New TD Wealth Survey examines business owner views on retirement readiness and financial planning
Retirement can come with mixed emotions – a culmination of one's professional career to celebrate, as well as the uncertainty and anxiety about life's next chapter. What’s more, retiring business owners often have their own unique set of doubts, which can mount as retirement approaches.
According to TD Wealth’s Business Owner Retirement Readiness survey of over 1,000 high net worth individuals who own a business, 95 percent of those surveyed are confident (very or somewhat) that their financial plans will be able to generate the income needed during retirement. However, as business owners approach retirement age, confidence dwindles.
Millennial business owners reported the highest confidence in their post-retirement income, with 78 percent very confident that their long-term investment plans will lead to the achievement of their goals, followed by Gen Xers at 69 percent. Despite being the closest to retirement of the age groups surveyed, only 59 percent of baby boomers are very confident that their long-term plans will allow them to achieve their goals.
“High net worth business owners face a myriad of challenges when it comes to their financial security in retirement,” said Ken Thompson, Head of Trust & Investments for TD Wealth. “A financial plan is not only crucial to having confidence in retirement, but also to confidence in a business owner's exit strategy, succession and estate planning, and other priorities that are vital to achieving financial goals."
Advisors Can Boost Confidence
Seven out of ten business owners surveyed indicated that they work with a financial advisor. Surprisingly, millennials were more likely to work with a financial advisor (77 percent) than baby boomers (64 percent). Business owners who work with an advisor are also significantly more likely to be confident in their future income compared to those not working with an advisor.
“While everyone can benefit from working with a financial planner regardless of age or net worth, business ownership adds an entirely new dynamic and complexity to retirement planning that necessitates a very particular expertise,” said Thompson. “Just as the long-term goals of an individual business are unique, so too are the individual financial goals for each business owner. Working with a professional advisor to establish a bespoke plan can help business owners prepare and feel confident as they head into retirement.”
Retirement Ready or Not?
In addition to the confidence business owners currently have in their retirement plans, and the relationship between their confidence and whether they work with an advisor, the survey explored other influences determining their retirement readiness. Such factors included desired age of retirement, what concerns could affect their goals and where respondent’s income will be derived from upon retirement.
The survey found that 66 percent of business owners expect to retire between the ages of 51 and 75. One in eight respondents age 55 and older plan to never retire (12 percent vs. three percent of younger business owners, ages 18 to 34). Those planning to retire at age 50 or younger skew younger. Fifteen percent of those planning to retire younger than 50 are between the ages of 18 and 34, and seven percent are between the ages of 35 and 54.
Many business owners also have concerns around how external factors may impact their ability to achieving their financial goals, including economic uncertainty (50 percent) and market volatility (40 percent). Not surprisingly, concerns around health insurance costs increase with age, from 25 percent among millennials to 34 percent among baby boomers.
When it comes to retirement income, a healthy mix is important. Thirty-four percent of high net worth business owners estimate their retirement income will come from retirement savings plan (34 percent), investment portfolio (21 percent), Social Security (11 percent) and personal savings (10 percent), with the balance coming from other sources.
TD Wealth commissioned Maru/Matchbox to conduct a survey targeting business owners with investable assets over $500,000, with the objective of finding out about their retirement plans and the future of their business. Questionnaire was five minutes in length and fielded between January 24 and February 4, 2019. All sample is sourced through the Maru/Blue proprietary panel and partners. A total of 1,002 responses were collected.
About TD Wealth
Through TD Bank N.A.,TD Wealth’s Private Client Group and its affiliates work with mass affluent and high net worth individuals and institutions to help build, preserve and transition wealth. TD Wealth is committed to helping personal investors, institutional and non-profit organizations gather and potentially grow their assets by building long-lasting relationships, and is affiliated with one of the 10 largest financial institutions in the U.S., TD Bank, America’s Most Convenient Bank®. From private banking, securities, investment advisory services, private trust, and estate planning, to institutional trust, including retirement planning, captive insurance and trustee services, TD Wealth creates and delivers customized and integrated wealth management solutions. Banking, investment and trust services are available through TD Bank. Securities and investment advisory products are available through TD Private Client Wealth LLC, member FINRA/SIPC (TDPCW).TD Wealth is a service mark of The Toronto-Dominion Bank. For more information, visit http://www.tdbank.com/investments.
TD Wealth is not a tax or legal advisor. You must consult with your own tax and legal advisors for specific advice pertaining to your estate planning needs.
About TD Bank, America's Most Convenient Bank®
TD Bank, America's Most Convenient Bank, is one of the 10 largest banks in the U.S., providing more than 9 million customers with a full range of retail, small business and commercial banking products and services at more than 1,200 convenient locations throughout the Northeast, Mid-Atlantic, Metro D.C., the Carolinas and Florida. In addition, TD Bank and its subsidiaries offer customized private banking and wealth management services through TD Wealth®, and vehicle financing and dealer commercial services through TD Auto Finance. TD Bank is headquartered in Cherry Hill, N.J. To learn more, visit www.td.com/us. Find TD Bank on Facebook at www.facebook.com/TDBank and on Twitter at www.twitter.com/TDBank_US.
TD Bank, America's Most Convenient Bank, is a member of TD Bank Group and a subsidiary of The Toronto-Dominion Bank of Toronto, Canada, a top 10 financial services company in North America. The Toronto-Dominion Bank trades on the New York and Toronto stock exchanges under the ticker symbol "TD". To learn more, visit www.td.com/us.
MARU/Matchbox is a professional services firm dedicated to improving its clients' business outcomes. It delivers its services through teams of sector-specific research consultants that have technology in their DNA, specializing in the use of Insight Community and Voice of Market technology. MARU/ Matchbox's research drives decision-making across all aspects of customer experience, including innovation, product, branding, commercialization and communications.