Nearly 70% of Business Owners Surveyed Cited Economic and Political Uncertainty as Factors in Retirement Readiness

Wednesday, November 11th, 2020

As the country continues to grapple with the economic impact of the COVID-19 pandemic, business owners in particular are unsure how long they can sustain their business under current conditions. TD Wealth's second annual Retirement Readiness Study gauged respondents' sentiment on retirement and financial planning.

Sixty-nine percent of business owners cited economic or political uncertainty as concerns when it comes to achieving their financial goals, as the economic impact of the pandemic and the 2020 election continue to be top of mind. Mass affluent business owners are more concerned about economic or political uncertainty (73%) than high net worth business owners (67%).

"It's no surprise that business owners struggled during the COVID-19 pandemic due to stay-at-home mandates and non-essential business closures. Additionally, the impact of economic uncertainty, coupled with political uncertainty, are weighing heavily on the minds of business owners as they seek to recover their financial losses," said Ken Thompson, Head of U.S. Wealth Shared Services. "Fortunately, business owners recognize that despite the difficult and volatile economic times, it is important to continue saving for retirement and avoid adjusting a long-term plan for short-term volatility."

Additionally, the survey found that 87 percent of all business owners surveyed reported their revenues were impacted by COVID-19, with nearly half experiencing reduced operations (49%) and a quarter witnessing temporary or permanent closures (25%). Despite the economic impact of COVID-19 on businesses, 85 percent of business owners have not made changes to their retirement planning as a result of the pandemic, demonstrating that business owners are staying the course through economic volatility.

Advisors Can Boost Confidence and Ensure Retirement Readiness

Sixty-one percent of business owners indicated that they work with a financial advisor. Millennial business owners were more likely to work with a financial advisor (68%) compared to baby boomers (58%). Of the business owners who have a long-term investment plan, 94 percent are confident (very or somewhat) that their long-term investment plan will lead to the achievement of their financial goals.

Of business owners surveyed, only 35 percent report having a fully integrated estate plan. However, 66 percent of respondents have a last will and testament and 44 percent have trusts (one or more). Only 12 percent of respondents reported that they do not have any sort of estate plan, signifying that most respondents are well-prepared for retirement with the proper estate planning.

"In a time where the world seems to shift under our feet as we speak, a financial advisor is key to help navigate economic volatility and stay on track for retirement," said Alyson Klug, Head of Mass Affluent, U.S. Wealth. "Many business owners could be facing the question of an early retirement due to the pandemic, and a financial advisor can help establish your goals, develop an estate plan and create a bespoke long-term investment plan that allow business owners to navigate the retirement journey with greater confidence."

Retirement Confidence Remains High for High Net Worth Business Owners Year-Over-Year

Ninety-four percent of high net worth business owners are confident (very or somewhat) that their financial plans will be able to generate the income needed during retirement, compared to 95 percent in 2019. Mass affluent business owners are less confident, with 82 percent reporting that they are confident (very or somewhat) that their financial plans will be able to generate the income needed during retirement.

When it comes to retirement income, a healthy mix is important. For business owners, retirement savings plans constitute the highest proportion of retirement income, followed by investment portfolio and social security. Retirement savings and investment portfolios make up more than half of the retirement income across all respondents.

Survey Methodology

TD Wealth commissioned Maru/Matchbox to conduct a survey targeting business owners and individuals with investable assets over $100,000 with the objective of finding out about their retirement plans and the future of their business. A total of 1,296 responses were collected, split across four segments: high net worth business owners and individuals (investable assets over $500,000), and mass affluent business owners and individuals (investable assets of $100,000 - $499,000). Questionnaire was up to 15 minutes in length and fielded in July 2020. All sample is sourced through the Maru/Blue proprietary panel and partners.