Why Business Owners Struggle to Retire: The 2 Biggest Financial Gaps You Can’t Afford to Ignore
- Barry Group
- Jun 10
- 4 min read
🚨 Introduction: A Financial Reality Check for Business Owners
You’ve built a business that supports your family, employs people, and fuels your community—but are you building your exit strategy with the same intensity?
Too many business owners rely solely on their companies for retirement and protection, yet:
48% of business owners plan to exit their business within the next 5 years, but
75% have no formal transition or succession plan (Source: UBS Business Owner Insights Report, 2023)
80% of businesses that go on the market never sell (Source: Exit Planning Institute, 2023)
Without a proper strategy, your business might not survive without you—and neither will your retirement plans.
🔒 Gap #1: Business Protection – What Happens If You’re Gone Tomorrow?
If something unexpected happens to you or your key executives, what happens to the business?
Here are the three most overlooked yet critical protection tools for business owners:
✅ 1. Key Person Life Insurance
Your business likely depends on one or two people—whether that’s you, a co-founder, or a top producer. If one of you dies unexpectedly, the financial impact could be devastating.
Key Stats:
71% of small businesses rely on one or two individuals for success
But only 22% have key person insurance in place(Source: LIMRA, Small Business Market Facts 2022)
How it helps:
Pays a tax-free lump sum to your business upon the death of the insured
Covers lost revenue, training new leadership, and loan obligations
Builds confidence with lenders, partners, and investors
✅ 2. Buy-Sell Agreements Funded by Life Insurance
What happens if a partner dies, divorces, or leaves the business? A buy-sell agreement ensures a smooth, pre-arranged transition—and when funded with life insurance, it ensures there’s money to make it happen.
Key Stats:
Only 17% of family-owned businesses have a formal, documented succession plan(Source: PwC Family Business Survey 2022)
Why life insurance works:
Guarantees liquidity at death
Keeps ownership in the hands of the remaining partners or family
Avoids disputes or forced sales to outside parties
✅ 3. Disability Income & Overhead Protection
You're 3.5 times more likely to become disabled than to die during your working years(Source: Social Security Administration)
Disability protection ensures:
You continue to receive income if you're unable to work
Business overhead expenses (like rent and payroll) are covered
Partners can buy out your share if you're permanently disabled
💼 Gap #2: Retirement Income – The Business Is NOT Your Retirement Plan
Many business owners falsely believe their company will fund their retirement. But relying on a successful sale (that may never happen) or endless cash flow is dangerous. Here’s why:
Key Stats:
68% of business owners have less than $100,000 saved in a tax-deferred retirement account(Source: SCORE Association / SBA, 2022)
Over 11 million Americans aged 60+ still work because they lack guaranteed retirement income(Source: CBS News, 2024)
Let’s fix that with smart, owner-friendly strategies.
✅ 1. Index Universal Life Insurance (IUL) & Whole Life Cash Value Policies
Permanent life insurance with cash value provides:
Tax-deferred growth
Tax-free retirement income via policy loans
A death benefit for heirs or business continuity
Asset protection in many states (consult your advisor)
Why it’s powerful:
No contribution limits like IRAs or 401(k)s
No required minimum distributions
Ideal for high-income earners who’ve maxed out other retirement vehicles
Case in point: Many business owners use IUL as a personal pension, leveraging cash value growth without market downside.
✅ 2. Fixed Index Annuities (FIAs) – Turn Your Old 401(k) Into a Pension
If you’ve left a job or sold part of your company, don’t let that 401(k) sit stagnant. Rolling it over into a Fixed Index Annuity gives you:
Guaranteed lifetime income
Protection from stock market loss
Options for income riders, inflation protection, or legacy planning
Key Stat: Over $3.1 trillion in old 401(k)s are sitting unused or mismanaged by Americans who’ve changed jobs(Source: Capitalize, 2023)
FIAs offer business owners peace of mind and a steady income stream in retirement—without relying on the company.
✅ 3. Executive Bonus & Golden Handcuff Plans
Want to retain top employees without giving equity? Use a Section 162 Executive Bonus Plan funded with life insurance. It allows:
You to bonus premiums to a valued executive
The executive to own a policy with cash value accumulation and death benefit
Structured vesting to incentivize loyalty
💣 BONUS: Why Exit Planning Isn’t Just For Retirement
Even if you’re not planning to exit soon, here’s why you need a plan:
Key Stats:
50% of business exits are unplanned (due to death, disability, divorce, or disagreement)(Source: Exit Planning Institute)
Owners who plan their exits are 2–5x more likely to increase the value of their business before leaving(Source: BEI, Business Enterprise Institute)
Exit planning includes:
Business valuation
Tax strategies
Coordinated legal and insurance solutions
Funding succession, buyouts, or inheritance
✅ What Barry Group & Associates Can Do For You
We help business owners in all industries:
Protect the company with Key Person and Buy-Sell Insurance
Fund retirement with Cash Value Policies & Fixed Index Annuities
Reward key team members with Executive Bonus Plans
Create a complete exit strategy with tax-smart solutions
📞 Call us now at 866-540-9122
🌐 Or visit www.barrygroup.net to schedule your free Discovery Session
📚 References
LIMRA. “2022 Small Business Market Facts.” www.limra.com
Exit Planning Institute. “State of Owner Readiness.” 2023. www.exit-planning-institute.org
CBS News. “11 Million Americans Over 60 Still Work.” 2024. www.cbsnews.com
PwC. “2022 Family Business Survey.” www.pwc.com
Social Security Administration. Disability Statistics. www.ssa.gov
UBS. “Business Owner Insights Report.” 2023. www.ubs.com
SCORE / SBA. “Small Business Owner Retirement Data.” 2022.
Capitalize. “The Forgotten 401(k) Report.” 2023. www.hicapitalize.com
Forbes Advisor. “Why High-Income Earners Use IUL.” 2024. www.forbes.com/advisor
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