Why Many Business Owners Aren’t Ready for Retirement — And What to Do About It

Barry Group
Jun 4
4 min read

Running a successful business doesn’t guarantee a successful retirement. In fact, many business owners are significantly behind in planning for their financial future. While entrepreneurship often signals financial independence, the reality is stark: many business owners are so focused on growing their companies that they neglect long-term retirement strategies.

This article dives into the latest statistics on business owner retirement readiness, explores why many fall behind, and outlines practical, tax-advantaged solutions including Whole Life Insurance, Index Universal Life (IUL), and Fixed Index Annuities (FIA).

📉 The Retirement Readiness Gap Among Business Owners

A significant number of small business owners are unprepared for retirement:

34% of small business owners have no retirement savings plan in place at all.— SCORE, “Small Business Retirement Planning”

Other studies show a widespread lack of preparedness:

Only 13% of small business owners say they are “very confident” in their ability to retire comfortably.— Manta & Oasis Small Business Owner Retirement Study
Just 19% of business owners contribute to a retirement account like a 401(k) or IRA, compared to 52% of traditional employees.— Pew Charitable Trusts
Fewer than 15% of small businesses with under 100 employees offer any type of retirement plan.— U.S. Bureau of Labor Statistics, 2022

🏚️ Relying on the Business: A Risky Retirement Strategy

Many entrepreneurs assume they’ll sell their business to fund retirement:

Over 40% of business owners expect to retire off the sale of their business, but fewer than 30% successfully sell when the time comes.— Exit Planning Institute, 2021 Survey

This approach is highly risky — markets change, valuations fluctuate, and buyers are limited. Without diversification, owners face serious shortfalls.

👵 Working Past Retirement Age

Without a formal plan, many are forced to keep working:

Nearly 60% of business owners aged 60+ plan to continue working past retirement age.— Guidant Financial, 2023
Just 30% of owners have a formal succession or exit plan.— Exit Planning Institute

This isn't by choice — it’s often due to lack of planning, insufficient savings, or unpredictable business valuation.

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✅ Proven Retirement Strategies for Business Owners

It’s never too late to shift gears. Here are four powerful tools used by high-income entrepreneurs and business owners to build reliable retirement income and protect their wealth:

1. Whole Life Insurance

Whole Life Insurance offers guaranteed premiums, guaranteed cash value growth, and guaranteed death benefit. It's often used as a foundational asset for business owners due to its:

Tax-deferred cash value accumulation
Non-correlated growth (not tied to the market)
Access to tax-free loans for retirement or business capital
Estate planning benefits

With paid-up additions and dividend reinvestment, the policy can grow efficiently and provide tax-free retirement income via policy loans while keeping the death benefit intact.

2. Index Universal Life (IUL) Policies

IULs provide flexible premiums and cash value growth based on index performance (like the S&P 500) without market downside risk.

Benefits include:

Tax-free retirement income through policy loans
No 59½ age restriction or early withdrawal penalties
Flexible death benefit and living benefits
Upside growth potential with downside protection

IULs are ideal for business owners looking to supplement their retirement and protect their families or partners.

3. Fixed Index Annuities (FIAs) An FIA is a retirement vehicle that offers:

Guaranteed lifetime income
Principal protection from market losses
Tax-deferred growth
Optional inflation protection riders

FIAs are particularly useful for rolling over old 401(k)s or cashing out business profits while creating a personal pension.

4. Executive Bonus Plans (Section 162 Plans)

This strategy uses life insurance funded by the business as a bonus to the owner or executive. It’s:

100% tax-deductible to the business
Fully owned by the executive
A retention and retirement tool in one

It’s a powerful way to reward yourself or key employees while building tax-free retirement income.

🔑 Conclusion: Entrepreneurs Deserve Better Than Just “Hope” for Retirement

Running a business is hard. Planning for retirement doesn’t have to be. Relying solely on your business sale is not a plan — it’s a gamble. By implementing Whole Life, IULs, FIAs, and other advanced insurance strategies, business owners can:

Build reliable, tax-free retirement income
Protect their wealth from market volatility
Secure their legacy for the next generation

📞 Ready to Build Your Exit Plan?

At Barry Group, we specialize in helping business owners create personalized wealth protection and retirement income strategies using IRS Code 7702, Whole Life, Index Universal Life, Executive Bonus Plans, and Fixed Index Annuities.

👉 Book your free Discovery Session now at 866-540-9122 or visit www.barrygroup.net

Your business built your income. Now let’s build your retirement.