SME owners not prepared for retirement

The majority of small and medium enterprise (SME) owners consider the sale of their business to be very important in funding their retirement, according to REST Industry Super.

According to the white paper ‘Bridge the Gap', commissioned by REST, one-in-five respondents admitted that their business would be unable to fund their livelihood and expenses for longer than a week in the event of their unplanned absence, demonstrating a sizable gap in most SMEs' insurance coverage.

REST chief executive, Damian Hill, said the gap highlighted the importance of SME owners to look beyond the sale of their business to fund their retirement by ensuring they make regular super contributions.

"SME owners put themselves at risk if they rely solely on the sale of the business — and the assumption that it will remain viable for sale — upon retirement," Hill said.

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Hill noted that although SME owners were responsible for ensuring the livelihood of around 4.7 million working Australians, the research suggested they were typically less conscious of the risks around their own financial wellbeing.

"SME owners are relatively unprepared for the future when it comes to planning for their financial security — in terms of both their ability to continue supporting their livelihood following an unexpected event, as well as their plans for an eventual retirement," Hill said.

"While it can be difficult to find the additional cash for income protection and total and permanent disability insurance, small business owners can access these through superannuation, an affordable means of helping them take control of their financial future should the unexpected happen."

The research also found 82 per cent of SME owners surveyed believe it was the responsibility of their employees to choose the super fund that was right for them, with nearly half of respondents taking less than five minutes to choose their businesses' default super fund.