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Most self-employed frightened for their retirement

Adam Zuchetti
Adam Zuchetti
30 July 2018 1 minute readShare
retirement, money, savings

Many business owners claim their company is their retirement asset, and so refrain from paying themselves super. Yet this tactic is sorely lacking in delivering financial security, it has been suggested.

Some business leaders rejected calls to be forced to pay themselves superannuation, when the suggestion arose before a senate committee in May this year.

At the crux of the argument against such a move was that business owners view their company as their retirement nest egg, and so forgo paying themselves super in order to boost the amount of working capital available within the business.

Such an argument may not be as sound as it appears at first glance though, with a MYOB survey of some of its 1.2 million customers revealing a sense of inadequacy for retirement among a large component of self-employed Australians.

In fact, less than a third of self-employed people felt either very well or quite prepared for their retirement.

That was despite almost one in three (31 per cent) adopting this strategy of not paying themselves superannuation.

The reason, suggested MYOB’s Jane Betschel, head of customer marketing and direct sales, is that employers are forced to sacrifice their own security for the sake of the business.

“We know that cash flow is one of the big pain points for businesses, particularly small and medium-sized enterprises,” she said.

“Owner-operators may sacrifice their own super payments to ensure that payments owing to staff are met. They may also decide to pay bills that will keep the doors open today, at the expense of future, personal financial security. This is a reality for many small businesses.”

Some 19 per cent of respondents said that funding their retirement was their biggest concern of all – ahead even of worries over the increasing cost of living (14 per cent).

Ms Betschel said it is important for business owners to seek professional advice on managing their finances to protect their biggest asset of all – themselves and their families.

“There can be a bit of a grey area between business and personal finances for small business owners. Personal sacrifices can leave them on shaky ground come retirement,” she said.

“Seeking out sound financial advice is an essential part of setting your business up for success. Managing your cash flow and understanding your P&L promotes better financial literacy and saving habits, which can enable super contributions as well as reduce the burden at tax time.”

Most self-employed frightened for their retirement
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Adam Zuchetti
Adam Zuchetti

Adam Zuchetti is the former editor of MyBusiness and a senior freelance media professional, specialising in the fields of business, personal finance and property. In 2020, he also embarked on his own business journey – inspired in part by the entrepreneurs and founders he had met through his journalistic work – with the launch of customised pet gifting and subscription service Paws N’ All.

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