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Business owners altering retirement plans due to inflation, recession fears: Survey

A survey of business owners shows that amid inflationary pressures and economic uncertainty, 43% of those who work with an advisor say they’ve communicated with their advisor more frequently in the past year.

By Gregg Greenberg, InvestmentNews.com

Retirement plans, they are a-changing.

According to the recently released TD Wealth Retirement Readiness report, nearly two-thirds (65%) of business owners altered their retirement plans in the past year in response to inflation, economic uncertainty and the threat of a recession.

The annual survey revealed that more than half (54%) of the third-party business owners surveyed say their business has been negatively impacted by rising prices and supply chain problems in the last year. As a result, nearly one-third (31%) of owners have considered moving the location of their business or selling it to offset rising costs, the survey said.

More than three-quarters (77%) of respondents who work with a financial advisor and considered moving or selling their business said they consulted their financial advisor about these actions. And 43% of business owners who work with a financial advisor say they have communicated more frequently with their advisor in the past year.

“Record inflation and supply chain troubles have presented significant challenges for business owners, and while both show signs of improvement, the impacts will be felt into 2023,” James Beam, head of investment management, brokerage, planning, retirement and strategy at TD Wealth, said in a statement. “Business owners are depending on registered financial professionals to weather short-term volatility and help with the long-term success of their financial plans.”

“It’s not surprising that business owners are working with their financial advisors more often in times of disruption or uncertainty,” said Jeremy Finger, founder and CEO of Riverbend Wealth Management, part of Stratos Wealth Partners. “These are the times when a professional advisor can really be of assistance by providing guidance on the best course of action — whether a business owner should stay on track or veer off in a different direction.”

Regarding the business owners who changed their retirement plans in the past 12 months, the survey showed that 31% changed their asset allocation, 30% postponed retirement and 30% lowered contributions to their retirement account. Moreover, almost three-quarters of business owners aged 18 to 34 (70%) and 35 to 54 (74%) were more likely to amend their retirement plans compared to business owners over the age of 55 (50%).

Still, the report showed that 90% of business owners are “confident that their retirement savings will generate the income that they are planning to live on.”

Richard Siminou, senior financial advisor at Siminou Wealth Management at Kingswood U.S., advises business owners to embrace active management in the current economic climate.

“Alternative investments are not just for good-weather environments. Some of the best investments are made during times of dislocation, and communication with your team of advisors and CPAs will come in handy. Inflation, the impact of rising rates, and the turbulent markets have created opportunities in recent months,” Siminou said. “Some of the fastest-growing sectors are now seeing prices come down even as innovation continues. In real estate, inflation is raising the costs to build, making hard assets with strong fundamentals more attractive.”

Read more at InvestmentNews.com here.

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