News Releases

TORONTO, ONTARIO--(Marketwire - Oct. 20, 2011) - According to a study by BMO Financial Group, the majority of small business owners are planning to fund their retirement through the sale of their business and often face challenges when saving for retirement. The study found that:

• Fifty-one per cent indicated that they plan to use the sale of their business to fund their retirement.
• Forty-nine per cent admitted to having to choose between either contributing to their Registered Retirement Savings Plan (RRSP) or investing in their business.

"Canadian business owners should avoid relying solely on the sale of their business to fund their retirement," said Tina Di Vito, Head, BMO Retirement Institute and author of a new book on retirement planning, 52 Ways to Wreck Your Retirement… and How to Rescue It. "The value of your business can fluctuate significantly over the years, so it's important to have personal retirement savings, such as an RRSP, as well."

Ms Di Vito also notes that, as business owners focus on growing and maintaining their businesses, their own retirement planning is often put on the back burner. "Business owners know the value of having a business plan. Unfortunately, many underestimate the importance of having a personal financial plan that includes their retirement goals."

BMO's Tina Di Vito offers small business owners advice on how to effectively save for retirement:

• Take care of yourself - Invest in yourself, not just your business. As a small business owner, the instinct is often to invest back into the business. However, it is very important to pay yourself as well, especially when planning and saving for retirement. Relying on selling the business to fund retirement can be a risky approach that does not always work.
  
  
• Invest in an RRSP – Having a diversified financial plan, including an RRSP, is a great way to accumulate wealth outside of the business. Investments grow faster in an RRSP due to tax-deferred compound growth, and RRSPs with conservative holdings are effective during times of instability, offsetting the volatility of business returns.
  
  
• Team of experts – Surround yourself with a group of experts, including a financial professional who specializes in small business, an accountant, a tax specialist and a lawyer. They can offer sound advice and provide insight on how to build your retirement savings independently of your small business. A financial professional can also help develop a detailed financial retirement plan that outlines your goals and progress.
  
  
• Explore other investment options – Consider other investment strategies that will help build your retirement savings, like income splitting through a spousal RRSP or investing outside of a registered savings plan if you have maximized your RRSP contribution. It is also important to take precautions against the unexpected, like an illness or disability, by considering life and disability insurance.
  

The survey was completed by telephone between Tuesday, February 1^st, and Friday, February 25th, 2011, with a sample of 507 small business owners/operators in Canada.