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TORONTO, ONTARIO--(Marketwire - Jan. 23, 2012) - With Registered Retirement Savings Plan (RRSP) season in full swing, many Canadians are gearing up to make an RRSP contribution before the February 29^th deadline. This, however, might not be the case for small business owners, who are often more focused on investing in their businesses rather than on their own retirement:

• According to Statistics Canada, fewer self-employed Canadians (74 per cent) reported that they were financially prepared for retirement compared to those that are paid employees (85 per cent).
• According to a BMO Financial Group study, almost half (49 per cent) of small business owners feel they have to choose between either contributing to their RRSP or investing in their business.

"Small business owners often find themselves torn between investing in their business and saving for the future," said Cathy Pin, Vice President, Commercial Banking, BMO Bank of Montreal. "Although it's tempting to concentrate on investing in your business, it's critical for entrepreneurs to have personal retirement savings as well, since they can't rely solely on the future value of their business to provide for their retirement."

An RRSP can offer significant advantages for small business owners who are trying to accumulate wealth outside of their business:

• Investments grow faster in an RRSP because of tax-deferred compound growth. Moreover, RRSPs with conservative holdings are effective during times of instability, offsetting the volatility of business returns.
• For entrepreneurs, having a retirement nest egg is also important if unexpected circumstances arise, such as health problems for the business owner or a need to sell the business sooner than anticipated. If market conditions are not optimal for the selling of the business, RRSP savings can act as a safety net.
• Small business owners will also experience tax benefits when they make RRSP contributions. For unincorporated small enterprises, money made in the business is considered personal income; RRSP contributions will reduce the business owner's taxable income for the year of the contribution.

"Similar to the plans you make in order for your business to succeed, how you plan to fund your retirement needs to be considered as well. Even if your business meets all of your financial needs in retirement, the money you save and invest in an RRSP can supplement your income for a more comfortable retirement," said Tina Di Vito, Head, BMO Retirement Institute and author of 52 Ways to Wreck Your Retirement…and How to Rescue It. "Adding an RRSP to your retirement income plan is one of the best ways to save, offering tax-deferred compound growth that can give small business owners a safety net as retirement approaches."

For more information on how to save for retirement, please visit:
www.bmo.com/smartbusiness