Owning a business might be part of your American dream. For some baby boomers, entrepreneurship is also a part of their retirement. A report from the Kaufman Foundation1 found that baby boomers are twice as likely to plan on starting a business as millennials, and the percentage of businesses being started by Americans 55 and older is steadily increasing.

The problem is that retirement planning is not a priority for many entrepreneurs and saving for retirement as a small business owner isn't as simple as being automatically enrolled in a company 401(k) plan. Here are some of the biggest mistakes entrepreneurs are making when it comes to retirement planning:

Not having a plan: It takes a lot of time and energy to start and keep a business running. It’s certainly not an eight-hour-a-day venture. Self-employed professionals have a lot on their plates, including financial obligations like business taxes and payroll. So, saving for retirement often gets pushed down to the bottom of their priority list.

Putting every cent back into the business: Entrepreneurs are sometimes hesitant to put their money into retirement accounts because they worry they will lose quick access to the funds if they need them for the business. Diversifying your assets can help you to better cope with emergencies and save for the future.

Selling the business is the retirement plan: Most entrepreneurs overestimate the value of their business and their ability to sell it when they are ready to retire. Many business owners fail to obtain periodic outside assessments of the value of their business, which can cause surprises later.

Using retirement savings to start a business: Make sure you know what investments you own and how they are performing. Each investment and fund you’ve paid into needs to produce enough to help you reach your objectives. Check that you understand and are comfortable with the costs, risks, and liquidity of your portfolio



 1Ewing Marion Kauffman Foundation 2019, 2018 National Report on Early-Stage Entrepreneurship