Inflation has some business owners rethinking their retirement savings

Supply chain issues and inflation are affecting business owners’ bottom lines – and their retirement accounts. 

Inflation topped the list of concerns for business owners, according to a TD Wealth survey of more than 700 business owners with $100,000 in investible assets and more than one employee. Economic uncertainty followed closely behind in the second spot. 

Read the latest inflation report

These fears are propelling some entrepreneurs to change their retirement plans. Almost two-thirds of the survey respondents said they tweaked their retirement plans in the last year, with nearly one third of them saying they changed their asset allocation, another three in 10 saying they postponed retirement and the same percentage of people saying they lowered contributions toward their retirement savings. 

The concerns aren’t far-fetched. Inflation hit a 40-year high last year and supply chain issues have caused shortages across the sectors, from baby formula to garage doors. 

See: Supply-chain snags are the new normal – here are some ways businesses can manage the problems

Younger business owners were more likely to make changes. Half of the business owners 55 and older said they altered their retirement plans, compared with 70% of owners 18 to 34 years old and 74% of owners 35 to 54 years old. A strong majority of these survey respondents – 90% – said they are still confident their savings will be enough to live on in the future. 

Read: People who work for a small business now have a better shot at retirement security

Most of these survey participants (82%) were working with a financial adviser and those were the investors more likely to feel confident in their retirement goals than the people who did not work with an adviser (but only marginally – 83% had higher confidence when working with an adviser versus 75% of the people who did not have an adviser). These financial professionals were also likely to suggest new ways to save for the future, including investment opportunities for retirement portfolios such as digital assets and ESG funds. 

Investors are better off when they have a plan in place for their money and retirements, said James Beam, senior vice president and head of investment management, brokerage, planning and strategy at TD Wealth. “Without a plan or assessment, it is tough to determine where you’re at,” he said.