According to recent research from the Association of Superannuation Funds of Australia, 25% of self-employed people have no superannuation. People employed by others have their employer make 9.5% super contributions on their behalf – a form of forced retirement savings made compulsory by the government. However, no such conditions are imposed on self-employed people. This leads to a dangerous mindset for many self-employed people in Australia. Many of them have no superannuation, believing that the value of their business will fund their retirement. They assume their business will be sold for a relative fortune and allow them to retire on the proceeds. Unfortunately, there is usually a gaping hole between the price someone thought their business was worth and the price for which they are able to sell it for, compounding the gap between the sale price and what they will actually need for a comfortable retirement. This sees many self-employed people retire with nothing like the lifestyle they were hoping to enjoy after all their years of hard work running their business.
If you’re self-employed, you need to make saving for retirement a part of your business plan!