Invest in the company or retirement? More owners opt to save

NEW YORK >> In John Holloway’s early years as an entrepreneur, saving for his own future wasn’t a priority.

“I invested a lot of money into one of my first businesses and came out break even at best. I am kicking myself for not setting some of that money aside for retirement,” says Holloway, co-owner of NoExam.com, a life insurance brokerage based in Roswell, Georgia.

These days, when his company’s cash flow and profits are strong enough, he takes money out of the business and invests in a retirement account.

“I am trying to diversify — having all of my eggs in one basket is stressful,” Holloway says.

Saving for retirement hasn’t been a priority for many small business owners over the years. They’ve hoped to build their businesses, sell at a huge profit and have a comfortable retirement. While they’ve taken profits out for homes and college tuition, it was more important to reinvest earnings into the company rather than save for retirement. But attitudes about saving may be evolving after the financial devastation of the Great Recession, when tens of thousands of businesses failed.

In a survey by insurer Nationwide released in October, 53 percent of younger business owners — those born in the 1980s and ‘90s — said having a workplace savings plan was important for their retirement. Fewer baby boomers, 39 percent, felt it was important. Older surveys show how boomers favored their companies over saving — the Small Business Administration said in 2006 that only about a third of owners had Individual Retirement Accounts and 18 percent had a 401(k).

When Ron Lieback started his digital marketing business, he began setting aside 10 percent of his own salary. Profits from the company, ContentMender, are reinvested into new technology, but Lieback wants to be personally prepared for the what-ifs.

“Something could crash and our business could fail. You always have to have that in the back of your head, so you need that nest egg,” says Lieback, whose company is based in Mountain Top, Pa. To help his company be more profitable, and therefore help himself save, Lieback uses freelancers for some of Con

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JIM MONE - THE ASSOCIATED PRESS Shamila Nduriri, who owns Dalasini, an upscale jewelry company, poses in her Minneapolis apartment with some of her jewelry. Nduriri, who studied finance in college, saved aggressively when she worked for a corporation and continues to put money aside now that she owns Dalasini.