Article by Connect Yorkshire partner Rathbones
Many business owners see their company as their retirement plan, but relying on one unpredictable asset can leave you exposed. New research from Rathbones shows the gap between confidence and readiness is wider than most expect. Here’s how to close it.
If most of your wealth is tied up in your business, you may be relying on it more than you realise to fund your retirement. For many business owners, the company they have built represents years of dedication, sacrifice and ambition. It is also, all too often, treated as the retirement plan, the asset that will, one day, fund everything that comes next. While pensions and other investments can help diversify your plans, their value and the income from them can go down as well as up, and tax treatment will depend on your individual circumstances and may change in the future.
New research from Rathbones suggests this confidence may be misplaced. And for those approaching the point where retirement starts to feel real rather than distant, the gap between what many owners expect and what they have in place is worth examining now, not later.
Three in ten business owners have no pension at all, and 44% do not hold an Individual Savings Account (ISA), despite the vast majority holding cash savings. Taken together, these findings suggest many business owners may be overlooking some of the most effective ways to build long-term financial security.
The result is a significant reliance on short-term cash and long-term assumptions about business value, at a time when economic and tax uncertainty is rising.
It is easy to understand why business owners prioritise their company. The business demands capital, attention and resilience, often leaving little room to think about life beyond it.
The challenge is that a business as an asset is unpredictable. Economic shocks, regulatory changes, changes in buyer appetite, or the loss of a major client can quickly alter its future value.
Even a successful sale may not guarantee the retirement income many owners expect. Without other assets in place, business owners can find themselves asset-rich on paper but short of reliable income in practice, particularly where earn-outs extend for years after a sale completes.
Reviewing where you stand now, before that moment arrives, is what readiness looks like.
Ninety-five per cent of business owners hold cash. Yet almost half do not hold an ISA, and three in ten have no pension savings at all.
Cash plays an important role in day-to-day resilience, but relying on it for the long term reduces growth potential, weakens protection against inflation, and limits tax efficiency. It is a foundation, not a retirement plan.
The question worth asking is not whether you have cash. It is whether it is being over-relied on for long-term retirement income, and whether the assets that matter most for your future are being built alongside it.
Pensions remain one of the most powerful and tax-efficient tools available to business owners, and one of the most underutilised.
For limited company owners, employer pension contributions can be made directly from profits before Corporation Tax and without National Insurance (NI). With NI rising to 15% from 2026/27, this makes pension contributions an even more valuable part of a well-structured plan.
If a pension is not already in place, or has not been reviewed recently, now is the right moment to change that.
Robust retirement planning is not about replacing your business as an asset. It is about building diversified assets alongside it so that your future does not depend entirely on a single exit event going to plan. That means building retirement income from pensions, ISAs, and investments outside the business, not just planning for the proceeds of a future sale.
Done well, this can provide greater flexibility over when and how you step back from the business, while giving you more confidence about the future.
That means reviewing your ISA allowance, your pension contributions, and the balance between cash and longer-term investments. It means understanding what income you will need, when you will need it, and how your current plans stack up against that picture.
The business you have built is something to be proud of. The goal is to make sure it is part of your retirement story, not the whole of it.
If you are approaching the point where retirement feels closer than it once did, a structured review of your retirement planning proposition is one of the most valuable things you can do right now. You may want to consider:
If you’d like to explore how this could apply to your circumstances, our experts are here to help you review your options and discuss next steps that suit your situation.
Our Retirement Readiness Review is a named one-to-one conversation with one of our financial planners, designed to help you understand where you are, where you want to be, and what needs to happen in between.
Article via rathbones.com
