More Small-Business Owners Delaying Retirement

A Wells Fargo survey reveals that a growing majority of small-business owners do not plan to retire before age 65.   

More small-business owners plan to retire at an older age–fewer plan to retire at a younger age. This is the current state of affairs after the economic downturn, according to the Wells Fargo/Gallup Small Business Index, surveyed in July 2010. Sixty-nine percent of business owners are not planning to retire or cut back on work until age 65 or older. This is a 17 percentage point increase from December 2007 and a 28 percentage point increase from September 2005. Conversely, respondents planning to retire earlier than full retirement age (between ages 60 and 64) decreased to 21% from 27%.  And retiring before age 60?  Only 11% are still holding on to that dream. 

“Many business owners are reinventing their business approaches in order to ensure financial stability for the long-run,” said Doug Case, Wells Fargo small business segment manager. “This often has a direct impact on personal retirement plans and tests the resilience and entrepreneurial flexibility which characterize small business ownership.”  

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Small-business owners are adaptive people and 62% of them have made changes to their retirement plans since the economic downturn, Wells Fargo said. Yet 68% are still worried that they will not be able to recoup the losses their 401(k)s suffered in the recession. Likewise, fewer respondents, 63% as opposed to 79% in 2007, were confident that they will have enough money to live comfortably when they retire.   

And then there are those small-business owners who do cannot imagine life without their work. Forty-seven percent of respondents reported they never plan to retire unless forced to do so for health reasons, an increase from 40% reported in December 2007. The majority of survey respondents, however, look at retirement as a time to work at something they enjoy doing, on their own terms. 

 

Court Dismisses BofA Stock Drop Case

 A federal judge has tossed out a stock drop case against Bank of America (BofA) that had alleged numerous fiduciary breaches in connection with BofA’s Merrill Lynch and Countrywide Financial acquisitions.

U.S. District Judge P. Kevin Castel of the U.S. District Court for the Southern District of New York accepted a defense request to dismiss the consolidated case that had alleged bank officials continued to offer company stock as a retirement plan option when it was no longer prudent. Other than the Benefits Committee, the plaintiffs didn’t prove defendants were, in fact, fiduciaries, nor did they show that the Benefits Committee acted imprudently, Castel found.

Castel also rejected allegations the BofA officials didn’t adequately disclose to participants BofA’s true financial picture and likewise failed in their obligations under the Employee Retirement Income Security Act (ERISA) to monitor certain other fiduciaries and to act in a loyal manner toward participants’ interests.

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The court held that statements made about the company’s financial picture in Securities and Exchange Commission (SEC) documents were not fiduciary statements simply because participants received them.   Quoting a 1996 U.S. Supreme Court case, Castel asserted that a company acts in a fiduciary capacity under ERISA when it “intentionally connect[s]. . . statements about [its] financial health to statements it ma[kes] about the future of benefits, so that its intended communications about the security of benefits [are] rendered materially misleading.”

BofA was hit was numerous suits in the wake of the Merrill Lynch and Countrywide deals including a number alleging participants were hurt when the bank’s shares declined in value (See Stock Drop Suit Hits BoA over Countrywide, Merrill Deals).

Castel’s stock drop ruling is here

 

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