Running your own business is often painted as the ultimate dream: freedom, flexibility, and the satisfaction of building something from scratch.
But for many Australian sole traders and small business owners, a hidden cost lurks beneath the surface—and it could spell disaster for their retirement plans.
Recent research from AMP has shone a spotlight on a ‘crisis hidden in plain sight’: only 55 per cent of small or micro business owners (those with four or fewer staff) regularly contribute to their superannuation.
That means nearly half of our nation’s entrepreneurs are risking a future where their golden years might not be so golden after all.
Take Michelle, a 38-year-old Sydney mum and co-founder of Young Wonderer, an e-commerce business selling high-contrast books and sensory toys for babies.
Like many, Michelle’s journey into entrepreneurship began as a side hustle while she worked full-time. But when redundancy struck during her maternity leave, she seized the opportunity to go all-in on her business.
The flexibility has been a game-changer for her family life, but it’s come at a cost.
‘Any money I earn, I’m just reinvesting it back into the business,’ she admitted. ‘I need to prioritise the needs of the business and cash flow… and, unfortunately, I guess the future does take a bit of a backseat.’
She’s not alone. AMP’s data shows that sole traders, especially those in their first few years or living in rural areas, are the least likely to make regular super contributions.
The reasons are clear: when you’re responsible for every bill, every wage, and every hiccup, superannuation can feel like a luxury you simply can’t afford.
The super gap: Why it matters
It’s easy to put off thinking about super, especially when you’re in the thick of running a business. But the numbers are sobering.
According to AMP, if you start contributing just $100 a week to your super from age 30, you could have $500,000 by the time you hit 65—assuming a 6 per cent annual return.
That’s the magic of compound interest: the earlier and more consistently you contribute, the bigger your nest egg grows.
Yet, a recent Commonwealth Bank survey found that a third of Australian workers don’t know how much is in their super.
The risk is even greater for sole traders, as there’s no employer to make those regular contributions on your behalf.
There are a few key reasons why small business owners are falling behind:
- Cash flow pressures: Super can seem less urgent when every dollar counts than paying suppliers or keeping the lights on.
- Complexity: Australia’s super system isn’t always straightforward, and many business owners don’t know where to start.
- Short-term focus: The demands of today often crowd out the needs of tomorrow.
John Arnott, AMP Bank’s GO director, puts it bluntly: ‘It’s understandable that many small business owners prioritise reinvesting in their business, which can mean super contributions fall by the wayside. But striking the right balance between short-term needs and long-term security is crucial.’
What can you do?
If you’re a sole trader or small business owner, it’s not too late to take control of your retirement future. Here are some practical steps:
- Check your super balance: Knowledge is power. Log in to your super fund or use the Australian Taxation Office’s (ATO) online services to see where you stand.
- Automate contributions: Set up a regular transfer, even if it’s a small amount. Many banking apps and accounting tools can help automate this process.
- Seek advice: To understand your options, consider speaking to a financial adviser or using resources from the ATO and your super fund.
- Plan for growth: As your business grows (for example, when registering for GST after hitting $75,000 in turnover), make super a non-negotiable part of your budget.
This isn’t just a personal issue—it’s a national one. With millions of Australians now working for themselves, the risk of a widespread retirement shortfall is real.
If too many of us reach retirement age without adequate savings, the pressure on the Age Pension and social services will only increase.
But it’s not all doom and gloom. The earlier you start, the more options you have. Even small, regular contributions can make a big difference over time.
Are you a small business owner or sole trader? Have you struggled to keep up with your super contributions, or have you found a system that works for you? What advice would you give to others in the same boat?
Share your experiences and tips in the comments below—your story could help someone else secure a brighter future.
Also read: Experts divided: Should Australia’s super system be scrapped?
This is an on going problem and people really have to blame themselves. This topic is covered through many different digital platforms and main stream media talk about it alot. People need to educate themselves, not wait until a friend mentions something. I’ve made sure all my children were financially literate as they went from their first job to now and I have no formal training. They now explore all avenues regarding super and other investing.