People who run small businesses like general stores, bakeries, candy stores, barbershops, shoe repair, laundry, fruit and vegetable shops, carpet sellers, etc., often keep working throughout the week to meet their daily expenses, and it could be a big ask for them to save for retirement.

So, does that mean they could never be completely free from work, even in old age?

Mrin Agrawal, a wealth management expert and director of Finsafe India Pvt. Ltd., an investment advisory firm, said, “A lot of times they do not plan for retirement because they rely heavily on their small businesses for daily needs, which calls for structured planning and look for instruments like the National Pension System (NPS), where they can lock in their money, as these people have a habit of frequently withdrawing money from their investments. It also provides them with a monthly pension after retirement, which may solve the cash flow problem.”

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Also, today, retirement is not about doing something; it is about keeping yourself mentally engaged, so most people, she says, do not retire as they want to keep themselves occupied.
But it is also true that one needs a considerable sum of money for retirement, which a small businessman does not have, and they may not be able to retire completely.

Challenges And Opportunities

People who are self-employed in small businesses may have limited income. Their small profits are reinvested into the business for growth or to pay their bills. Therefore, it is challenging for them to save for a retirement fund large enough to sustain them for the rest of their lives. Consequently, they are more exposed to financial risks and uncertainties.

Agrawal recommends investing in equity mutual funds with whatever they can to build a corpus. Equity funds are safe to invest in if you have some market knowledge and the ability to picture the outcome based on the fund’s reputation and past earning patterns.

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People with lower or uncertain income can also consider the Public Provident Fund (PPF), Atal Pension Yojana (APY) and other government-backed schemes that require a small amount to open to build a retirement corpus. Both PPF and APY provide decent interest rates and could help accumulate wealth. Moreover, both have longer lock-in periods and provide safety to investments.