In a follow-on from my blog yesterday on small business confidence and economic recovery, today I will take a look at the impact on retirement planning of continued tough conditions and a lack of external funding for businesses.

Retirement planning has taken a back burner for many small business owners since the crisis started. With small business confidence dropping in December for the first time in three months and many still reporting a dearth of outside funding sources, many owners expect to see their savings dwindle further in the coming six months, rather than grow.

According to the Small Business Watch survey by Discover, the number of small business owners with a financial plan for retirement dropped 12 percent over 2010-down to 50 percent from 62 percent in 2009.

Plus, 74 percent of respondents reported that their retirement savings were diminished over the course of the recession-with 20 percent citing more than 50 percent of their savings eaten up and 18 percent citing a decrease of between 30 percent and 50 percent of their savings.

Only 56 percent of small business owners felt they would have sufficient resources to last through their retirement, down from 63 percent in 2009-a decrease of seven percent.

Thirty five percent of respondents felt it was not very likely or not at all likely that they would have sufficient savings to last through their retirement.

There are two major results or conclusions to come out of this.

The first is that small business owners are increasingly likely to work longer into their later years. In fact, 38 percent of respondents to the survey said they do not plan to retire at all-up from 30 percent in 2009.

The second is that there will be a price to be paid for this over the longer term. As the economy does pick up, so too will savings, which will make up for some of the depletion seen during this crisis. However, not all of that diminishment will be covered by increased savings down the road, and that shortfall will have to be made up somehow.

How or when that price will be paid remains to be seen.