Business Owners Can Balance AI, Employees and Retirement

BIM Manager And Team Review 3D City Model Using Laptop Software. An older business owner looks at a monitor with a younger worker in a modern office. — (Image credit: Getty Images)

It's not a secret that AI adoption is becoming increasingly commonplace in Corporate America. But it's not just giant corporations that are using it. A 2026 Intuit QuickBooks survey (PDF) found that 77% of small and midsize businesses now use AI regularly, up from 48% two years ago.

If you own a small business, you may be looking to increasingly lean on AI tools to improve productivity and save on costs. In fact, the same QuickBooks survey found that 78% of US respondents reported productivity gains from AI use, and 42% reported revenue gains. For large companies, a PwC study found that investing at least 1.6% of revenue in AI tools resulted in 9.5% growth (as measured in EBITDA). Moreover, AI can help create documented workflows and efficiencies that can give you a higher exit price when you're ready to sell up and retire.

But what if those tools are making some of your employees' tasks obsolete?

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On a scale of 1-5, which of the following describes your current views of AI's impact on your productivity? (Asked of U.S. small businesses.)

The bar graph shows responses from 2024 through April 2026, indicating growing profitability from AI use by small businesses. — 79% of respondents said AI was "very helpful" or "somewhat helpful" to productivity in 2026.

Letting employees go is a gut-wrenching decision for any small business owner. But when your personal finances are at stake, sometimes you may need to make hard choices.

If you're a business owner who's looking to power through for a few more years and sell your business to fund your retirement, you need your company to be profitable and competitive. That means shedding unnecessary costs and using technology to your advantage. Here's how to reconcile the financial side of the equation with the moral and emotional side.

Look at AI as a time-saver more than anything else

AI may be able to take over some of the tasks your employees handle now. But that doesn't mean those employees suddenly lose all of their value.

Paul Carlson, CPA and managing partner at Law Firm Velocity, a company that provides virtual CFO and financial services to law firms across America, says, "You don’t want to make decisions out of guilt and keep carrying payroll that no longer makes financial sense for the business."

He explains, however, that just because AI is saving you time doesn't mean your employees with years of business knowledge and experience are suddenly obsolete.

"What helps you make a more mindful decision is to first see whether the freed-up time can actually improve some other aspect of your business," Carlson says. Those aspects could be things AI can't handle, such as strategic decisions that require more human intervention and judgment.

Carlson says that discovering the time-saving power of AI could position you to make better use of your employees' skills rather than letting them go.

"In most small businesses, your employees will most certainly end up wearing multiple hats over time. So even if AI suddenly saves someone five or six hours a week, that doesn’t necessitate that the employee is no longer able to play a part, especially given the kind of context they have about what works for your business and what doesn't," he explains.

Carlson also points out that if you're running a lean operation, you may not be tracking the various ways your employees are contributing. Before letting them go, it pays to take a closer look.

"Some employees are integral when it comes to catching mistakes," he says. "Others are great at answering questions nobody else has time to deal with, or take great pride when following up with clients. All those elements may have had a big role to play in your company’s reputation and how satisfied clients are with you."

E.J. Simonsen, Founder & Finance Advisor at EIDLexit, agrees. His best advice? "Replace tasks, not people."

"Routine administrative labor can be handled by AI," he says. "Use the savings of time to transition employees into higher value endeavors such as customer service, business development, process improvement, or client retention. Those domains are often higher impact to revenue and significantly harder to automate. This enables you to be competitive while still investing in your team."

Proper AI adoption could make your business more valuable

If retirement is on the horizon and you're within 10 years of an exit plan, you need a sound strategy that enables your business to maintain its edge without blowing money on unnecessary costs.

Kevin Williams, founder of Ascend AI, advises C-suite executives and small business owners on AI adoption, governance, and workforce readiness. And he says that given your timeline, you have a prime opportunity to use AI in a way that could make your business more valuable without shedding headcount.

"Companies where AI is used strategically and where the team knows how to leverage it fetch a higher price," he insists. "Such companies are viewed as mature, where things work efficiently. Buyers pay a premium for that."

Williams also says, "Using AI to increase productivity of each employee by 20-30% and thus build a lean and competent organization that is highly valued by a potential buyer [several] years down the road — that's how to retire successfully."

Simonsen says that ultimately, a business that runs well and has good and skilled people will generally be worth more. On the flip side, if AI adoption makes a business feel cold, automated, or robotic, client retention might drop.

"Balancing compassion and business decisions is part of establishing a better company," he says.

Of course, successfully implementing AI requires an investment. And training employees to use it could take time away from daily operations while your staff gets up to speed. But if you're willing to sacrifice some short-term gains, you may find that AI boosts your company's profitability in the long run and puts you in a stronger position once you're ready to sell.

It's also important to be transparent with your employees about how you're looking to integrate AI. Nothing hurts employee morale like the fear of being replaced by a machine. Emphasize that you're adopting AI tools to make their jobs easier, not to replace them.

"Guilt doesn't arise from using AI technology. It comes from the choice you made [regarding] AI use." — Kevin Williams

Take guilt out of the equation

It's natural to feel bad about the idea of letting hard-working employees go. But if you use AI the right way, you may not have to.

"If you feel guilty about AI, then this is because you miss the point entirely," Williams says. "Guilt doesn't arise from using AI technology. It comes from the choice you made [regarding] AI use."

Of course, you may come to the realization that one or two roles at your company are, in fact, obsolete in the wake of AI, and that you can't justify the cost of labor. In that case, it's important to do your best to ethically offboard those employees.

If you can afford to be generous with severance, it could ease the financial blow for those impacted while helping you sleep better at night. Be empathetic but pragmatic.

But all told, Williams says, using AI to empower your employees rather than replace them could set you up for a lot more financial success. And that way, you can forge forward with your personal financial plans without the remorse that might come with destroying other people's livelihoods.

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Maurie Backman is a freelance contributor to Kiplinger. She has over a decade of experience writing about financial topics, including retirement, investing, Social Security, and real estate. She has written for USA Today, U.S. News & World Report, and Bankrate. She studied creative writing and finance at Binghamton University and merged the two disciplines to help empower consumers to make smart financial planning decisions.