A strong majority of small business owners agree that lack of retirement security can hurt business and the economy, yet few small business owners offer a retirement plan, according to new research.
The Main Street Alliance and American Sustainable Business Council disclose this finding in a June 2013 report, “Small Business Owners’ Views on Retirement Security.” The report recaps findings from a telephone survey of 515 owners of small businesses (2 to 99 employees) nationwide, the poll conducted by Lake Research Partners.
Seven in ten (70 percent) of the survey respondents agree that a lack of retirement security undermine confidence and a willingness to spend among older Americans. And more than four in ten (64 percent) say that a lack of retirement security can be cause harm by forcing the current generation of workers to devote time and money to the financial support of their aging parents.
However, only one third (33 percent) of small business owners currently offer a retirement plan to employees. An additional 27 percent of SBOs say they’re interested in offering a plan.
“Unfortunately, only half of working-age (18 to 64) Americans participate in employer-sponsored retirement plans and only 8 percent have individual retirement accounts,” the report states in its introduction. “Even before the Great Recession in 2007, one-half of households with someone aged 55-64 had financial assets of $72,400 or less. That wouldn’t cover two years of retirement at the median annual working income that year of $54,600.”
The survey notes also that the percentage of SBOs offering a retirement plan declines in tandem with the company’s size. Firms with 20 or more employees are as likely as not to offer a retirement plan. Among those companies with 10-19 employees, 5-9 employees and 2-4 employees, 31 percent, 35 and 23 percent, respectively, provide a retirement plan.
Overwhelmingly, small business owners perceive cost as the biggest barrier to availing employees of a retirement plan: More than 6 in 10 (63 percent) cite cost as an obstacle. Few of the respondents flag legal and regulatory requirements (8 percent), concern about liability (8 percent) or complexity (6 percent).