Home / News / Economy / Survey: Small businesses see retirement crisis

Survey: Small businesses see retirement crisis

A recent survey of U.S. small-business owners reveals contradictory views on the retirement preparedness of the country’s workers – yet offers an optimistic economic outlook for the next two years.
An overwhelming majority of owners believes the country is in the midst of a retirement crisis. The online study, commissioned by Nationwide, the insurance and financial services firm, and conducted by Harris Poll, found that 84 percent of small-business owners believe American workers are facing a retirement readiness crisis.
However, 60 percent of owners believe their own employees are on track to retire.
Nearly two-thirds (63 percent) of small-business owners say it’s important for a business owner to provide retirement benefits, but, in reality, only a third (34 percent) offer those benefits to their employees.
According to the U.S. Small Business Administration, small businesses make up 99.7 percent of all employers, employ nearly 50 percent of all private-sector workers (48.5 percent) and create 63 percent of the net new private-sector jobs in the country.
“Small businesses are the lifeblood of our economy and keep our communities moving forward,” said Joe Frustaglio, vice president and leader of private sector retirement plan sales at Nationwide. “All workers deserve access to retirement savings options, and it is evident that we’ve reached a point in this country where people are starting to pay attention to the fact that a retirement savings problem exists.”
Help is on the way
Workers should have hope that their retirement-readiness outlook will improve. Of the small-business owners who offer retirement benefits, including 401(k) plans, to their employees, 67 percent say they plan to increase their company contribution to employees’ 401(k) plan.
Of the owners who don’t, 30 percent say they plan to offer the benefits in the future.
If that happens, then more than half (54 percent) of owners will offer their employees retirement benefits.
Half of owners who plan to start offering retirement benefits say they will because they expect sales or revenue to increase in the next 12 to 24 months (50 percent), and 32 percent believe the U.S. economy will improve in the same timeframe.
Small-business owners who currently offer 401(k) plans and say they will increase contributions have an even more positive outlook: 56 percent expect company sales or revenue to increase in the next 12 to 24 months, and 53 percent believe the U.S. economy will improve in that same period.
“In spite of recent market volatility, economic indicators are pointing toward continued growth for the U.S. economy in 2016,” said David Berson, senior vice president and chief economist at Nationwide. “Small business owners should see Main Street benefit from the economic stability that we’ve enjoyed during the last few years.”
Affordable Care Act: making its impact
The Affordable Care Act is indirectly affecting workers’ retirement preparedness, experts say.
Of small business owners who plan to offer retirement benefits in the future, 25 percent say the ACA has made health benefits less attractive to employees, and 18 percent say the ACA has decreased company healthcare costs.
Of owners who offer retirement benefits and plan to increase company contributions to their employees’ 401(k) plans, 33 percent say the ACA has made healthcare benefits less attractive to employees, and 30 percent say the ACA has decreased the company’s healthcare costs.
“Lower healthcare costs means small business owners have the option of contributing more to their employees’ retirement,” said Frustaglio.
As the ACA makes health care benefits less relevant to small business employees, business owners have to find a new way to recruit and retain employees, the experts say. There is mounting evidence that 401(k) plans are filling that role, they say.

Leave a Reply

Your email address will not be published. Required fields are marked *



%d bloggers like this: