As more and more Americans are reaching the age of retirement, there are many questions about their retirement plans and whether they can afford to retire. According to this year’s figures, 57% of households say they have less than $25,000 in savings and investments. 28% say they have less than $1,000. Furthermore, small business owner’s retirement plans for their employees are minimal if they exist at all. If you are a small business owner interested in starting a 401(k) plan for your employees, read the articles below to read more.
The Sorry State Of Small Business Retirement Plans
Workers of the small-business world: I’m worried about you. In particular, I’m worried about your retirement.
A bruising new study from the Transamerica Center for Retirement Studies tells a tale of two retirement systems in the U.S. workplace: one for employees at large companies and an inferior one for those at small firms.
If you work for a business with fewer than 100 employees, there’s a far greater burden on you for even the prospect of having a comfortable retirement.
The Burden on Small Business Employees
“Workers at small companies need to be even more savvy about their retirement benefits than those at large companies, given the lag of those benefits at small companies,” Catherine Collinson, president of the Transamerica Center and author of the report told me. “It’s incumbent on small-company workers to help bridge those gaps on their own.”
Three Myths Keeping Small Businesses From Starting A 401(k)
Small businesses employ nearly one-third of U.S. workers and are a major part of our nation’s economic engine. But an issue that continues to be discussed in Congress and state governments is how do we help more small businesses offer a retirement plan?
Ninety-nine percent of businesses with over 500 employees provide 401(k) plans or similar retirement benefits to their employees. The numbers for small businesses are much lower. In fact, our latest research on businesses with less than 50 employees shows that only about 24 percent offer a 401(k) plan. This means a large number of Americans are not likely to be as prepared financially for retirement as those who have access to a retirement plan.
And while there are many sound reasons for small businesses to start a retirement plan, there are also some myths and pockets of misinformation clouding the picture. Following are three of the most-commonly cited myths (along with the real facts) to be aware of.
How business owners view money, retirement
Benefits and Retirement:
• When it comes to health benefit plans, 47% of respondents currently offer some type of plan. Almost half (44%) offer employee health benefits, 20% offer flex health and benefit plans and 8% offer healthcare spending accounts.
• Only 11% currently offer an employee wellness program.
• Just 37% of companies that have a health benefits plan also offer a retirement savings plan.
• A majority (54%) of small business senior decision makers feel that the financial security of employees who retire from their company is a reflection on their company and on them personally.
• Of those owners without a plan, reducing employee turnover (28%) or attracting top talent (17%) are important motivators for implementing one.
