Data & Research March 26, 2010

Small Businesses Still Struggle to Offer Retirement Plans

A study prepared for the U.S. Small Business Administration (SBA) found that nearly 72% of workers in small companies have no retirement plan available.
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Small Business Retirement Plan Availability and Worker Participation, by Kathryn Kobe of Economic Consulting Services, found a major stumbling block keeping many small firms from offering a retirement program is the cost of setting up and running it. The study defines small businesses as those with fewer than 100 workers.

In general, the study found, 58 million workers—nearly half of the entire U.S. workforce—have no workplace retirement plan access. Another 20 million workers with plan access through work do not participate. 

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In a separate report, Saving for Retirement: A Look at Small Business Owners, Advocacy Economist Jules Lichtenstein offers further evidence for concern that business owners are not saving enough for retirement. This working paper showed that 38.5% of owners of businesses with 10 or more employees participated in a 401(k)/Thrift plan, compared to only 16.1% of business owners with fewer than 10 employees. These microbusiness owners represent 91% of the owners in the sample.

“Retirement plan coverage of both business owners and workers is low. These studies give us new information about the particular gaps in retirement plan savings,” said Acting Chief Counsel for Advocacy Susan M. Walthall. “We hope that, armed with this information, policymakers and small-business owners can take steps to close the gaps and ensure that workers are able to plan and save adequately for their retirement.”

The Kobe report is available here. The Lichtenstein document is available here.

Both studies use nationally representative data from the Census Bureau’s Survey of Income and Program Participation. 

Data & Research March 26, 2010

Survey Finds Fewer Americans Saved for Retirement Last Year

Fewer Americans are saving for retirement and many still aren’t saving at all, according to a survey commissioned by online investing firm Scottrade.
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The survey found fear and anxiety about retirement has subsided, though 51% of Americans age 18 and older are still concerned about having enough money to retire (compared to 56% in 2009). However, 40% of Americans are not actively planning for retirement (up from 35% in 2009) and representing a four-year high, according to the Scottrade survey.

Forty-one percent of Americans have saved $25,000 or less for retirement, and the same percentage saved nothing at all in 2009, up from 33% who said they saved nothing in 2008. One-third of respondents admitted that they planned to save nothing in 2010.

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While the survey suggests many Americans aren’t saving, those with retirement savings held steady through market turmoil. Most Americans (78%) reported keeping their retirement savings invested in the market. Of the 22% of investors who did get out of the market, more than half of them plan to move some or all of the amount back, according to the survey.

More respondents (66%) reported that the value of their retirement accounts stayed the same or increased in 2009. Of those who saw declines, nearly two-thirds (62%) expect they will recover within five years, and 43% trust that their accounts will rebound with the market and are not planning to save more to rebuild their nest eggs.

The 2010 American Retirement Survey commissioned by Scottrade polled 1,000 Americans 18 years of age or older using Synovate’s national online omnibus survey, eNation, in late January.

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