Many sole proprietors and small businesses operators were forced to tap into their retirement and 401(k) savings during the Great Recession in recent years. But investments back into those plans have been growing and are higher than they were five years ago, according to a new survey.
A ShareBuilder 401(k) – a subsidiary of Capital One – survey says nearly a quarter of small businesses now offer a 401(k) plan (compared to 10% in 2008). The majority of small business owners (58%) say their current retirement savings is higher than it was five years ago.
“Though the Great Recession had a negative impact on many Americans’ retirement plans, it appears it was also a wake-up call when it comes to planning for the long-term,” says ShareBuilder 401(k) President Stuart Robertson. “A record percentage of small businesses are reporting ownership of a retirement plan—a sign that more small business owners are prioritizing their own and their employees’ need to save for the future.”
The nationwide survey of small and medium-size business owners shows an important shift in sentiment and behaviors related to 401(k) planning and investing when compared to a similar survey conducted in 2008. Sixty-five percent of those respondents now feel confident they are saving enough for retirement, compared to 44% five years ago; 82% of all small business owners view 401(k)s as an effective approach to saving for retirement; of the 28% of businesses with a 401(k) plan that either stopped offering a match or lowered their match over the past five years, 56% have since reinstated it; and 58% of small business owners describe their current retirement savings as higher than it was five years ago.
The survey also shows that employers have changed their view regarding their obligation to offer retirement plans to employees, with 89% of small business owners with more than one employee that offer a 401(k) plan reporting it is an important factor for attracting and retaining the best talent. Also, 50% of those who offer a 401(k) plan believe offering a plan is their responsibility as a business owner.
“We still have a long way to go,” says Robertson, “but we are pleased to see a significantly higher number of businesses offering plans and that many others with plans are reinstating matching contributions.”
Joel Kranc is Director of Kranc Communications, focusing on business communications, content delivery and marketing strategies. He has written and worked in the retirement and institutional investment space for 17 years covering North American markets, large institutional pensions and the adviser community.
