Business Owners’ Optimism May Lead to Growth in Retirement Benefits
A positive economic outlook and anticipated sales growth have small business owners considering increases in contributions to their retirement plans, according to the results of an annual survey.
Nationwide’s third annual survey of more than 1,000 small business owners finds that 50% of owners who offer a 401(k) plan intend to increase retirement plan contributions, with 55% of them citing rising sales or revenue as the reason.
In addition, a sizable percentage of owners (36%) who do not currently offer a plan say they plan to start one in the near future because they expect sales revenue to increase in the next 12 to 24 months. Nearly a third (30%) of business owners say they plan to introduce retirement benefits as a result of continued economic improvement.
Millennials Take Action
In what might be somewhat of a surprise, the survey results also show that Millennial business owners are more likely to take action when it comes to adding retirement benefits for their employees.
Among business owners who currently offer retirement benefits, 85% of Millennials plan to increase contributions to their employees’ 401(k) plans, compared to 31% of Boomers and 49% of Gen X business owners, the results show. Moreover, 70% of Millennials plan to offer retirement benefits to their employees in the future.
“America’s workers rely on employer-sponsored retirement plans as their primary way to save for retirement. Millennial business owners understand this and recognize the value and importance in offering retirement benefits to their employees,” explains John Carter, president of retirement plans at Nationwide. “Plus, the changing health care marketplace has made it more important for employers to offer a more robust benefits package.”
The findings further show that small business owners at every age cited the importance and urgency of offering a retirement plan. Only 39% of business owners believe their employees are on track to retire and nearly three out of four (72%) think the U.S. is facing a retirement readiness crisis. More than half of these business owner respondents feel a retirement plan is an essential benefit, as an increasing number of Baby Boomers reach retirement age and prepare to leave the workforce.
The Affordable Care Act is also driving greater interest in retirement plan benefits. The survey found that 32% of business owners said they increased retirement plan contributions because they believed the retirement benefits they offered were “even more important now for attracting and retaining talent.”
Nationwide commissioned the online survey conducted by Edelman Intelligence between May 16-24, 2017, among a sample of 1,069 U.S. small business owners, defined as being 18 years or older, having between 1-299 employees, and self-reported being a sole or partial owner of their business.