Survey: Small Businesses Can’t Afford to Offer Retirement Plans

A survey from ShareBuilder 401k shows 24% of small businesses with 1-50 employees offer 401(k) benefits to their employees. Photo credit: Shutterstock (Andrey_Popov).

Posted June 6, 2024

A survey by ShareBuilder 401k shows only a portion of small businesses offer 401(k) benefits to their employees.

ShareBuilder surveyed responses from 500 U.S. small business owners with one to 50 employees and found that only 24% offer 401(k) plans.

The survey also identified 55% of respondents said their business is too small to access a plan and 28% said the business could not afford a company match. Additionally, 22% of owners believe providing a 401(k) plan is too expensive.

ShareBuilder also uncovered some trends among its respondents as 23% save less than 1% of their income for retirement, 17% save between 1-9% and 25% do not save for their retirement. Nearly half of the respondents, 49%, are uncertain they will retire.

“Nearly half of all Americans work for small businesses, and 401(k)s have proven effective in helping employees build meaningful nest eggs for retirement,” said Stuart Robertson, CEO of ShareBuilder 401k. “The need to debunk these misconceptions about the access and affordability of 401(k) plans for small businesses is essential to help a large swath of Americans to have the option to retire with financial security.”

ShareBuilder cited the Secure Act 2.0 as a remedy for the low engagement in 401(k) plans. The Secure Act 2.0 encourages employees to contribute to their employers’ 401(k) plans by providing tax incentives for small businesses. However, many small business owners are not aware of the legislation as only 18% of small business owners know of the Secure Act 2.0 tax credits, according to the survey.

“As a country and industry, we must spread awareness about the Secure Act 2.0 tax credits and the tailored solutions available to any size business, including the self-employed, to help ensure a more secure financial future for all and avoid a retirement crisis many indicate lies ahead,” Robertson said.