Cognitive dissonance? Doublethink? A new survey on retirement preparedness finds that small business owners in the U.S. hold two views that don’t coincide with each other.
The Nationwide study, conducted by Harris Poll, found that 84 percent of small business owners believe American workers are facing a retirement readiness crisis.
However, 60 percent of SBOs believe that their own employees are on track to retire.
To top it off, nearly two-thirds (63 percent) of small business owners say it’s important for a business owner to provide retirement benefits. But just a third (34 percent) of small business owners actually offer these benefits to their employees.
Considering that, according to the U.S. Small Business Administration, small businesses make up 99.7 percent of all employers, employ nearly half of all private-sector workers (48.5 percent) and create 63 percent of the net new private-sector jobs in the country, such a dichotomy may not bode well for workers in search of a retirement plan.
But there’s some good news on the horizon: the Patient Protection and Affordable Care Act.
Odd as it may seem, PPACA appears to be pushing SBOs along the path to providing better retirement benefits—or providing them in the first place.
Eighteen percent of SBOs say that PPACA has cut their companies’ health care costs, and 25 percent say it’s made the health care benefits they provide to their employees less attractive to their workers.
And many SBOs, as a result, are turning to retirement benefits as a way to attract and retain employees, while other SBOs are finding that the money they don’t have to spend on health care benefits as a result of those lower costs frees up cash to contribute to employee retirement plans.
The ACA isn’t the only driver of SBOs’ optimism—and it is an optimistic outlook, despite their concerns over employee retirement preparedness.
Of the SBOs who offer retirement benefits, including 401(k) plans, to their employees, 67 percent say they plan to increase their company contribution to their employees’ 401(k) plans.
Of the SBOs who do not currently offer retirement benefits, 30 percent say they plan to offer these benefits in the future. If that happens, then more than half (54 percent) of SBOs will offer their employees retirement benefits.
Half of SBOs who plan to start offering retirement benefits say they will do so because they expect sales or revenue to increase in the next 12 to 24 months (50 percent), and 32 percent believe the U.S. economy will improve during the same time period.
SBOs who already offer 401(k) plans and say they will increase contributions are even more optimistic: 56 percent expect company sales or revenue to increase in the next 12–24 months, and 53 percent believe the U.S. economy will improve in that same period.
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