Majority of Micro-Business Owners and Employees Unprepared for Retirement
WASHINGTON, DC, May 16, 2007 -- The National Association for the Self-Employed (NASE) today released the results of a national survey showing that a large majority of owners and employees of America's micro-businesses do not have access to retirement plans and are financially unprepared for retirement. More than 3,000 owners of companies with 10 or fewer employees participated in the survey.
The survey found that an overwhelming percentage of the nation's micro-businesses -- 80% -- do not offer retirement plans of any type for either owners or employees. The greatest barrier, reported by 62 percent of respondents, is the cost of administering and contributing to a retirement plan. More than one-third of micro-business owners acknowledged they were not saving for retirement at all.
"These findings show us that this segment of America's business community -- which represents about 20 million businesses -- is contributing mightily to the economy, but not to the future of its own people," said Kristie Darien, Legislative Director for the NASE. "Micro-business owners and the self-employed face so many challenges, including soaring health care costs, and as a result retirement planning is overshadowed by those more immediate needs."
Of the respondents who do provide a retirement savings plan, more than half shoulder the administrative duties themselves. This arrangement places the responsibility of choosing and administering the plan on the business owner, who often is working long hours to maintain and grow the business.
The survey also found that the gap between what many business owners say they will need for retirement and what they actually have saved is considerable -- nearly 13 percent have no savings at all, and 26 percent have less than $50,000 saved. However, nearly 29 percent believe they will need at least $1 million in savings before they can retire.
"This gap is striking," said Darien, "it shows how retirement often takes a back seat to other employee benefits such as health care and incremental wage increases, often at the risk of the financial security of the business owner who has invested so much time and energy in nurturing the enterprise."
Chances are your retirement income will come from several different sources, including Social Security and savings in retirement plans. However, over three-quarters of micro-business owners are relying on the federal government as their primary source for financing retirement. "Social Security is the most frequently mentioned retirement income source, but it's unlikely to pay all of your retirement living expenses, even if the system remains solvent," Darien remarks.
Other retirement plans, such as an IRA, Simplified Employee Pension (SEP) and individual 401k, have become more popular with micro-business owners. The NASE advises its members to explore all retirement options before deciding which option is best for you.
Other Notable Findings:
- The average preferred retirement age is 62 years, but the expected age for having sufficient retirement assets is 67 years.
- One in five micro-business owners are unsure of the age at which they will have sufficient assets to retire.
- 5% of micro-businesses say they plan to offer a retirement plan in the next 12 months.
- Most of the plans (63.4%) cover ONLY the owner/operator, but nearly one in three owners exclude themselves from the retirement coverage, opting instead to provide employee-only coverage;
- A Simplified Employee Pension plan (SEP) is by far the most common form of plan offered by micro-businesses.
- While finding information on retirement options is easy, only 40% are familiar with and understand the options available.
- More than 90% of those with a retirement plan through their business are presently saving for their own retirement, versus only 57% of those without a retirement savings plan through their business.
For complete survey results or to obtain a copy of the NASE survey report, please contact either Kristin Oberlander at 202-466-2100, koberlander@nase.org, or John Stauffer at 202-223-4933, jstauffer@stantoncomm.com.
About the NASE
The National Association for the Self-Employed (NASE) is the nation's leading resource for the self-employed and micro-businesses, bringing a broad range of benefits to help entrepreneurs succeed and to drive the continued growth of this vital segment of the American economy. The NASE is a 501(c) (6) non-profit organization and provides big-business advantages to hundreds of thousands of micro-businesses across the United States. For more information, visit the association's web site at www.nase.org.
###
Click here for more material dealing with current trends, opinion, news, legislative action, investments, marketing, sales, consulting, and legal issues on 401k plans.
This is a press release provided by the company or its representatives. 401khelpcenter.com, LLC is not the author of this release and is not associated or affiliated with any firm or organization mentioned unless otherwise noted. Use of any information obtained from this release is voluntary, and reliance on it should only be undertaken after an independent review of its accuracy, completeness, efficacy, and timeliness. Reference to any specific commercial product, process, or service by trade name, trademark, service mark, manufacturer, or otherwise does not constitute or imply endorsement, recommendation, or favoring by 401khelpcenter.com, LLC.
