NEW YORK (MainStreet) -- The personal savings rate – the index that measures how much Americans are tucking away for a rainy day – was relatively unchanged from October to November, but now a separate study from Nationwide Financial reports that small business owners are also concerned about the number of Americans unprepared for retirement.
The nationwide study shows that 75% of American small business owners say that workers are nowhere near ready to retire and that the numbers are at a “crisis level.” But the study reports that only 19% of small business owners offer their employees a self-funded retirement plan, like a 401(k).
Furthermore, only 11% of the business owners participating in the study say they would even add a new retirement plan for their workers during the next two years.
The economy plays an important role in those numbers, too. Small business owners say they want to help their employees save money, but the cost of opening and maintaining a retirement plan was deemed “too expensive.” Of the survey respondents, 69% said their business was “too small” to offer a retirement plan, and more than 50% said the price tag was too high.
Another factor was the prospect of matching financial contributions. American business owners are wary of them, and say they can’t afford to offer them for employees. But that could be a misplaced opinion, Nationwide says.
“Our survey found that nearly half (46%) of small business owners were not aware or were unsure that an employee self-funded retirement plan could be offered without having to match employee contributions,” said Anne Arvia, senior vice president of retirement plans for Nationwide Financial, in a statement. “The provisions in the Small Businesses Add Value for Employees (SAVE) Act before Congress will remove many of the barriers that have kept small businesses from offering their employees a retirement plan.”
In a word, the SAVE Act would encourage small business owners to band together to offer “multiple small employer plans” that financial professionals say are less expensive to manage than single employer retirement plans. The SAVE Act would make it easier for business owners to pool their financial resources, and help cut costs to manage such plans for employees.
Most financial services companies, including Nationwide, support the SAVE Act. It’s big money for Wall Street, and would likely help more small businesses offer retirement plans to their workers.
“There’s a retirement crisis looming and we need to work together to improve access to retirement plans for all Americans,” Arvia says.
In the meantime, Americans continue to struggle to save not just for a rainy day, but for their retirement – if they ever get one.