The SBA Office of Advocacy released two reports today related to retirement planing in small businesses.
The first report,written by SBA economist Jules Lichtenstein, looks at planning by small business owners for their own retirement.
The author's results offer substantial evidence for concern that business owners are not saving enough and that their retirement savings may be inadequate. Some of the findings:
- Individual-based (outside work) retirement account ownership, contribution activity and employment-based participation (at work) among business owners are low. IRA ownership rate for business owners is only about 36 percent, and only one-third of business owners with an IRA contributed for the 2005 tax year. Less than 2 percent of business owners own a Keogh plan. Only about 18 percent of business owners participated in a 401(k)/Thrift plan.
- Business owners are more likely to own or contribute to retirement accounts if they are older, non-minority, educated, have more established business(es) (e.g., larger, older, profitable), and own more than one business.
- Having a micro-business with fewer than 10 employees reduces the probability of an owner having a 401(k)/Thrift plan from 17.4 percent to 10 percent, all else equal.
Given the increasing strains and questionable viability of social security going forward, both of these studies should cause concern given that 50% of Americans now work for small businesses.
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