Survey Finds Small Business Owners Shaky When They Look Toward Retirement
- Paychex Small Business Survey found that small business owners generally lack confidence about their retirement readiness.
- 21 percent of respondents said they were "not at all confident" that they'll be financially prepared to retire between ages 61 and 65.
- Most respondents said that simply being able to save more would bolster their confidence.
- A company-sponsored retirement savings plan can be a win-win for owners and employees.
Survey finds the majority of small business owners are uncertain about retirement readiness
Are you well-prepared for retirement? Many small business owners feel uneasy when they think about the subject. Data from a recent Paychex Small Business Survey found that leaders of small firms generally lack confidence when it comes to their retirement readiness.
According to the survey, 30 percent of respondents indicated they felt "somewhat confident" that they'll be financially prepared to stop working sometime between the ages of 61 and 65, and 21 percent of respondents said they were "not at all confident" that they'll be financially prepared to retire when they reach that average retirement age. Eighteen percent fell between "somewhat confident" and "not at all confident" on the survey's retirement readiness scale. When you add it all up, that means 69 percent of respondents declared zero to little financial preparedness for their golden years.
Only 20 percent of those polled said they felt “very confident” that they'll have the funds to retire comfortably. Eleven percent expressed a confidence level between "very" and "somewhat."
Greater savings would boost retirement confidence
What would promote a feeling of financial security as business owners age? Of those respondents who indicated that they aren’t confident about their retirement readiness, 68 percent said that simply being able to save more would bolster their confidence. Other respondents indicated a range of ways as to how they could gain fiscal assurance:
- 15 percent said that nothing would make them more confident about their retirement;
- 10 percent want assistance in converting lump-sum accounts to projected monthly income;
- 10 percent want more guidance on investments and appropriate savings rates;
- 8 percent would like better retirement tools to help them understand expenses such as healthcare costs in retirement; and
- 7 percent want something else.
Results reinforce the looming U.S. retirement crisis
The Paychex survey findings reinforce the notion that Americans – business owners and employees – aren't saving enough. A 2016 survey of 7,000 individuals by GOBankingRates found that 69 percent of Americans have less than $1,000 in savings. And earlier this year, the Employee Benefit Research Institute found that one-third of Americans wonder whether they'll be able to cover basic living costs when they retire.
Some small business owners may figure that they will sell their business as a way to fund their retirement, or not retire at all. In both scenarios, there’s no guarantee that these solutions will be feasible in the future. A backup plan in the form of retirement savings can be a more secure option.
A win-win solution
A retirement plan can help employees and employers alike. Business owners that offer a 401(k) and take advantage of the plan themselves can feel more confident as they and their staff prepare for their non-working years.
About the Paychex Small Business Survey
Data included in the Paychex Small Business Snapshot was taken from the results of the Paychex Small Business Survey, administered by Bredin, a third-party research firm specializing in small business. The survey was conducted online between August 18, 2017 and August 24, 2017 and polled 341 principals of U.S. companies with 500 employees or less.