Think small to go big—at least with 401(k)s. That appears to be the lesson from the August 2016 SurePayroll Small Business Scorecard.
Market penetration for small business 401(k)s hovers below one-third, with just 28 percent offering the popular retirement savings and income vehicle.
Just 6 percent are planning to add one soon, according to the Scorecard. Add the two together and 34 percent of small business owners see a 401k as the primary way they’ll save for retirement.
In a nod to the ever-increasing importance of financial wellness and education, of those not offering the work-sponsored retirement plan, “42 percent said they don’t see the value in it.”Another 35 percent said the fees are too expensive and 23 percent said they don’t know how to manage it. Only 6 percent of those offering a 401k said they do it for the tax breaks.
Outside of a 401(k), business owners said named the following as their primary methods of saving for retirement:
- Earnings from business (25 percent)
- Roth or Traditional IRA (14 percent)
- Stocks, bonds and cash outside of a retirement account (9 percent)
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
