A sunny outlook has business owners singing, at least about retirement benefits. The bosses claim a positive economic outlook and anticipated sales growth have many reconsidering their retirement benefits.
In fact, 50 percent of business owners who offer a 401k plan intend to increase retirement plan contributions, with 55 percent citing rising sales or revenue as the reason, according to a new Nationwide study.
Meanwhile, 36 percent of business owners who currently don’t offer a plan but intend to offer one soon say it’s because they expect sales revenue to increase in the next 12 to 24 months and will start offering retirement benefits as a result.
Additionally, nearly a third (30 percent) of business owners plan to introduce retirement benefits because of continued economic improvement.
“With tight labor markets as a result of the continued economic expansion, it’s more important than ever for employers to offer benefits like retirement plans that can differentiate their business as a destination for top talent and a workplace where employees want to stay and grow,” John Carter, president of retirement plans at Nationwide, said in a statement.
Millennials More Likely to Act
When it comes to planning for the future, Millennials often get a reputation for not doing enough. But among business owners who currently offer retirement benefits, 85 percent of Millennials plan to increase contributions to their employees’ 401(k) plans, compared to 31 percent of Boomers and 49 percent of Gen X business owners.
Additionally, 70 percent of Millennials plan to make retirement benefits available for their employees in the future.
Millennial business owners are also more likely to feel they should provide retirement benefits, with 70 percent of them stating agreement versus 47 percent for all owners.
“America’s workers rely on employer-sponsored retirement plans as their primary way to save for retirement,” Carter added. “Millennial business owners understand this and recognize the value and importance in offering retirement benefits to their employees. Plus, the changing health care marketplace has made it more important for employers to offer a more robust benefits package.”
Need and Importance Noted
Business owners at every age noted the importance of offering a retirement plan and the urgency of doing so.
Only 39 percent of owners believe their employees are on track to retire, and nearly three out of four (72 percent) business owners surveyed think the U.S. is facing a retirement readiness crisis.
With more Americans preparing to leave the workforce as an increasing number of Baby Boomers reach retirement, more than half of owners feel a retirement plan is an essential benefit.
The Affordable Care Act (ACA) is also driving greater interest in retirement plan benefits. Nationwide’s survey found that 32 percent say they increased retirement plan contributions because they felt the retirement benefits they offered were even more important now for attracting and retaining talent.
“While it can feel overwhelming to revisit retirement plan benefits in the midst of the other challenges associated with running a business, advisors are a resource for business owners and can help them select or enhance retirement benefits, while streamlining the amount of time spent on selecting services and plan administration,” Carter concluded.