Most entrepreneurs don’t think their businesses are big enough for 401(k)s. Others think it’d be too expensive to implement retirement plans. More than one-third just plan to cash in by selling their company at a later date.
A variety of factors deter entrepreneurs from saving, but there’s a major discrepancy between the percentage of small-business owners who say they’re confident they’re putting away enough for retirement and the percentage who aren’t saving at all. Sixty-two percent say they feel confident that they’re saving enough, but a full 25 percent of small-business owners report they aren’t saving a dime.
On top of that, a whopping 47 percent of small-business owners report that they are saving less than 10 percent of their income. These alarming stats emerged from the Spark 401k Small Business Retirement Planning Index, released today by Capital One Advisors 401k Services.
Not only is the amount entrepreneurs are saving low, it’s getting lower. This year, 47 percent of entrepreneurs have a nest egg of more than $100,000, compared to 59 percent in 2013.
Still, the majority of small-business owners who feel secure in their level of saving tracks with the general population: The 2017 Retirement Confidence Survey found that 60 percent of American workers feel confident that they will be able to retire comfortably. Yet that’s down from 64 percent last year. Meanwhile, three in 10 workers say they find preparing for retirement mentally or emotionally stressful.
Those who have retirement plans unsurprisingly report feeling more financially secure for the future. Eighty-six percent of small-business owners who have a 401(k) say they feel confident they’re saving enough, compared with 62 percent overall, according to Spark 401k. And when it comes to workers, two-thirds of those who do not have a retirement plan of any kind report having less than $1,000 in savings and investments, compared with just 9 percent of those with a retirement plan, this year’s Retirement Confidence Survey found.