Home SBA Finds Entrepreneurs Aren’t Saving for Retirement

SBA Finds Entrepreneurs Aren’t Saving for Retirement

While creating a profitable company may provide for a comfortable retirement, that’s no way to plan. And many entrepreneurs, perhaps believing their businesses will be their retirement, don’t plan sufficiently for their retirement. That’s the finding of two reports recently released by the Small Business Administration.

Saving for Retirement: A Look at Small Business Owners, written by SBA economist Jules Lichtenstein, finds that entrepreneurs’ retirement account ownership, contribution, and participation rates are low. Among his key findings:

  • Just 36% of business owners have individual retirement accounts (IRAs), and only one-third of business owners with an IRA contributed to one during the 2005 tax year. Only 18% of business owners have a 401(k) plan, and less than 2% have a Keogh plan.
  • Business owners are more likely to own tax-deferred individually based IRAs if they are older, female, white, non-Hispanic, citizens, better educated, and married.
  • Entrepreneurs who own homes and have other retirement accounts are most likely to have IRA, Keogh or 401(k) participation.

A second SBA study, Small Business Retirement Plan Availability and Worker Participation, surveyed the participation in retirement plans by employees of small businesses. Among the results:


  • Approximately 72% of employees working for small businesses (almost 41 million workers) do not have a company-sponsored retirement plan available where they work. This contrasts with those who work for businesses with over 100 employees. 78% of employees for large firms have retirement plans available at their work.

  • Of the employees at small businesses who do have company-sponsored retirement plans, 9% do not participate. Only 19.5 percent of workers in small private sector companies report participating in a retirement plan.

Lichtenstein suggests the findings in his study point to the need to develop ways to help owners of small businesses, especially home-based sole proprietorships and minority-run businesses, increase their retirement savings.

“There is a need to better coordinate employer-based retirement accounts with individual-based accounts like IRAs and make plans less complex and burdensome on business owners, especially for owners of micro-businesses.”

Are you saving for retirement? Do you even have a plan? Let us know in the comments.

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