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Two new studies examine small biz retirement plans

Workers in small firms with fewer than 100 employees are much less likely than larger businesses to have a retirement plan available to them, according to a study released today by the Office of Advocacy of the Small Business Administration (SBA).

A related working paper analyzes the retirement savings behavior of business owners, and finds that retirement account ownership, contribution, and participation rates for all business owners are low; this is especially true of micro-business owners. Both studies use nationally representative data from the Census Bureau’s Survey of Income and Program Participation. 

“Retirement plan coverage of both business owners and workers is low. These studies give us new information about the particular gaps in retirement plan savings,” said Acting Chief Counsel for Advocacy Susan M. Walthall. “We hope that, armed with this information, policymakers and small business owners can take steps to close the gaps and ensure that workers are able to plan and save adequately for their retirement.”

“Small Business Retirement Plan Availability and Worker Participation” ( , by Kathryn Kobe of Economic Consulting Services, finds that the number of companies offering traditional defined benefit pension plans has been declining steadily, and almost half of the workforce—about 58 million workers— do not have access to any type of retirement plan through their place of work.

Moreover, another 20 million workers do not participate in the plans their employers offer. Nearly 72% of workers in small companies have no retirement plan available. One reason smaller firms may not offer the benefit is the cost of setting up and running a retirement plan.

In “Saving for Retirement: A Look at Small Business Owners” (, Advocacy Economist Jules Lichtenstein offers further evidence for concern that business owners are not saving enough for retirement. This working paper shows that 38.5% of owners of businesses with 10 or more employees participated in a 401(k)/Thrift plan, compared with only 16.1% of business owners with fewer than 10 employees. These microbusiness owners represent 91% of the owners in the sample. The most significant factors affecting participation in individual retirement accounts (IRAs) and 401(k)/Thrift plans are homeownership and other retirement plan savings.

The Office of Advocacy, the “small business watchdog” of the federal government, examines the role and status of small business in the economy and independently represents the views of small businesses to federal agencies, Congress, and the President. It is the source for small business statistics presented in user-friendly formats, and it funds research into small business issues. 

For more information and a complete copy of the reports, visit the Office of Advocacy website at

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