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Two-Thirds of Small Businesses Do Not Offer Retirement Benefits: Fidelity

Practice Management


While they may not realize it, there is an opportunity for small employers to offer competitive retirement benefits, as only a third (34%) of small employers currently offering retirement savings to employees today, according to Fidelity Investment’s 2023 Small Business Retirement Index.

Of those that do not offer a plan, nearly half (48%) say they do not believe they can afford one. Other small business owners feel they are too busy running their company to focus on it (22%) and an equal amount (21%) say they don’t know how to start the process of offering a retirement plan. And with nearly half of all U.S. employees working for a small business, this could leave many individuals unprepared for the future, the firm notes. 

“While offering a retirement benefit can feel like a potentially expensive and overwhelming task, there are many retirement saving solutions available for companies of all sizes,” says Andrew Schreiner, Senior Vice President, Small Business Retirement. “In addition to helping their employees establish a secure financial future, a retirement benefit also can have an enormous impact in attracting and retaining top talent.”

When asked by Fidelity what keeps them up at night as small business owners, 54% of respondents said they are most worried about inflation when it comes to running their business, and 37% are worried about employee attraction, retention and well-being. 

What’s more, in a tight labor market, 73% of small business owners believe they can’t compete with larger companies on compensation and benefits. Even when it comes to their own retirement, 83% of small business owners know they should be saving more for their futures, but nearly 6 in 10 (59%) are not sure how to maximize their retirement savings.

Microbusiness Concerns 

Those who are self-employed or who are running microbusinesses (with less than 10 employees) are most likely to say they cannot afford to offer a retirement savings plan to employees (71%). This helps explain why 55% of these employers do not currently offer a retirement plan and do not plan to do so, Fidelity notes.  

Like the broader findings, the vast majority (82%) of these microbusiness owners feel they can’t compete with larger companies on benefit offerings.  

Similarly, when it comes to their own retirement savings, 85% of self-employed/microbusiness owners know they should be saving more for retirement, 75% aren’t sure if they are saving enough, and 42% worry they will never be able to retire. When asked what’s preventing them from saving more, the most common response is that they only earn enough to cover their expenses (42%).

“Self-employed individuals are carrying the entire weight of their business’ success on their shoulders,” says Roger Morrisette, Vice President of Small Business Retirement Products. “Understandably, many feel they do not have the time or resources to administer a retirement savings plan. The good news is there are many options available. Whether you have one employee or 100, there are affordable, flexible solutions for businesses of all sizes.”

This includes self-employed 401(k)s, SEP IRAs, SIMPLE IRAs, and Pooled Employer Plans, Fidelity further emphasizes. 

The findings are based on a Small Business CARAVAN survey among a sample of 504 adults who are owners or partners of U.S. businesses with 1-99 employees. The survey was conducted March 14-21, 2023 by Big Village, not affiliated with Fidelity Investments.