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Retirement a Growing Priority for Small Business Owners

401(k) Plans, Matching Programs and Confidence Up Sharply Compared to 2008, According to National Survey by ShareBuilder 401k

July 23, 2013:
SEATTLE, Wa. — After weathering a recession that forced many to curb, cut and sometimes even tap into employee retirement savings plans, small business owners are offering and investing in 401(k) plans at rates considerably higher than five years ago.

In fact, according to a nationwide survey of small business owners by ShareBuilder 401k, nearly a quarter (24 percent) of small businesses now offer a 401(k) plan (compared to 10 percent in 2008), with the majority of small business owners (58 percent) saying their current retirement savings is higher than it was five years ago.

"Though the Great Recession had a negative impact on many Americans' retirement plans, it appears it was also a wake-up call when it comes to planning for the long-term," said ShareBuilder 401k President Stuart Robertson. "A record percentage of small businesses are reporting ownership of a retirement plan—a sign that more small business owners are prioritizing their own and their employees' need to save for the future."

The survey conducted during June 2013 revealed a significant shift in sentiment and behaviors related to 401(k) planning and investing when compared to a similar survey conducted in 2008, including: a sharp increase in small business owners offering a 401(k) plan—up from 10 percent in 2008 to 24 percent in 2013; 65 percent now feel confident they're saving enough for retirement, compared to 44 percent five years ago; 82 percent of all small business owners view 401(k)s as an effective approach to saving for retirement; of the 28 percent of businesses with a 401(k) plan that either stopped offering a match or lowered their match over the past five years, 56 percent have since reinstated it; and 58 percent of small business owners describe their current retirement savings as higher than it was five years ago.

The survey also revealed a shift in how small business owners view their obligation and need to offer retirement plans to employees, with 89 percent of small business owners with more than one employee that offer a 401(k) plan reporting it is an important factor for attracting and retaining the best talent. Additionally, 50 percent of those who offer a 401(k) plan believe offering a plan is their responsibility as a business owner.

"Small business is a key driver of our economy and job creation, and therefore it is crucial small business owners prioritize retirement planning for their employees—so more Americans can plan for a better future," said Robertson. "We still have a long way to go, but we are pleased to see a significantly higher number of businesses offering plans and that many others with plans are reinstating matching contributions."

The survey also found the two biggest reasons more small businesses are not offering a plan to be "not enough employees to make it worthwhile" (reported by 48 percent of respondents) and "can't afford to offer a company match" (at 23 percent).

"As more small businesses gain awareness that matching isn't a requirement and that any size business can have an affordable plan—even the self-employed—we expect the uptrend in offering a 401(k) to continue," said Robertson.

The comparative data used in the report comes from a similar survey of small business owners commissioned by ShareBuilder 401k called the 2008 Small Business Annual Retirement Trends report. Both this year's survey and the 2008 research surveyed 500 small businesses from across the United States with 50 or fewer employees.

Since 2005, ShareBuilder 401k has made all of its pricing readily available on its website, and the company began advocating for an industry benchmark of less than one percent for "all-in" employee-paid fees in 2007. ShareBuilder 401k is not a fund provider and takes an unbiased approach in the evaluation and selection of funds with a focus on low-expense, index based investments from the leading ETF providers such as Vanguard, iShares, SPDR and PowerShares to create a powerful line-up from which participants can choose, including five model portfolios. ShareBuilder 401k also serves as the investment manager role (ERISA 3(38) fiduciary) for employers, which helps maximize employer protections and saves employers the time of regularly reviewing investment options that are made available to employees.

About ShareBuilder 401k by Capital One
ShareBuilder 401k, a subsidiary of Capital One Financial Corporation, provides easy-to-use, cost-efficient 401(k) retirement plans for small and mid-size businesses serving clients that include the self-employed to those with over 2,000 employees. ShareBuilder 401k is a leader in providing 100 percent index-based ETF investments (plus a money market) in 401(k) plans. ShareBuilder 401k offers a suite of on-demand services that make it simple for employers and employees to open and manage their retirement plans online at ShareBuilder 401k plans provide market-efficient investments and model portfolios that make it easy for employees to select smart investments to help them get on track to meet their retirement goals. Customers can also take advantage of ShareBuilder 401k consultants, customer success managers, and customer care agents to receive assistance in choosing and managing their retirement benefits.

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Alison Cahill

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