Study Reveals Small Business Owners’ Growing Fears on Economy
63 Percent Feeling Very or Extremely Concerned About the Economy, See “Access to Cash” as Second Greatest Challenge They Face, 56 Percent Putting Away Less for Savings, 16 Percent Raiding Retirement Accounts for Cash
Bellevue, WA — At a time when many of the nation’s largest companies are struggling to survive, a growing number of small businesses are also feeling the stress that comes from making and saving money in a tough economy, according to the results of a new survey conducted by Harris Interactive for ING DIRECT’s ShareBuilder 401k.
The new survey, completed by more than 500 small business owners across the U.S., reveals that:
- 63 percent say are either very or extremely concerned about the future of the economy
- 57 percent see developing new business as their number-one challenge through the remainder of the year and “access to cash” ranked number-two at 18 percent
- 56 percent are now saving less money for personal and 53 percent are saving less for retirement savings compared to a year ago
- 40 percent see the current financial state of their business as worse than a year ago
“A lot of small businesses are struggling to cover their monthly expenses and still have something left to put into savings,” said Stuart Robertson, general manager of ShareBuilder 401k. “Before this down economy set-in, the number of small businesses making regular contributions to their savings plan was actually on the rise. Today we’re beginning to see a step backwards.”
For many small business owners, that step backwards has come in the form of smaller and/or less frequent contributions to their own 401(k)s with 11 percent also reducing or eliminating matches for their employees. For 16 percent, it has meant taking premature withdrawals or borrowing from their retirement accounts.
“Raiding your retirement should always be a last resort,” said Robertson. “But, given the tough access to cash and credit – a growing concern of 23 percent of survey respondents – some small business owners have made that difficult choice.”
In 2007, the number of small business owners with some sort of retirement plan was at 35 percent. In 2008, the number has dropped to 26 percent. Of the remaining 74 percent of businesses operating without a retirement plan, 45 percent say they are now less-likely to start a 401(k) plan compared to a year ago.
The report also found that nearly six out of 10 small business owners feel there are not enough incentives in place to help them start a 401(k). Many may not be aware that in addition to the tax-deferred savings that come from most retirement programs, small businesses starting a 401(k) plan can also receive annual tax credits of $500 for each of the first three years after they enroll.
Data included in this press release come from the 2008 Small Business Annual Retirement Trends (SBART) report — an annual survey commissioned by ING DIRECT’s ShareBuilder 401k to measure small business employer attitudes, preferences, perspectives and needs for retirement benefits. This survey was conducted online within the United States by Harris Interactive from July 29 through August 25, 2008 among 512 small business employers (including owners, partners CEOs, chairmen and presidents with 1-50 employees). No estimates of theoretical sampling error can be calculated; a full methodology is available.
About Harris Interactive
Harris Interactive is a global leader in custom market research. With a long and rich history in multimodal research that is powered by our science and technology, we assist clients in achieving business results. Harris Interactive serves clients globally through our North American, European and Asian offices and a network of independent market research firms. For more information, please visit www.harrisinteractive.com.
About ING DIRECT and ShareBuilder 401k
ING DIRECT, the nation’s largest direct bank and third-largest thrift, is dedicated to inspiring Americans to become a nation of savers. Since its inception in 2000, more than 7.1 million Americans have entrusted their savings with ING DIRECT, building the bank to $79 billion in assets. For more information on ING DIRECT, or to learn more about the bank’s high-value products, including the Orange Savings Account and the Orange Mortgage, visit www.ingdirect.com or call 1-800-ING DIRECT.
ShareBuilder 401k provides easy, affordable and smart 401(k) retirement plans for small businesses, ranging from the self-employed to those with 25 or even more employees. ShareBuilder401k is a leader in providing 100 percent index-based ETF investments 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 www.sharebuilder401k.com. ShareBuilder 401k plans provide market-efficient investments and model portfolios that make it easy for employees to select the 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 Service Agents to receive assistance in choosing and managing their retirement benefits.
Stuart Robertson is General Manager of ShareBuilder Advisors, LLC which operates ShareBuilder 401k.
Dan Branley, Launch Communications