Small businesses shun retirement plans over cost, complexity fears

Only about half of U.S. private-sector workers participate in an employer-sponsored retirement plan at any given time — a gap driven almost entirely by small employers, according to new research from the Center for Retirement Research at Boston College. While more than 90% of larger employers offer retirement plans, just 49% of firms with fewer than 50 employees do so. Small businesses account for the vast majority of all U.S. firms and employ roughly one-third of private-sector workers. The result is that roughly one-third of households end up completely reliant on Social Security at retirement, while others move in and out of coverage throughout their careers, accumulating only modest 401(k) balances. Small employers consistently cite three barriers to offering retirement plans: concerns about firm size and financial stability; perceived costs and administrative complexity; and employee preferences for wages over benefits. But many of these fears are based on misperceptions, the Boston College brief explained. Researchers said that several 401(k) providers offer options with annual employer costs of less than $2,000 for a firm with five employees and less than $3,000 for a firm w...