Economy Fears Affecting Small Business Owners' Retirement Savings

September 30, 2008 ( - A growing number of small businesses are feeling the stress of the tough economy, leading many to cut back on retirement savings or raid their accounts, according to the results of a new survey conducted by Harris Interactive for ING DIRECT's ShareBuilder 401k.

More than half of survey respondents say they are now saving less money both for personal reasons (56%) and for retirement (53%) compared to a year ago, according to a press release. Eleven percent also report reducing or eliminating matches for their employees, and 16% have taken premature withdrawals or borrowed from their retirement accounts.

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), the release said. The number of small business owners with some sort of retirement plan dropped from 35% in 2007 to 26% in 2008. Of those operating without a retirement plan, 45% say they are now less-likely to start a 401(k) plan compared to a year ago.

Other survey findings included:

  • 63% of small business employers say are either very or extremely concerned about the future of the economy;
  • 57% see developing new business as their number-one challenge through the remainder of the year, and “access to cash” ranked number-two at 18%;
  • 40% see the current financial state of their business as worse than a year ago.

Data comes from the 2008 Small Business Annual Retirement Trends (SBART) report — an annual survey commissioned by ING DIRECT’s ShareBuilder 401k — 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).