Idaho’s big business is small. Representing more than 99 percent of all the state’s businesses and employing more than half of its workers, small businesses dominate the Idaho economic landscape according to data culled from state and federal government agencies and reported by the U.S. Small Business Administration. Most are firms with under 20 employees.
Given what seems like the near-universal problem of attracting and keep employees which those business owners increasingly report, incentives for workers to stay are top priority. Long gone are the days of pensions and loyalty enjoyed by our grandparents. Couple that with housing costs which outpace inflation, debt loads, and shrunken (if any) savings averages, and retirement is just a pipe dream for most people.
An AARP survey reported last year explored this topic with 500 Idaho small business owners. Most said they’re concerned that Idahoans haven’t saved enough money for retirement, are worried about their employees not having enough for healthcare or living expenses when they retire and think that more should be done about it.
Yet two-thirds of Idaho small business owners said that they don’t offer a retirement savings plan. Half said that’s because they can’t afford one, while three in ten cited concerns about how complicated such plans are to operate.
The average Idahoan is unprepared for retirement. AARP’s “Idaho Retirement Savings Program: Opinions of Small Business Owners” survey found about 375,000 private-sector Idaho employees don't have access to a retirement savings plan at work. While others say people can save on their own, the reality is most don’t. AARP’s prior research shows Americans are 15 times more likely to save for retirement if they can do so at work with a voluntary payroll deduction diverted into an account.
The survey also found:
• Sixty-three percent agree the state should do more to encourage saving for retirement.
• The average retirement savings of Idaho households is only $2,500. For households near retirement, the average is $14,500. It doesn’t take a math genius to see that won’t last long.
• Sixty-seven percent of Idaho small businesses don’t offer a retirement savings plan.
• Seventy-one percent don’t plan to offer one in the future, under the current system (or lack thereof).
• Seventy-one percent also support legislation that would create a ready-to-go, public-private partnership savings program option for businesses. Seventy-seven percent think their legislators should support such a state retirement savings program.
• Seventy-six percent agree that being able to offer one would help attract and retain employees, and stay competitive.
• Seven in 10 Idaho small business owners support a government-created, privately managed, ready-to-go retirement savings option that would help small businesses offer employees a way to save for retirement.
Following a state report recommending such a program, House Bill 180 was introduced in the state legislature this year. The “Idaho Work and Save for Retirement Program” would create an interest-bearing account in the state treasury for volunteer retirement savings contributions from Idaho workers (via payroll deduction) and, if applicable, employers. The program aims to make it easier for businesses to establish and maintain such programs for employees, essentially removing the burdens of investigating and operating them from small business owners. While initially it would cost the state money to set up, like similar programs in time it would become self-sustaining and revenue-neutral, according to legislative analysis.
Unfortunately, the bill stalled in committee.
For more information see AARP.org/research, or the U.S. Department of Labor’s publication “Choosing a Retirement Solution for Your Small Business” (Bit.ly/2SvRCgN). The full survey questionnaires and answers are at Bit.ly/3fltne0. To read the bill see Bit.ly/2Tha8K0.
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Sholeh Patrick is a columnist for the Hagadone News Network. Email email@example.com.