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Financial Viability and Retirement Assets: A Look at Small Business Owners and Private Sector Workers

December 6, 2012

Financial Viability and Retirement Assets: A Look at Small Business Owners and Private Sector Workers

Source: U.S. Small Business Administration

Highlights

• Having an underwater mortgage did not have a significant effect on the likelihood that a small business owner invested in retirement assets or on the amount of retirement assets they accumulated.

• On the other hand, having an underwater mortgage increases the likelihood that private sector workers had a retirement account and increases the amount that these workers invest in retirement accounts.

• Owners of smaller businesses (fewer than 25 workers) were significantly less likely to invest in retirement assets and had lower amounts than owners of larger firms.

• The data depict the differences in asset allocation choices between small business owners and wage and salary workers and the use of different assets for retirement purposes.

• Wage and salary worker retirement plan behavior exhibited a similar pattern with respect to employment in smaller versus larger firms.

• The study’s findings suggest the following:

- There is a need to reexamine federal rules and regulations written to equalize the benefits within companies between workers and highly compensated individuals/owners to help both business owners and wage and salary workers increase their ownership and accumulation of individual account retirement assets.

- In addition, new policies to expand automatic enrollment to owners as well as workers may need to be considered.

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