Michigan Small Businesses Support a Public-Private Retirement Savings Option

Lansing, Mich.—The vast majority of Michigan small business owners and decision-makers say more should be done to support Michigan workers saving for retirement, according to a new AARP small business survey. Most survey respondents agree that state lawmakers should back legislation to make it easier for businesses to access a retirement savings option at work for their employees and themselves.

Most small business owners surveyed by AARP (79%) agree that being able to offer a portable retirement savings program helps them attract and retain quality employees and stay competitive. Yet nearly six in ten do not offer their workers a way to save for retirement.

“My business is young and growing but turnover can be high, so anything to entice people to stay longer while helping them save for the future is something I support,” said Kari Vanderheuel who owns The Red Fork restaurant and a coffee shop in northeast Michigan near Harrisville in Alcona County. “I tend to employ younger people and I wish I could offer them something to help with saving for retirement, but financially I’m not in a position to do that. If there was a program that was easy and free to implement, I’d be interested.”

More than 40% of Michigan’s private-sector workforce aged 18-64—workers at all levels of earnings, education, and backgrounds—do not have access to a retirement savings plan at work. The smaller the employer, the less likely its workers are to have access to a retirement plan. 

AARP found that 62% of small businesses are concerned about their employees not having enough money to cover health care or living expenses when they retire. One in four (25%) say they are very concerned. Most (82%) small business owners in this survey also said that as taxpayers, they are concerned that Michigan residents who have not saved enough money for retirement could end up being reliant on public assistance programs.

“Small businesses recognize there is a retirement savings crisis in Michigan, and they want lawmakers to take action,” said Paula Cunningham, AARP Michigan State Director. “Nearly 1.6 million Michigan workers do not have access to any savings plan at work. If we can make it easy for more workers to save through payroll deduction, workers will build savings, small businesses will benefit, and taxpayers will save money.”

Similar retirement-savings partnerships are up and running in Oregon, California, Illinois, Delaware, and Hawaii, and assets under management exceed $839 million. Missouri and Minnesota are the 17th and 18th states to pass retirement savings legislation, and several other states, including Ohio, are working on similar measures. Many participants are first-time savers and the average income of savers in Oregon, which has had the program since 2017, is $29,000.

Small business owners across the state told AARP they would support the creation of a privately managed, plug-and-play retirement savings option to allow employees to save money for the future through their paychecks. In other states, elected officials have developed retirement savings options for small businesses that don’t already offer a plan.

The majority (72%) of business owners surveyed believe that conventional retirement savings plans are too costly and almost half (46%) think they would be too complicated for their business to operate. 

However, when asked how likely they would be to participate in a retirement savings option as described in the survey, over two-thirds of Michigan small business owners said they would be likely to offer access to their employees if it was available to them. Nearly three-quarters said they would support such an option, which would be run similarly to state college 529 savings plans.

Similar retirement-savings partnerships are up and running in Oregon, California, Illinois, Delaware, and Hawaii, and assets under management exceed $839 million. Missouri and Minnesota are the 17th and 18th states to pass retirement savings legislation, and several other states, including Ohio, are working on similar measures. Many participants are first-time savers and the average income of savers in Oregon, which has had the program since 2017, is $29,000.

The 2023 Michigan Small Business Owner Survey was a telephone study among 548 small business owners or decision-makers about employee benefits at companies with 1-150 additional employees. Interviews were conducted between April 21 and May 16, 2023. The margin of error for this sample is ± 4.2 percent. The sample, including owner names and companies, came from a Data Axel business list and is weighted using the 2023 Economic Census from the U.S. Census Bureau (based on industry, number of employees, and county) in Michigan with 1-150 additional employees.  

For media inquiries: Cathleen Simlar, csimlar@aarp.org.