Survey: Small business owners see an increasingly uncertain economic outlook
The pandemic has worsened Texans' retirement savings difficulties
A new survey released by AARP today shows the coronavirus pandemic's economic impact on Texas small business owners and employees. Six months into the pandemic, more Texas small business owners were concerned about having enough money to cover health care or living expenses in retirement (47 percent to 56 percent), both for themselves and on behalf of their employees. Also, fewer employers offered retirement savings plans for employees (66 percent to 73 percent).
The report demonstrates the increasing bind that working Texans have found themselves in over the past year, based on findings from 501 interviews conducted in January and February 2020 and 500 interviews conducted in August and September 2020.
Three-quarters of small business owners (74 percent) are concerned that Texans haven't saved enough and could be forced to rely on public assistance. This outcome is incredibly likely given that the average working-age household only has $2,500 saved for retirement, and near-retirement households only have $14,500 saved.
"The solution is simple," said Tim Morstad, who oversees AARP's financial security work in Texas. "We know that being able to save through work, through automatic payroll deductions, makes folks fifteen times more likely to start setting money aside each month. That's where the Secure Retirement Savings Act comes in. This is how we can help Texans help themselves."
The bill, HB 2996, will be heard by the Texas House Committee on Pensions, Investments and Financial Services at 8 a.m. on Wednesday. The proposal would make it easier for Texans to save at work through an optional, publicly-administered, and privately-managed individual retirement account (IRA) or multiple employer plan (MEP). A board chaired by the Texas comptroller would develop and implement the program.
Further key findings from the survey include:
- Small business owners overwhelmingly agree (84 percent) that being able to offer a voluntary, portable retirement savings program would help them attract and retain quality employees and stay competitive.
- Two-thirds (68 percent) agree that more should be done to encourage Texans to save for retirement.
- Most (58 percent) say that offering retirement savings would be too costly to their business given the current options open to employers.
According to the Small Business Administration, small businesses employed nearly half (45 percent) of Texas private sector workers (or nearly 5 million Texans) prior to the start of the pandemic.
Find the survey at aarp.org/txretirementsecurity.