Many small business owners hesitate to set up retirement plans, worried about costs and complexity. However, new research suggests that offering a retirement plan can be both a benefit for your team and a way to strengthen your business.
The Generational View on Retirement Readiness
A 2025 report from Capital Group reveals that a business owner’s age often influences their perspective on offering retirement plans. While most owners are optimistic about their business’s future, their readiness to provide these benefits varies significantly across generations.
Millennial business owners, with a median age of 37, are leading the charge. An impressive 77% believe that offering a retirement plan is essential to their business success. They see it as a core component of a modern, competitive company.
On the other hand, Gen X owners (median age 53) are the most hesitant. Despite being closer to retirement themselves, only 57% feel their business is ready to offer a plan. Gen Z owners (median age 21), the newest entrepreneurs on the block, also show less urgency, with 67% viewing employer-sponsored plans as important. This generational divide shows that perceptions, not just finances, play a huge role in this crucial business decision.
Overcoming the Top 3 Barriers to Offering Retirement Plans
If you’ve been putting off offering retirement plans, you’re not alone. The Capital Group survey identified three main obstacles that small business owners consistently face. The good news is that these perceived barriers are more manageable than ever.
1. Perceived High Costs
The No. 1 concern for 36% of owners is the expense. The idea of matching contributions and paying administrative fees can seem daunting, especially for a business with a tight budget.
How to overcome it: The SECURE 2.0 Act was designed specifically to help small businesses like yours. It offers substantial tax credits that can offset a significant portion of the setup and contribution costs. For example, you may be eligible for credits covering up to 100% of plan startup costs (up to a certain limit). These incentives dramatically lower the financial barrier, making retirement plans much more affordable.
2. Feeling Your Business Is “Too Small”
About 34% of business owners believe their company is simply too small to need or support a retirement plan. This mindset often comes from the misconception that such benefits are only for large corporations.
How to overcome it: Retirement plans are scalable, with simple, low-cost options available. The SIMPLE IRA and SEP IRA, for example, are designed for small teams. Furthermore, new “starter 401(k)” plans are easy to implement and maintain.
3. Lack of Administrative Resources
The thought of managing enrollments, contributions, and compliance paperwork is enough to make any busy owner pause. In fact, 32% of owners cite a lack of administrative resources as a key roadblock.
How to overcome it: You don’t have to manage it all yourself. Modern plan providers and financial advisors specialize in handling the administrative heavy lifting. They offer streamlined, automated platforms that simplify recordkeeping and ensure you remain compliant. This support allows you to offer great benefits without getting bogged down in administrative tasks.
The Business-Boosting Benefits of Retirement Plans
The Capital Group survey found a compelling link between offering retirement plans and overall business health. Owners who provide these benefits report greater peace of mind and fewer concerns about major business stressors, from rising labor costs to keeping up with technology.
More than 80% of owners who decided to offer a plan are glad they did. They point to several key advantages that directly impact their bottom line:
- Better employee retention (63%): In a competitive job market, a solid retirement plan can be the deciding factor that keeps your best employees from looking elsewhere.
- Stronger team morale (56%): Investing in your employees’ future shows you care about their long-term financial well-being, which naturally boosts morale and job satisfaction.
- Increased company loyalty (44%): When employees feel valued, they become more loyal and engaged, creating a more stable and productive work environment.
How to Turn Interest into Action
Feeling inspired to take the next step? Getting started with retirement plans is more straightforward than you might imagine.
- Talk to a professional. While online research is a solid starting point, a financial advisor or accountant remains the most trusted source of information. They can help you navigate the options and find a plan that fits your business’s specific needs and budget.
- Educate yourself on SECURE 2.0. Take some time to learn about the tax credits and simplified plan options available to you. Understanding these provisions will give you the confidence to move forward.
- Find the right provider. Look for a plan provider that specializes in small businesses. They’ll offer user-friendly platforms, transparent pricing, and the administrative support you need to make the process as seamless as possible.
Offering retirement plans is a strategic decision that pays dividends for your employees, your business, and your own peace of mind. By overcoming the common hurdles and leaning on available resources, you can implement a benefit that strengthens your company from the inside out.
