With retirement savings shortfalls becoming an increasing concern, legislators have attempted to address the issue with The SECURE Act, which simplifies the process and provides tax incentives for small businesses to establish 401(k) plans, as well as the emergence of state-sponsored plans, which give those who don't have access to an employer-sponsored plan an opportunity to save in plan similar to a 401(k).

Not lack of demand but lack of 401(k) options

The Human Interest report emphasized that the lack of 401(k) options at small businesses is not due to a lack of demand amongst employees. When offered access to a workplace retirement plan, up to 85 percent of SMB employees participated and saved between 5 and 10 percent of their salary, the report found. Even without an employer match as an incentive, SMB employees saved about the same as those who did have an employer match.

The report found that younger SMB employees are saving at a similar rate to their older counterparts, although the oldest savers, those aged 50-64, still save the most as they near retirement. 

The study also found similar savings rates among male and female SMB employees, although it noted women face not only a shortfall because of lower wages and a slightly lower retirement savings rate (7.9 percent vs. 7.5 percent), but they also have to stretch their retirement nest egg out over a statistically longer lifespan. That can translate into a difference of nearly $1,000 per month in terms of what women will accumulate vs. men on average.

In addition, married SMB employees overall save more than those who are single (8.2 percent vs. 7 percent), and those who are single contribute slightly more than those who are divorced (6.8 percent), the report found. Of note, married women saved at the highest rate of all groups at 9 percent, a dynamic that Human Interest suggested could help close deficits created by lower earnings and longer lifespans.

SMB industry sector saving

SMB employees working in the finance sector were the most likely of all industry sectors to participate in workplace retirement plans. However, the report also found strong participation among SMB employees working in the technology sector, who participate at nearly the same rate and are saving a larger portion of their salary in workplace plans, the report said. Participation among SMB employees in the nonprofit sector was also strong, although those employees saved the least at 6.1 percent.

Overall, 66 percent of workers in non-office verticals, including automotive and manufacturing, save for retirement through a company plan and contribute 8.2 percent of their salary on average. Just slightly more than half of service sector workers – those with jobs in retail, food service and hospitality – participate in workplace retirement savings plans and contribute about 7.7 percent of their earnings. 

Finally, the report dispels a myth that only high wage earners save for retirement. Human Interest's survey found that those earning between $30,000 and $39,999 per year save 6.1 percent of their salary, while those earning $200,000 to $209,999 save 7.7 percent in a 401(k). The report noted that consistent saving is the most important habit regardless of income level.

Kristen Beckman is a freelance writer based in Colorado. She previously was a writer and editor for ALM's Retirement Advisor magazine and LifeHealthPro online channel. She also was a reporter for Business Insurance magazine covering workers compensation topics. Kristen graduated from the University of Missouri with a degree in journalism.