Narrowing The SMB Retirement Savings Gap

LAST REVIEWED Aug 30 2022 4 MIN READ

By The Human Interest Team + Independent Freelance Contributor*

Introduced in 1978 by the passage of the Revenue Act by Congress, the 401(k) is now more than 40 years old, and the first people who have saved via a 401(k) for their entire career are hitting retirement.

This dynamic shines a light on a significant gap in the American retirement savings ecosystem, namely that employees who work for small businesses have been largely excluded from what is now the country’s primary retirement savings vehicle.

The 401(k) was quickly adopted as a recruiting incentive by large companies competing for top talent, but they were prohibitively expensive to set up and administer for smaller companies. While more than 90 percent of employers with more than 500 employees offer a 401(k), nearly the opposite is true for employers with less than 100 employees. Only 12 percent of those companies offer their employees a 401(k) option.

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Disclosures

The content in this blog post has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction. Human Interest's investment advisory services are provided by Human Interest Advisors, LLC, an SEC-Registered Investment Adviser. Investing involves risk and may result in loss. Past performance is no guarantee of future results, and expected returns may not reflect actual future performance.