Small business owners: Big opportunities to save for retirement

As the son of former small business owner, I recall as a kid working summers and occasional weekends – seeing firsthand how my father devoted his time, energy, and human/financial capital into his business. As focused as he was on his customers and his employees, my father was not nearly as focused on his personal finances outside of the business – namely retirement savings. As someone who’s spent much of my career as a retirement-savings advocate, this can feel a bit unsettling. However, looking back, I can understand the realities: long hours, cash-flow uncertainty, and how benefits decisions can easily be deprioritized by day-to-day needs.

My father’s situation is not unique. Historically, small businesses have been an underserved segment of the retirement marketplace. Today, only 55% of businesses with fewer than 50 employees offer a workplace retirement plan.

This lack of access translates into substantial savings gaps. At larger corporations, where 401(k) plans have become ubiquitous, nearly two-thirds (62%) of participating employees have at least $100,000 saved. In stark contrast: only 5% of workers without plan access have a comparable amount saved for retirement.¹

The tide is turning

While small businesses historically have been underserved they are not unreachable. Rather, it means small businesses—along with their employees—need solutions that are both approachable and administratively manageable.

It’s easy to imagine my father’s colorful response if someone had suggested he establish a 401(k) plan. He likely would’ve said, “Sounds expensive, how much will it cost? and “Sounds like a lot of work, how much of a headache will it be now and going forward?”

These are legitimate questions for any business owner to ask. The good news is the landscape is changing. Key legislative developments providing valuable tax credits, combined with product innovation, have remedied common areas of pushback.

The issue of costs has been addressed

With passage of the SECURE 2.0 Act of 2022, attractive tax credits of up to $5,000 per year for the first three years can help offset start-up expenses for businesses with fewer than 100 employees.

An additional tax credit of $500 per year for three years is available for selecting auto-enrollment, which is now a requirement for newly established plans. As employee retention is key to the success of any business, an annual employer contribution credit of up to $1,000 per eligible employee is also available for five years.²

The administrative burden has been eased

Business owners now have access to off-the-shelf solutions that bundle the recordkeeping, administrative support and investment lineup, including target date funds, all in a ready-to-use platform. This translates to a faster set-up with fewer decisions and operational hurdles over the plan’s lifespan.

In addition to the day-to-day commitment of time, focus and energy, many small business owners have a large share of their net worth tied up in the enterprise. Having a retirement plan can help them systematically build and diversify a nest egg, for example: 

• Plans can be designed to allow an owner to contribute up to $72,000 annually, which can go a long way toward building tax-advantaged savings over time.
• Similarly, having a dedicated savings plan reduces the risk of the business having to be sold in order to fund retirement.
• Succession planning is critical, but sometimes is treated as an afterthought. Having non-business assets creates flexibility on timing, valuation and exit options.

How to get started

One way to begin is for small business owners to address these key questions: 

1. Does my state have a retirement savings mandate? (To date, 17 states have passed laws mandating small businesses must establish retirement savings plans.)
2. Will the business contribute to employee accounts?
3. What costs and administrative responsibilities must the business assume?
4. What tax credits are available?
5. What is best for my business—a ready-to-use or customizable solution?

In conclusion

While business owners indeed have a unique set of challenges, the reality is that there are compelling opportunities to save for retirement. And compared with the past, it’s simply more feasible to offer a workplace plan—less friction, fewer hurdles and more support for getting started.

Whenever I talk to small business owners about retirement plans, I think about my father. He poured everything into his customers and his people—and like many owners, he put his own retirement on the back burner. If today’s tax credits and bundled solutions had been on the table back then, I’m convinced he would’ve given it a second look. That’s why this shift is so important: Owners don’t have to choose between running the business and building retirement security for themselves or their teams.

For more information

Explore these ideas with more Retirement Insights along with the J.P. Morgan Everyday 401(k) platform.

¹Sources: U.S. Bureau of Labor Statistics, Employee Benefits in the United States Supplemental Tables, data as of March 31, 2025; Employee Benefit Research Institute Retirement Confidence Survey, 2025.

²2026 (indexed); For employers with 100 or fewer employees; for employers with 51–-100 employees, applies to 50% of start-up costs; For employers with up to 50 employees, limited to employees whose wages do not exceed $110,000 (2026 indexed). The credit amount is phased out for employers with 51-–100 employees. Consult your legal or tax professional.

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