Fidelity Investments, a Boston-based financial services company whose specialties include retirement savings products, regards small businesses as the proverbial canary in the coal mine.
Business with 10 employees or fewer are “often good predictors of economic growth,” Fidelity says, and based on its analysis of recent retirement savings contributions by small business owners and their employees, the economic outlook seems encouraging.
To reach that conclusion, Fidelity examined its more than 200,000 small business accounts that offer a Simplified Employee Pension Plan, a Self-Employed 401(k), or a Savings Incentive Match Plan for Employees.
In the past year alone, the average balance in small business retirement plans increased by 4 percent, Fidelity said in a report issued Friday, and the average contributions made by small business workers increased by 18 percent.
This is the third consecutive year that Fidelity’s Small Business Retirement Savings Analysis showed increases in both average balances and in contributions, the firm said.
Balances hit a recent low point in 2008, when the economy went into free fall. Compared with 2008 levels, average savings have jumped by 88 percent, an indication that suggests that the small business segment is feeling confident enough about their present financial situation to contemplate saving for a future in retirement, Fidelity said.
Those findings are “encouraging, because our research has consistently shown too many Americans are unprepared to live comfortably in retirement,” Ken Hevert, a Fidelity vice president, said in a statement. “While many small business owners count on the sale of their business as a big part of their retirement plan, if the past is any indication, it’s important to have options. Selecting a retirement savings plan that is easy to administer and low-cost is critical --- it can help maximize retirement savings, retain valuable employees, and provide key tax deductions.”
Chris Reidy can be reached at reidy@globe.com.