If you're a woman who owns a business, you've got plenty of company. In fact, women own more than 10 million U.S. companies, and women-owned businesses account for about 40% of all privately held firms in the nation, according to the Center for Women's Business Research. Clearly, the good news is that women are entering the small-business arena at a rapid pace. The not-so-good news is that those women may face a retirement savings gap in comparison to male business owners.
To get a sense of this gap, consider these statistics:
According to the U.S. Small Business Administration's Office of Advocacy, 19.4% of male business owners have a 401(k) or similar plan, compared with just 15.5% of women owners.
The percentage of female business owners with Individual Retirement Accounts (IRAs) is about the same as that of male business owners — but the men have more money in their accounts. The average woman's IRA balance is about $51,000, compared with $91,000 for men, according to a recent report by the Employee Benefit Research Institute. Although these figures change constantly with the ebb and flow of the market, the difference between the genders remains significant.
One way to help close this savings gap, of course, is to set up a retirement plan for your business. But for many women business owners (and male owners, too), the perceived cost of setting up and running a retirement plan has been an obstacle. However, the retirement plan market has opened up considerably for small business owners over the past several years, so you might be surprised at the ease and inexpensiveness of administering a quality plan that can help you build resources for your own retirement — and help you attract and retain good employees.
With the help of a financial professional, you can consider some of the myriad of plans that may be available to you: