The National Center for Employee Ownership (NCEO), with support from Employee-Owned S Corporations of America (ESCA), recently released survey results in the “S Corporation ESOPs and Retirement Security” report. The findings show that ESOP participants are better prepared for retirement than most average Americans. The online survey polled existing ESCA members from January through March 2018 and received responses from 39 S corporation ESOPs, collectively comprising more than 61,000 plan participants. The plan participants span varying industries, economic groups and ages, including 20,000 lower-wage workers and 8,000 employees nearing retirement. Key findings include:
- S ESOP participants have on average $170,326 in total retirement accounts, which is more than twice the average total retirement balance of Americans nationally at $80,339.
- Millennials (25 to 34 years old) who work for S ESOP-owned companies have a median retirement balance of $33,827, consisting of $22,588 in an ESOP account and $11,239 in a non-ESOP account. Comparatively, the median retirement balance of millennials for a non-ESOP company is zero.
- S ESOP participants aged 65 and older have an average total retirement balance of $325,641, composed of $233,602 in ESOP retirement and $92,039 in non-ESOP retirement. For non-ESOP participants, the average retirement balance is $108,363, resulting in three times less the retirement balance of ESOP participants in the same age category.
- Those earning $12.86 to $19.22 per hour at ESOP-owned companies have a median retirement balance of $34,438, consisting of $27,138 in an ESOP account and $7,300 in a non-ESOP account. Alternatively, the median retirement balance of those in the same earnings category at non-ESOP companies is zero. Nationally, 56 percent of wage earners in this category don’t have access to retirement benefits through their employer.
- In the companies that responded to the survey, the ESOP isn’t replacing other retirement plans. The majority of survey respondents offer at least one other retirement plan in addition to the ESOP, whereas 32 percent of all U.S. workers don’t have any retirement benefits with their employer.
Respondents elected to participate in this survey and may not be representative of all S corp ESOPs. However, respondents included more than one industry, size and location. Even so, this study indicates that S ESOPs are a powerful retirement tool for all wage earners, not just the highest earners. The full results of the study can be found here.
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