In a recent article from CNBC quoting a report from Northwestern Mutual’s 2018 Planning and Progress Study, 21% of americans have nothing saved for retirement, and an additional 10% have less than $5,000 saved.

That is 31% or 1 in 3 Americans who have $5,000 or less saved for their retirement.  Let’s just suppose that these folks were working in an ESOP and were employee owners, would this picture change?

YES!!

According to NCEO (2015 Data from DOL) there are 6,669 ESOP/KSOP type plans with over 14 million total participants, and total plan assets of over 1.2 Trillion dollars.  These figures provide an average ESOP/KSOP Retirement account balance of almost $90,000 per participant.

How does this relate to Indiana?

Indiana is home to 176 ESOPs, which create wealth and retirement benefits for over 130,000 fellow Hoosiers.  The total assets in these ESOP plans exceed 11.7 Billion Dollars.  These numbers also provide an average ESOP balance of ~$90,000 dollars per participant.

Best of all, for the most part, the funds in these ESOP accounts are contributions from the company – not contributions that were diverted from the employee’s paycheck.  Some in the ESOP community call this “free money”, but I like to describe this as sweat equity.  A return on the employees efforts in helping to make the company propser, grow, and continue to be a success.

As Louis O. Kelso stated long ago –  “Labor is the source of subsistence, capital is the source of affluence.  My idea is to make everyone a capitalist, and therefore financially secure”.

Perhaps the best way to solve the retirement funding dilemma already exists.  As current business owners look toward retirement and seek a succession plan, these could convert to an ESOP thereby inreeasing the number of employee owned companies and the number of employee owners within our state.