Research conducted on American workers indicates that only about 50 percent have a small business 401(k) plan. Many companies are reluctant to offer such plans because they are costly and involve extensive government regulation. However, there are a number of advantages to be gained from offering these retirement packages, and small business owner should take these factors into consideration.
Offering a 401k attracts the best Employees
Any small business that wishes to attract the best workers their industry has to offer should consider offering a retirement plan. A strong economy results in low unemployment which means that businesses must compete to attract the best talent. Not only do experienced and educated workers expect to be well paid for their efforts, they will also expect a 401(k). While a small business owner may save money in the short term by not offering such a plan, they also run the risk of losing valuable talent to competitors who over time may capture their market share.
Neglect 401k Plans because More Plans are Now Available
Another reason many small business owners have been reluctant to offer employee retirement plans is due to the limited options. Traditionally employee retirement plans have been expensive and tedious to implement, and many business owners found them to be undesirable. However, times have changed and today business owners have more options than ever before. Advances in technology have made it easier to offer extensive packages that involve education, investment and administration at a price that is reasonable. Today many retirement plans also function as fiduciaries which mean that the employer doesn’t have to micromanage them.
Many Small Business Owners Can Benefit from a 401(k)
Small businesses don’t have many employees which mean the owner often needs to pick up the slack, working many hours with little time off. A lot of small business owners believe that the value of the company will cover their retirement, but this may not be the case. Setting aside a personal 401(k) plan can be a great idea, as it provides that extra blanket of security that a business owner will need once they reach their golden years.
A Retirement Plan makes Employees more Productive
A distracted worker is often an unproductive one. No one wants to worry about their financial future or whether they’ll ever be able to retire. Even worse is the feeling that the business owner doesn’t care. A growing body of research indicates that stress and anxiety related to finance causes a variety of problems, including those which are health related.
A business owner who offers a retirement shows that he cares about something more than the future of his own company. This attitude will not go unnoticed by the workers, and it will increase their commitment to the company as well as their productivity. They will also be less likely to jump ship and head elsewhere whenever the company goes through difficult times. While many small business owners will continue to avoid offering retirement plan, there are numerous benefits to be gained from doing otherwise.