Small businesses have a big retirement problem. According to the Bureau of Labor Statistics, at companies with fewer than 50 workers less than half the employees have access to a 401(k) or pension.
At companies with 500 workers or more, 90 percent of employees have access to a retirement plan. Setting up an employee retirement plan can seem daunting for small business owners—if not impossible. Let’s clear up some misconceptions and review a few of the many reasons why offering an employer-sponsored retirement account is a great idea for small businesses of all types.
Investing in Your Employees Creates An Invested Team
How badly does your team want retirement? According to a 2015 Glassdoor survey, 31 percent of workers valued a workplace retirement account, such as a 401(k) or pension plan, over an increase in pay.
Even your team members who would prefer a wage pump want help preparing for the future. The Employment Benefit Research Institute found that two-thirds of employed workers not currently saving for retirement say they would be likely to start if automatic paycheck deductions ranging from 3 to 6 percent were used by their employer.
By offering a retirement plan, small businesses may be able to attract more talent—and retain the valuable team members they already have.
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Low-Cost, Low-Hassle Plans
There’s a toxic myth floating around that retirement plans have to be clunky, expensive, and require an annual 1.5-2% fee to a provider. That’s a misconception! Nowadays, there are low-cost options, specifically designed for small businesses. (Full disclosure, we think our plans are pretty great. Check them out here)
Besides providing lower costs, choosing a third-party plan provider allows you to delegate certain plan responsibilities to let you focus on what you do best—running your business.Read full article