Retirement readiness is a hot topic in our industry these days. So imagine my surprise when I read the following statistics from a report by U.C. Berkeley Center for Labor Research and Education:
- 55% of private-sector workers lack any employer-based retirement plan (401(k) or pension plan)
- 68% of those working for small companies (100 or fewer employees) lack access to an employer-based retirement plan
These numbers apply to California, but are similar for small businesses throughout the country. See the full report here.
Add this to the research done on the effectiveness of 401(k) plans for moderate income workers (those earning between $30,000 and $50,000 per year). The Employee Benefits Research Institute estimates show the following:
- 5% of workers are likely to participate in a company-sponsored 401(k) plan
- 6% of those same workers would save money in an IRA if no 401(k) plan were available
So 401(k) plans certainly play an important role in savings rates of Americans when it comes to retirement. See the EBRI report here.
Top quality employees consider the entire package when looking for an employer. Since many employers don't offer a company retirement plan you can give yourself an edge by providing a good plan to your employees.
The states are very nervous about the health of retirement accounts and the availability of savings plans to workers. Illinois recently started a Secure Choice plan for people who work in their state. It’s an employer-based IRA type plan. California has a similar plan with the same name in the works. See our blog about California Secure Choice that for more information about what’s coming.
The bottom line is that 401(k) plans are good for workers, and they are good for employers too. If you are ready to explore starting a 401(k) plan for your company so your employees are not forced into a state-run plan, contact us today. To attract the top quality employees, offering a retirement plan as a part of your benefits package is key. We will walk you through the plan design options, and potential costs – both contribution scenarios and administration costs – so you will have no surprises. Our business was built on helping small businesses design and administer state-of-the-art retirement plans. We want you to be able to retire in style!