Prioritizing health benefits. Some small employers would rather allocate their limited employee benefit dollars to offering or improving health benefits than starting a retirement plan. Private industry workers with 99 or fewer employees spend $1.55 per hour worked on health insurance, more than twice as much as the 60 cents per hour they spend on retirement benefits, according to March 2013 Bureau of Labor Statistics data. "As a company gets more established, the first benefit they will typically offer is a medical plan and then once they get that offered, a retirement plan," Jeszeck says.
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Most small business owners without 401(k) plans (68 percent) say offering a 401(k) plan would be beneficial for attracting and retaining employees. Some small business owners told ShareBuilder 401(k) that they would reconsider offering a 401(k) plan in the future if they were provided with tax benefits for owners (32 percent) and lower plan costs (29 percent) or if their company experiences higher revenue (24 percent) or improved profitability (20 percent).
The small employers that offer retirement benefits say they do so because it's part of their responsibility as a business owner (50 percent) and it helps attract or retain employees (41 percent). Some small business owners also offer retirement benefits because they want to enroll in a retirement plan themselves (39 percent) and receive a tax break (32 percent). "They do want to help employees, but they also want to help themselves lower their taxes and save for retirement," says Stuart Robertson, president of ShareBuilder 401(k). When small businesses offer a 401(k) plan, he says, "they get the benefit of both saving and keeping their valuable employees around."