If you’re struggling to recruit top talent, it may be time to rethink your benefit package. Workers today are more likely to expect 401(k)s through their employer, and they’ll prioritize jobs that have retirement plans. 

In our 2024 HR Benchmark Report, we found that providing this kind of benefit was closely correlated to growth. Fast-growth firms are significantly more likely to offer 401(k)s to their workers. To learn more about becoming a fast-growth business and offering a 401(k), read on. 

Do You Offer a 401(k) Savings Plan?

At Asure, we recently completed a survey of more than 1,000 small businesses. We divided the 2024 HR Benchmark Report into eight different sections. In our benefits section, we asked five key questions about the benefits employers offered, such as workplace 401(k) plans. 

Our survey uncovered some important differences between fast-growth and zero-growth firms. 

• 75% of fast-growth organizations have workplace 401(k) plans. 
• 49% of zero-growth organizations have workplace 401(k) plans. 

Then, you can see even more remarkable results when you break down the numbers and look at businesses that have less than 25 workers. This causes the spread to increase from 26% to 41%.

• 73% of fast-growth companies with less than 25 workers have 401(k)s. 
• 32% of zero-growth companies with under 25 workers have 401(k)s.

401(k): An Increasingly In-Demand Benefit

One reason for this remarkable difference is workers expect 401(k)s, and they’ll prioritize working somewhere that has retirement benefits. In fact, the Charles Schwab 401(k) Participant Study found the only benefit that was more in demand was health insurance.

• 88% of workers said 401(k)s were a must-have benefit. 
• 90% of workers believed 401(k)s were a must-have benefit. 

Employees believe they’ll need $1.8 million for retirement, which drives their desire for 401(k) plans. However, there are a few factors holding people back. Check out the percentage of people who said which cause was preventing a comfortable retirement.

Inflation: 62%

Market Volatility: 42%

Monthly Expenses: 35%

Unexpected Expenses: 33%

Paying Back Credit Card Debt: 24%

Paying or Saving for a Child’s Education: 20%

For the majority of workers, saving for retirement is a highly desirable goal. Unfortunately, life can get in the way. Because of this, many employees want a 401(k) plan from their employer that can help them save money for the future.

Why Do Today’s Workers Expect 401(K) Plans from Their Employers?

As an employer, providing a 401(k) plan isn’t just an important way to attract and retain top talent. It can also give you a tax break. Thanks to SECURE Act 2.0, small businesses can get tax credits for starting 401(k) plans and providing matching contributions. 

Entrepreneurs can use 401(k) plans to win the war for talent. Because of changing demographics, Social Security will start bringing in less than it spends by 2033. In fact, 2020 was the first time the number of Americans over the working age was more than the number of Americans under working age. As a result, labor will remain in short supply.

Retirement is changing, and savvy employers can use this trend to support their recruitment efforts. Workers need a 401(k) plan to retire comfortably, and they expect their employer to give it to them.

Gen Z and Millennial Workers Treat Retirement Differently 

One impact pushing the retirement savings trend is how Gen Z and millennials view retirement. In studies, 67% of millennials and 60% of Gen Z already have a personalized retirement savings plan. Plus, 86% of Gen Z and 69% of Millennials are ahead of schedule on their savings.

When adjusted for inflation, these age groups are saving at a higher rate than preceding generations. Unsurprisingly, this focus on retirement savings extends to the type of workplace they choose. 65% of graduating college seniors say they won’t take a job that doesn’t offer a 401(k).

In a recent Mission to Grow podcast, Asure’s VP of HR compliance, learning, and development, Mary Simmons, spoke about the changed approach to retirement among younger workers. “I think part of it is that people are actually now thinking about retirement. I don’t know about you, but when I was first starting my career, I wasn’t thinking about retirement at all. But the Gen Zs and Gen Xs are thinking about retirement.”

Workers Feel Anxiety About Retirement 

Across the generations, there are a few anxieties driving the push toward employer-sponsored retirement plans. 

• Stagnant wages 
• The rising cost of living 
• The high dollar amount required to retire 
• Social Security insolvency 
• Inflation

Many Workplaces Already Offer 401(k)s

Another reason employees expect jobs to offer 401(k)s is because many companies already provide them. When you don’t have a 401(k), your workplace is the exception to the norm.

Offering a 401(k) allows you to keep up with the competition. Additionally, it can provide an extra incentive for your current employees to remain with your company. Many workers don’t like the hassle of transferring 401(k)s to a new workplace, so they’re more likely to remain at your organization for longer. 

SECURE Act 2.0 Can Save You Money on Your 401(k)

Through SECURE Act 2.0, you can save money by offering 401(k) plans to your workers. SECURE Act 2.0 saves you money in several important ways. 

• It gives you money back for setting up the 401(k). 
• You can also get credit for your matching contributions, although this amount goes down over the course of the first five years of the retirement plan. Initially, you get 100% of up to $1,000 in matching contributions.
• SECURE Act 2.0 gives you credit for using auto-enrollment with your workers. 
• You can provide matching contributions under SECURE Act 2.0 for an employee’s student loan payments, which makes it easier for employees to save money while getting out of debt. 

Learn More About Setting Up Your Company’s 401(k) Plan

In our 2024 HR Benchmark Report, we found that fast-growth companies are far more likely to offer 401(k) plans. By offering retirement options, these businesses are able to attract and retain the best quality of talent. In turn, this spurs their productivity and profitability. 

Are you ready to take your company’s growth to the next level? At Asure, we can help you figure out the best 401(k) plan for your needs. To learn more about our services, reach out to our small business HR and payroll experts today.