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401(k)s: low cost benefits offering more than savings

11/10/2009:

Unlike healthcare benefits, 401(k) plans are typically a low-cost program for any size business. According to the 2009 Annual Employer Health Benefits Survey by Kaiser Family Foundation, the healthcare cost to cover a single individual is $4,824 per year and for an employee with family coverage it is $13,375. For a small business, a 401(k) is a fraction of this cost generally ranging from $15 a month for a solo 401(k) plan to $200 a month for a plan with 50 or more employees.

With Americans living longer and healthcare costs continuing to out pace inflation, saving in a 401(k) plan can help make retirement financially easier and save you some in taxes along the way.

And don’t forget about the cost of replacing employees. Top talent will almost always have other employment options regardless of the economy. While the voluntary turnover rate this year is likely much lower given the current economy, historically over 23% of employees leave their employers every year by their own choice. When you take into account the time and lost productivity, the cost to replace an employee is typically 29% to 46% of the employee’s salary (so that’s $14,500 on the low end for a $50,000 salary).

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