The Real Cost of Employee Turnover

It's Likely Much Costlier to Replace One Employee Than Offering a 401(k) Plan

When you really factor in core costs to replace an employee, it adds up quickly:

• It costs 29% to 46% of an employee’s annual salary to replace them (non-management vs. management drives the range)³
• So, replacing a $50,000 per year employee may cost you $14,500 on the low end

Those figures include things like interviewing time by management, productivity lost due to the vacant position, training the new employee, and any advertising or other associated expenses. But it doesn’t include variable costs, such as customers who might leave, or the knowledge lost with a resignation.

401(k)s and Employee Retention

401(k) benefits can help retain your top talent and they are typically a lot less expensive than needing to replace an employee. Research indicates that 78% of employees would leave their current employer if they felt their benefit package was inadequate⁴. Whether you're recruiting or seeking to keep your current employees, a 401(k) can be a terrific incentive.

Not only do you benefit from certain tax credits, tax deductions, and tax savings by opening a 401(k), but you and your employees can contribute to your 401(k) plans tax-deferred, meaning you can reduce your taxable income now, and pay taxes only when you withdraw funds in retirement. Additionally, you have the flexibility to make Roth contributions, giving you even more control over your savings strategy.