A recent survey conducted by the U.S. Small Business Administration (SBA) found that only 28% of workers in small businesses have company retirement plans available to them.

Unfortunately, this often translates into a lack of saving for retirement altogether.

In stark contrast, nearly half of all employees in the private sector enjoy some kind of retirement plan benefits through their company, according to U.S. News and World Report.

With the lack of retirement plans available to small business employees, more people are transitioning back to relying on Social Security benefits and Medicare to fund their retirement needs.

As a comprehensive retirement plan, Social Security is woefully lacking, and those without alternate retirement savings resources may find themselves in a tough situation come the golden years.

Why Small Business Don’t Offer Retirement Plans

The reasons why most small businesses don’t offer retirement plans are myriad and complicated.

But some of the reasons include lack of stability, limited selection and lack of interest among employees.

Lack of Stability

In the first few years, small businesses have yet to prove even to themselves that they have the staying power to make a retirement plan worth it in the long run.

Since more than half of all new businesses fail within the first three years, a sense of non-urgency over creating and developing an employee retirement plan is understandable.

After all, many small business owners may believe that more time and consideration should first be given to building the business and making it stable.

Limited Selection

As the following articles note, an economy that is overrun with large corporations that have seemingly endless pockets, small businesses are not always offered premium retirement plan options by top retirement plan providers .

This puts them at a disadvantage that is sometimes enough to discourage them from offering any retirement plan at all, even if their original intent would have been to do so.

If a small business owner is not able to offer an attractive retirement plan, they are more likely to offer a higher salary instead.

Lack of Interest

Even when small businesses do forge ahead by putting a retirement benefit plan in place, their plan may be too expensive for employees to comfortably buy into.

Since the plan product is not going to be premium, the earnings potential compared to the contributions is unlikely to be optimal either.

What to Do?

It seems the best option for small business owners might be to offer a salary compensation package that is slightly higher than the industry average.

This might help to offset needs for a retirement plan for employees, by introducing more income for each employee household that can easily be set aside for a private retirement fund.

Since payroll is a deductible business expense that is easily managed and adjusted, the sometimes exorbitant administrative costs that can be associated with retirement plans can be avoided.

And in the business marketplace, a small business with higher-than-average pay can be seen as an attractive, long-term employment option for job candidates.

Small businesses can be competitive in the job market.

As usual, it just takes a little creative thinking and ingenuity; two qualities that most small business owners already have.

Photo credit: Image courtesy of imagerymajestic at FreeDigitalPhotos.net

About the Author: Kate Supino writes about best business practices.