What if we ask you a question about your retirement plan, what would you reply? Or if we ask you that “being a small business owner what plans you are offering in an employee retirement period? We know there could be many strands related to the questions.
But have you ever thought of a retirement plan or strategies? How would you survive once you reach the declining years? Or we talk about the small business owners, are they aware of the reason behind offering retirement plans to their employees?
However, Have you ever wondered what percent of American workers save for their retirement? Okay, let’s change the question. Have you covered your employees with a retirement plan? These equations always bring reality to us that many employers and employees fail to secure their retirement.
Almost half of all the workers and employees do not have access to workplace retirement. There are several reasons that small companies do not offer employee retirement benefits like 401(k), such as they think these schemes are expensive, they are not eligible for the program, or they are simply ignorant. The bottom line is that still, not all employees have enrolled in a beneficial retirement plan.
We understand at a young age it is not really possible to think about retirement because new generation people are busy chasing their dreams and careers , or trying hard to settle down with a families,.So, it’s sort of clear that starting to think about retirement is not always possible for them.
One of the most important aims during retirement is to have saved financial capital. This method also determines your income goal and the steps you need to take during this tenure. To understand the future cash flow, there are several factors that must be taken into dept. They are:
- Understanding and acknowledging source of income
- Start to act on capital savings
- Identifying estimation of your expenses
- Taking care of assets and risk.
Hence, your current flash flow will determines your future retirement income. However, retirement plans may vary in the region you are living such as US or Canada.
Do you think that it’s time to offer retirement benefits to your employees? Not sure? Then here are 6 reasons that will compel you to think over this question and help you take your first step toward an employee retirement plan. Have a read:
To Attract And Retain Top Talent
Needless to say that if you offer benefits plans and incentives to your employees, it will help you attract the cream of the crop candidates. However, the concept of attracting and retaining employees goes beyond this.
When large companies do not offer retirement plans, they stick out because of a sore thumb as most of the other major companies provide their employees with it. However, for a small enterprise, it is an opportunity to stand out and rise above the competition by offering that is not common in other organizations. According to a recent survey, approximately only 15% of small companies that have less than 100 employees offer retirement benefits.
Therefore, this is the perfect chance to gain an upper hand in the job market and establish a strong brand image that will eventually bring in top talent to your company and retain them for a long time. Moreover, you can get rid of all the efforts to seek the right applicants for jobs as the pension plans will lure them to work with your company.
Apart from this, employees will not always get stuck to the wages, there are yet another factors that retain resources from and within the market. Personal fulfillment is important because your employees don’t want to feel like they are trapped in an inescapable situation and getting crushed each passing day.
Hene, your employees too want to know that they are doing a good job and their work is creating a positive impact on the organization. This is where your company’s policies and perks will take a turn. When they will come to know about the rewards along with retirement plans they will be ready to bring the positive work environment.
You can also educate your HR departments regarding various policies that could fulfil your employee needs.
To Avail Of Tax Advantages
There are many employers for whom monthly or annual contribution to retirement plans is a big turn off. The idea of committing huge funds is not acceptable to them, hence they avoid offering any such plan to their workforce. However, retirement schemes have something beneficial for employers as well which they cannot ignore – tax deductions.
Yes, many benefits programs are designed to avail of tax advantages so as to encourage companies to invest in such policies. Any contribution or cost incurred in connection to the plans is written off, reducing the tax burden on business owners. Moreover, they can claim a tax credit for the cost of starting qualified plans.
That is the reason that schemes like the 401(k) plan are quite popular among employers and employees. Also, employees need not pay income tax on the contribution until reimbursement of the benefits after retirement. This provides employers with two tax-saving advantages while also ensuring sufficient funds for a comfortable retirement.
It Is More Valuable Than A Pay Rise
Of course, salary is a major concern for employees to stay in a company and give the best efforts to attain organizational goals. However, they value a pension or an employee benefits scheme more than a pay rise.
It is because it gives them a sense of security even after they stop working. They are assured that their future is safe and this motivates them to work better. In recent research by Employee Benefit Retirement Institute (EBRI) it is shown that workers who are not saving for retirement are likely to do so if the employer opts for automatic paycheck deductions between 3% and 6%. This also increases their loyalty toward their company as they realize that it values them.
In case they have no benefits at work, the workers start looking for better job opportunities and you might lose your best employees even. When they are well-compensated, it boosts their morale and job satisfaction.
Retirement plans give a sense of security and encourage employees to yield more, through this way your company will rise and employees will perform better. It is pivotal planning or strategy that helps an individual after their paydays end.
For Financial Wellness Of Employees
Do you know what keeps employees motivated and focused? It is their physical and financial well-being. When they know that they have no financial worries and their life is secured, they feel less stressed which keeps them physically healthy and attentive to their work.
On the other hand, if they are constantly worried about their financial or retirement issues, they will be less productive and this may even hamper the quality and their workflow. This will lead to more absenteeism and might drive up your company’s healthcare costs.
In the survey conducted by benefits consultant AON Hewitt, over 90% of employers have agreed that the impact of financial stress is clearly seen in their workforce, hence they look forward to expanding financial wellness programs.
Yes, small organizations may not have enough funds to commit to expensive retirement plans but they can offer low-cost 401(k) retirement plans as their first step toward the financial wellness of their employees.
As said above, personal fulfillment is important and so as financial wellness. At some point of the duration, your employees may get baffled or confused regarding their future goals after they leave the organization by completing the full service. They too want to get financially stable in their declining years.
Your Employees Deserve It
We need not say that as an employer, you already do so much for your workforce by providing them with necessary goods, services, and jobs. We also agree that you spare no effort to come up with the best employee benefits administration plan for them that can make them feel valuable, secured, and happier.
Well, you can take this up a notch by offering a retirement benefits plan that secures their future as well. Most people struggle with their financial needs after retirement but with simple initiative, you can help them keep their worries at bay and give them a concrete solution. If a report by the Center for Financial Services Innovation is to be believed, then over 42% of Americans aren’t saving anything at all for retirement. With more employers offering qualified, tax-deductible plans, more people can save for their retirement.
Apart from this, if your employee is happy and settled they will perform well and their productivity will increase by 12%. Hence, your happy employee will try to perform as hard as they could with more energy as compared to unhappy employees.
Oh, You Need It As Well
Small business owners have to put in extra effort to stay in the competition and attain success. Unlike big brands, they don’t have different departments to look after employees. They are the face of their company and cannot afford to take time off. Hence, they need a beneficial retirement plan as much as their employees.
Whether they have enough savings or not and how much they can attain in their business, they need to secure their retirement without liquidating the business funds. Let’s face it – a retirement crisis will not only be an issue for your workers. Generally, business owners only save 10% of their income for their future and one out of four doesn’t save at all.
Therefore, when you offer retirement savings to your workforce, you can enroll as well. This will save you with a lot of uncertainties in the future and you can have a happier and more secure life.
As we mentioned earlier that almost 50% of small business employees don’t have a retirement plan. However, it’s time to make a change for the better. You can show your employees that you appreciate them and have their best interest at heart with such a simple step.
Your employees work hard and dedicate themselves to your company, now it’s your turn to show your commitment by sponsoring a workplace retirement plan. Opt for a simple scheme like 401(k) that is low-cost, hassle-free, and a perfect option for smaller organizations and create a positive environment for your business.
In a nutshell, you and your employees need retirement savings.Your plans will have financial strategies, investment,etc and the magic amount that would help you to sustain during your retirement. It’s never late to start the retirement strategies because sooner or later they would come into use.
It is a life-long process. Hence, you can begin with a retirement plan at any time, but it works best if you implement financial strategies from the start. That’s the best way to certify a safe, secure and easy retirement. However, it could amaze you because you would be in the long journey to reach that plan.