Popular media sources may paint the picture of a diminished need for company retirement plans when it comes to financial planning for employees. However, this is not completely the case. Just because defined benefit plans are less common these days doesn’t mean that employees no longer see the importance of corporate retirement plans. If a good portion of money is set aside for retirement, this decreases the stress of employees significantly, and could increase workplace production.
As an employer, the benefits you offer employees are extremely important. The goal should be to make sure that employees have lucrative incentives while keeping your business out of harm’s way financially. Here are some of the various viewpoints to keep in mind when it comes to a corporate retirement plan.
From Your Employees’ Point of View
In the past, workers accrued savings for retirement by making extra mortgage payments on their homes, putting funds into savings bonds and increasing the cash value on life insurance policies. These are all logical ways for saving for retirement, however, not all Americans are able to do this. A number of American families depend on the benefits package from work to fund retirement. Items like 401K plans, which can feature employer match and automatic enrollment, make it easier for employers to build their nest eggs.
Employees that have a slightly higher salary may prefer to save for retirement using a nonqualified savings plan. Since health care costs are also rising, health and retirement savings hybrids like Health Savings Accounts are also becoming more popular. However, it’s important to note the employees are generally looking for retirement plans offered by their employer to provide financial security in retirement.
From Your Viewpoint As The Employer
You may have heard some of your fellow business owners state that they are slowing down on the hiring process because they don’t want to be financially responsible for another employee’s health care costs and retirement needs. If this is also your situation, it’s important to make the most of your current workplace team, and one of the ways to do this is to offer more appealing retirement benefits.
A retirement plan that will cover all or most of the cost of living after an employee is no longer working can appeal to individuals of all ages. Younger employees will see the corporate retirement plan as a chance to grow wealth within your company, as opposed to making investments and building a fortune elsewhere. A solid retirement plan could also keep employees from moving to other companies where the benefits are more appealing.
As a business owner, it’s important to take a detailed look at your company’s retirement plan. Make sure that you’re offering benefits to your team members that will actually prove lucrative in the long run. Present retirement benefits as part of successful employment, and not simply an incentive package for team members that you favor. When you review and evaluate your retirement plan and make the necessary changes, you could be helping your entire company to improve financially.