As an employer, you have an opportunity to make a difference in the financial well-being of your workforce by offering the tools and resources they need to be economically secure both now and in the future. According to the Report on the Economic Well-Being of U.S. Households in 2019 issued in May 2020 by the Federal Reserve, among those non-retired survey respondents with a retirement savings, 55 percent reported the savings were in a defined contribution plan such as a 401(k) or 403(b), but just 37 percent thought their retirement savings were on track.
Many people wonder if they are saving enough for retirement and employers can provide guidance and strategies to do so. Employees like to feel valued and one of the easiest ways to show you care about their success is to help them learn how to save for retirement. Here are a few ways you can help your employees invest in their future and boost their retirement savings.
Pay a fair wage
It can be a win-win for both parties when employers offer a fair compensation program. Paying a fair wage based on the skills and qualifications for a job puts employees in a better financial position and offers them the opportunity to contribute to their retirement fund each pay period. The benefit to the employer is the ability to attract and retain employees and increase productivity. Workers who feel valued and are paid well are frequently more engaged and committed to their employers.
Provide a company retirement plan
A company retirement plan can make it easier for employees to save for retirement. It provides a path for workers just beginning a career to get started and gives new hires the option to transfer funds they may already have with a previous employer to your company’s plan.
There are many options to choose from when creating a company retirement plan such as 401K, Simplified Employee Pension (SEP) IRA, and Simple IRA. Each of these options allows the employer to offer a matching incentive to encourage the employees to save more of their salary. For instance, the employee may have to save at least 6 percent of their pay to get the company match of 3 percent. This is a great benefit to the employee and may afford your business additional tax breaks at the end of the year.
Before you select a plan for your company, make sure you do research to find a financial advisor you trust and will feel comfortable partnering with to help you develop a plan.
Encourage employees to maximize savings
Make sure your employees understand the benefits and features of the company retirement plan and encourage them to contribute the maximum percentage of their paycheck they can afford. If your company retirement plan allocates funds for a matching program, make sure employees are aware of this and motivate them to take advantage of it. Share this retirement calculator with your employees so they can see the impact of increasing their contribution.
Host information sessions
It can be helpful to bring in a financial expert on a regular basis to explain the details and benefits of saving for retirement. In addition to an annual meeting to review your company’s retirement plan, consider hosting events such as a "lunch and learn" meeting with guest experts who can discuss various topics related to educating and motivating your workforce to be engaged with meeting retirement savings goals.
Let your business lead by example
Promoting financial security and good money management skills can instill a sense of confidence and peace of mind for all parties involved. Certainly your employees will personally benefit from having access to the resources and tools you can offer related to retirement savings, but your business will be rewarded with higher productivity, better staff retention and workplace culture where employees know that they are valued.
Choosing the right partner to help you develop a retirement plan for your organization is important. Lakeland Financial Services offers a range of services for an employer-sponsored retirement plan, including 401K, SEP IRA, a Simple IRA, or a profit sharing programs. When you partner with Lakeland we work with you to create a custom strategy to meet your organizations specific needs and we’ll continue to help you manage and adjust over time to help your employees reach their retirement goals.
Want to learn more? Our Financial Advisors are available to speak with you via phone, virtual meeting or in-person consultation. Request a consultation for a no obligation, complimentary and confidential financial review with one of our financial advisors!
If you found this blog helpful, consider reading “Planning for Retirement as a Business Owner.”
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