No. According to the Employee Retirement Income Security Act of 1974, or ERISA, no employer is required to establish a retirement plan. But there are different requirements related to offering a retirement plan depending on the state your company is based in and company size. Not to mention helping your employees plan for a successful retirement can do so much for those who work for you and impact your business as a whole. In fact, a CNBC report highlights how 81% of workers like companies that automatically enroll their workers in a 401(k) plan. This proves how having a retirement plan can bring in skilled workers, keep your employees happy and loyal, and boost company morale.
How can I help my employees save up for retirement?
Sponsoring a retirement plan for your employees is a huge undertaking. For this reason, it’s best that you find one that best matches the needs of your employees and your business. For example, a traditional 401(k) is ideal if you aim to set a vesting schedule that inspires employee retainment. On the other hand, a safe harbor 401(k) helps you avoid non-discrimination testing and allows you and your employees to aggressively contribute for retirement. There is a myriad of other retirement plans available on the market. So if you want to settle on one that gives you and your employees an advantage, be sure to consult a trusted financial advisor and CPA for advice.
Help your employees improve their financial literacy
Personal financial problems often trouble employees the most. If your employees fail to take control of their financial worries, Entrepreneur points out that this may lead to absenteeism and poor performance. In order to help your employees get rid of their financial stress, you should help them improve their financial literacy.
In a nutshell, financial literacy is having a confident understanding of various financial concepts such as investing, debt, and saving. Having financial literacy allows your employees to effortlessly manage their own finances and figure out the best way to achieve their retirement goals. In addition, having financial literacy also empowers them to take advantage of financial products such as credit, which Petal Card states can be built by practicing responsible money choices such as paying on time, spending responsibly, and staying loyal to a credit provider. To help your employees improve their financial literacy, you can employ a financial advisor to hold financial wellness workshops and encourage your employees to seek out resources such as podcasts and books.
Encourage your employees to eliminate debt
It can be disheartening to contribute to a retirement plan for years only to use your payouts to pay off your debt. So, it is key that you help your employees get rid of their debt while they are still employed. One way to help encourage your employees to pay off loans is by encouraging them to change their behavior towards debt. A recent study showed that tackling smaller debts first and working your way up to bigger loans is the best way to pay off your loans. This is mainly because paying off smaller loans allows you to see your debt reduced immediately and helps you gain positive momentum. If your employee has too many debts and finds it hard to keep up with the interest rates, you can encourage them to take out a debt consolidation loan, which allows them to refinance their debt into one big loan.
By offering a retirement plan and helping your employees save up for retirement, you can cultivate a more satisfied, hardworking, and loyal workforce. For more business posts and insights, be sure to check out our blog here on Leading Retirement Solutions.
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