How Offering a Retirement Plan Can Help You Grow Your Business
Endless opportunities for relaxation. Time to take up new hobbies. Feeling financially free with wide-open days. However you personally envision spending the autumn of your life, one of the cornerstones of the American dream is a secure retirement. After a long and dedicated career, people envision their golden years stretched out ahead of them, filled with leisure and a chance to enjoy what they worked hard for all their lives. That dream has become more difficult to reach over the past decades, but with a little bit of employer-sponsored help, it’s still possible to restore retirement to America.
Defined benefit plans have been slowly declining in popularity throughout the past few decades, bringing defined contribution plans to the forefront of the conversation. Offering an employer-sponsored retirement savings plan has many benefits, both to the employee and the employer—yet according to recent research, nearly half of Americans don’t have access to an employer-sponsored retirement plan.1
Benefits of offering a defined contribution plan to employees
As a business owner, you may already be aware that implementing an employer-sponsored retirement plan, like a 401(k), can earn the business a tax credit of up to $5,000 for the first three years of a plan to help cover administrative expenses, but the benefits don’t end there. Employer contributions are tax-deductible, assets in the plan grow tax-free, and flexible plan options are available for those who like to have maximum control. For employers, offering a defined contribution retirement plan, like a 401(k), just makes sense.
Plus, in this day and age, many employees expect the opportunity to save in an employer-sponsored retirement plan. Finding qualified applicants for open positions can be a challenge for many small businesses, and offering a retirement benefit to applicants may make the difference between welcoming a new employee and continuing your search. Retirement plans are a key deciding factor—along with salary, time off, and health insurance—for many job searchers, and you don’t want to close the door on the perfect applicant just because your company is missing a common employee benefit. More and more business owners have learned that in order to attract and retain top talent, they’ll have to sponsor a stellar retirement plan.
Learn more: How to evaluate a 401(k) plan provider
If attracting new talent isn’t a top concern, maybe this is: a recent study found that nearly one in three employees have let personal finance issues be a distraction while at work. What’s more, 56 percent of those who are distracted by finances at work report spending three or more hours per week thinking about or dealing with the issues.2 And it doesn’t even end there. Employees who report feeling financially stressed are twice as likely to look for a new job, and almost 75 percent would be attracted to another employer they feel cares more about their financial wellbeing.2 So clearly, financially insecure employees aren’t just a hazard to themselves—they’re a hazard to the business too. And as a business owner, you have the unique ability to combat this issue and make a profound difference in employees’ retirement outcomes all at once.
How to start a small business retirement plan
Now that you know all about the benefits of offering a retirement savings account to your employees, where do you even begin? Working your way to becoming a retirement plan sponsor can be easier than you might think. The government wants to help businesses make retirement plans available to people, so regulations continue to make the process easier and more straightforward.
Plus, a retirement plan is one of the most powerful and rewarding benefits you can offer employees as a business owner. Not only are you showing them you care about their financial wellbeing and future, but you’re setting your business up for success as well.
As the nation’s largest retirement services provider, at Ascensus, we offer retirement plans of all sizes to give you the freedom to design a plan that’s going to fit the unique needs of both your business and your employees. Learn more about the retirement plan options we have available, or contact one of our retirement plan representatives at 800-345-6363.
Sources:
1"Nearly Half of Americans Do Not Have Access to Retirement Plans at Work" AARP, 2023. https://press.aarp.org/2022-7-13-New-AARP-Research-Nearly-Half-Americans-Do-Not-Have-Access-to-Retirement-Plans-at-Work
2"2023 Employee Financial Wellness Survey" PWC, 2023. https://www.pwc.com/us/en/services/consulting/business-transformation/library/employee-financial-wellness-survey.html
