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How to Help Prepare Your Employees For Retirement

Around 78% of employers believe their workers are prepared for retirement, but their employees feel differently, with only 45% of them feeling prepared. Planning for life after work doesn’t just affect the employees; it impacts the company. If your workforce consistently worries about their future financial wellness or their ability to make ends meet, they aren’t actively engaging at work, reducing their productivity and attention to detail.

While concerns about retirement vary by age group or tax bracket, it’s important for business owners to assist their workforce with retirement planning. Providing your workforce with the resources and tools needed to properly plan for retirement can improve employee trust, loyalty, and attract top talent. Continue reading to learn about the different ways you can support your workforce’s retirement journey.  

Promote Retirement Plans 

One of the most well-known ways employers assist their employees with retirement is by offering a retirement plan. A retirement plan is a financial strategy that helps individuals save money for life after work. It utilizes resources such as 401(k) plans, Individual Retirement Accounts (IRAs), and other options to grow savings.  Individuals can set aside a certain amount of their income into an account, allowing them to start saving earlier. Providing tools like a retirement plan demonstrates loyalty to your employees and shows you care about their well-being. 

Provide an Employer Contribution 

Depending on the company and plan type, employers often contribute funds to their employees’ retirement accounts. Offering a high contribution amount is another way to attract top talent and retain your current workforce. There are several contribution types that employers can provide.

Matching contributions 

  • This contribution is when an employer adds money to an employee’s retirement account, usually based on a percentage of what the employee already contributes.
  • The amount grows tax-free while in the plan and is only taxable when withdrawn.

Nonelective contributions 

  • This contribution is given to all eligible employees and is not contingent on whether the employee contributes to it.  
  • These contributions are tax-deductible. 

Profit-sharing contributions 

  • Profit-sharing contributions are a type of retirement benefit provided by employers, where a company allocates a portion of its profits to employees by making direct contributions to their retirement accounts. 

Provide Educational Resources 

A great way to prepare your workforce for retirement is to educate them about their options. There are various retirement plans available, such as a 401(k), Simplified Employee Pension Plan (SEP), and Employee Stock Ownership Plan (ESOP), among others, each with its own benefits. By offering educational sessions and providing advice regarding your specific retirement plan offerings, you can help your employees make more informed decisions about their retirement and future financial planning. 

Provide voluntary benefits 

Employers can support their employees’ retirement savings goals by offering a range of voluntary benefits to reduce financial stress. For example, health care benefits such as dental and vision coverage, and health savings accounts (HSAs) help employees manage out-of-pocket medical costs, allowing them to invest more towards retirement. Additionally, benefits like long-term care insurance, legal assistance, and identity theft protection provide financial security and peace of mind, which can encourage more consistent retirement contributions.  

Retirement Plans and GMS 

Effectively budgeting and planning for retirement is important for employers and employees. Employees often look to their employers for help regarding funding and contributions. Managing employee retirement funds can be a complex and overwhelming feat for a business owner. Luckily, there are third-party companies like Group Management Services (GMS) that can assist with 401(k) management and retirement planning.  

Our team can help you manage your retirement contributions and help you set up fully customizable profit-sharing plans that make your company more attractive to quality employees. From contribution amounts, vesting schedules, and eligibility requirements, GMS can help ensure your compliance and make sure you get the most out of your retirement plans.  

Learn more about GMS’ profit-sharing and 401(k) plans here!