Many leading economist have stated that the most recent financial crisis in America was caused in part by the obsession of individuals and corporations with spending and their lack of savings or ability to save. The leverage felt by Americans from credit card debt alone is staggering. When it comes to retirement savings or planning for retirement the outlook is even more grim for some.
A recent study published by the ASEC discovered the following:
- Only 57% of those not retired say they are saving enough for a retirement with a “desirable standard of living”.
- An important reason for inadequate retirement savings is the failure or inability to “save for retirement at work through a 401(k) or other contributory plan,” which only 55% of the non retired report having.
There is a perception by business owners (particularly small business owners) that a 401k plan is expensive and complicated to put in place. Neither is true. At Texas Associates, we recently helped a client put a plan in place for less than $1,000 a year in administration cost, and it only took 60 days to put in place.
Keep in mind that a 401k program is not necessarily an investment plan, but a forced savings plan. With the help of a Trusted Advisor, a firm can put a variety of investment products in place that can cater to the individual risk/reward strategy of your employees. Not only can a 401k plan be a value added benefit for your employees, it will be a required tool to recruit new talent to your firm, particularly if you are in a market that has to compete with larger employers.
Outside of the financial reward and gain that employees will appreciate as a result of a 401k plan, as an employer we have an obligation to help those that work for us plan for the future. A “forced savings” plan just might be the way to help many in this country make better use of their finances and start thinking about their future.
An employee with a better financial outlook for the future, will make for a more productive employee. If you have additional questions about employee benefit plans or 401k opportunities contact your Trusted Advisor or our office.