Shownotes
This week, on episode 32, Peddle Fast So The Future Is Not Your Fault; Default Into Savings Now, we receive some critical insight from Paul McEwan, Rea’s principal and director of benefit plan services – if the private sector doesn’t take control of America’s retirement problem, sooner or later the government will. Business owners play a huge role when it comes to ensuring the retirement readiness of their employees, and there are a variety of incentives out there to those who are proactive. The best way to promote retirement readiness in your business is to use your company’s plan document as a strategic tool; understanding that individual employee financial wellbeing holistically enhances the future financial stability of the company as a whole. In the 1980s, the American retirement process underwent a dramatic transformation from defined benefit plans that were paid for by employer contributions to employee contributed 401(K) plans – effectively shifting the financial responsibility of future savings from the employer to the employee. Unfortunately, employees and employers alike appear to be struggling with understanding the new responsibilities that have resulted due from this transition. Not only have we learned that employees, when left to their own devices, are unlikely to save for retirement on their own behalf; government statistics show that 53 percent of U.S.-based companies do not sponsor retirement plans. Furthermore, even when a company does offer a retirement plan to employees, the plan still fails to garner a meaningful participation rate (68 percent of eligible employees opt out). How can business owners educate employees about the importance of saving for retirement while encouraging improved participation? Start using your retirement plan document as a strategic tool that promotes a holistic approach to retirement readiness. Paul says that one way businesses can optimize the retirement plan is to embrace the science of behavioral finance with inclusion and participation. This can be done by “defaulting” employees into your company’s retirement plan while pushing longer term, voluntary investments. It may also be wise to begin offering plans with low administration costs, such as SEPs and SIMPLEs. Then, as the company becomes more profitable, you can begin utilizing more sophisticated, or qualified, retirement plans. Start listening to episode 32, peddle fast so the future is not your fault, on unsuitable on Rea Radio to discover more tips and incentives to help your business and your employees thrive. Want to learn more about optimizing your company’s retirement plan? Visit http://www.reacpa.com/podcast for additional articles and insight. ___ Like this episode? Give it a “like.” You can also ask a question, request more information or tell us what you think in the comment section! Thanks for listening!