A new retirement study is released every year, and the results are always the same – people are not saving enough for retirement. Median retirement savings are only $120,000 for workers aged 55-64, meaning they only have a budget of around $1000 per month after giving up work. When you factor in longer life expectancy, the rising costs of living, and potential medical expenses, $1000 is clearly not enough.
The older people get, the more stressed they become about being able to afford to retire. Businesses are in a unique position to help their workers, both young and those nearing retirement age, feel more secure about their financial future. You can encourage your employees to start saving early by offering a pension savings plan.
Here are 6 reasons why you should help your employees plan start saving early.
1. Financial stress impacts employers’ bottom lines
According to Employee Benefit News, financial stress is the main culprit behind workplace stress. Employees who stress about their finances are:
- Twice as likely to be looking for a new job
- 10 times more likely to be less productive at work
- 11 times more likely to have sleeping problems
Each of these outcomes means that employers will be affected one way or another – whether through reduced productivity, failure to meet crucial deadlines, or even a higher turnover rate.
For example, if you had a Chief Compliance Officer who wasn’t sure about how their future was taken care of, would they be at their best when anticipating the future of your healthcare practice? As you can see, the answer has some serious financial implications that aren’t always apparent at first glance.
By helping your employees save for their retirement through various retirement vehicles (i.e., 401(k), Roth IRA, annuities), your business relieves this uncertainty for the future and maximizes your organization’s productivity.
2. More employee loyalty
When your business is part of an employee’s long-term plans, they are more likely to reciprocate and stick it out for the future.
It may seem like a relic of the past or simply reserved as a caricature of the Japanese “salaryman,” but the worn-out office worker with a sense of loyalty to their employer is rare in our modern working world. In the past, these people were loyal to their employer because it ensured a guaranteed and comfortable retirement safety net in exchange for their hard work. Can your organization say the same in today’s uncertain climate?
Cynicism aside, loyalty still exists in employees if their employer shows that they care about their well-being. Helping your employees find a clear path to retirement means that workers will feel that their needs are taken care of, and in exchange, employees are more willing to give 100% of their effort.
3. Less turnover
According to a recent survey from PwC, nearly 75% of respondents said they would jump ship to a company that cared more about their financial well-being versus one that did not. The thinking behind this is simple – an employee may be looking for other jobs to provide more income for the future.
Helping your employees start saving for retirement shows that they won’t need to look for a better-paying position elsewhere (even without retirement benefits) or a second job to help fill in the gaps. And as most employers know, hiring and training replacement employees is an expensive and time-intensive process, so it just makes fiscal sense.
4. Attract better talent
In today’s economy, workers have the upper hand when it comes to finding work that suits their interests and life goals. Being an employer that offers retirement options means that your business will stand out from the competition.
Talented workers weigh their options. Therefore, encouraging your employees to start saving early creates a culture to attract talent that thinks beyond just a paycheck.
Don’t forget that word gets around in today’s information-rich culture. If, for example, your company gets a bad rating on the job insights portal Glassdoor because you didn’t offer employer-matching contributions or other retirement vehicles, your company’s long-term prospects may suffer.
5. Less sick days
Studies have shown that the mental stress of financial uncertainty leads to costly physical ailments. Stress creates or worsens the risk of conditions like depression, diabetes, Alzheimer’s disease, asthma, heart disease, and more.
Similarly, “comfort eating,” alcoholism, and drug abuse are also relatively common coping mechanisms against stress due to economic uncertainty. If your employees are stressed out about their finances, they may engage in harmful behaviors and be tempted to call out of work more often.
With employee attendance being a constant metric for success, business owners must know that sick employees mean higher insurance premiums and more business disruption, especially if a staff member is chronically ill. That’s why it’s up to your company to provide retirement options to ease some of this stress.
6. Creating a better company culture
No one wants to work in a workplace with toxic company culture. In fact, companies with low employee morale tend to have negative performance that’s directly related to company culture. Retirement planning is part of that culture, where year after year, employees feel comforted by growing older with their colleagues, not whispering in the break room about the next layoff or how the company doesn’t care about their needs.
There are a couple of easy ways to create a better company culture when it comes to retirement:
- Provide as many options for retirement as possible. Having choice means that workers can choose a retirement plan that fits their needs.
- Hold regular meetings about employee benefits to ensure that everyone takes advantage of what’s available. This can be done annually to show the effects of accumulated funds, address any changing policies (such as maximum contributions), and answer any questions that employees may have.
- Show how retirement investing in mutual funds, for instance, affects the performance of the companies they’ve invested in. For example, if an employee wants to support a sustainable energy company, their retirement savings plan can contribute to its success and viability.
As you can see, encouraging your employees to start saving early for retirement is a smart decision with plenty of benefits to your organization. Start today by showing that your organization offers plenty of retirement options and cares about its workers’ well-being. It’s a win-win.