Employers who aren’t giving their retirement plans as much attention as their health plans could be missing vital benefits when it comes to finding new employees.
Providing the right health plan to employees is important and scrutinized on every level but when it comes to retirement, employers need to be just as diligent ensuring that benefits grow alongside employees, said Steven Maher, partner and senior wealth adviser at Hanover-based Domani Wealth.
It is not uncommon for clients to visit Maher with plans for retirement, only for him to have to tell them that they will need to work full-time jobs into their 70’s to fund it.
Today, employers have more tools than ever to ensure that their staff save what they need to be ready for the day they retire– it just may take an employer to benchmark their plans and be sure that they are keeping up with the marketplace to do so.
“Employers need to focus both on what they provide today and what that employee’s situation will look like in 20 to 50 years,” he said. “You want your employee looking in the mirror and thanking the organization for providing the tools and resources to have a successful retirement.”
If someone hasn’t updated their retirement benefits in some time, Maher said they may not realize just how many benefits that were once seen as high-end offerings for Fortune 500 companies, are now within reach for most employers.
401(k) plan features such as automatic escalation and enrollment allow employers to automatically deduct elective deferrals from wages and increase an employee’s contribution amount to a set percentage every year.
Maher also recommends offering financial wellness programs in concert with financial advisers, opening the workplace up to conversations on savings, saving for college and general holistic financial needs.
“With a lot of the tools available, you can be a small business in central Pennsylvania and have the same bells and whistles as some Fortune 500 companies,” he said.
The financial adviser said that he has yet to see many of his clients need to suspend their 401(k) matches as a result of the COVID-19 pandemic. If an employer is looking at the possibility they cannot continue offering their benefits, he recommends talking to a third-party administrator before making the decision.
“There may be a way to delay or suspend your match and not necessarily completely get rid of it,” he said. “With a 401(k), it can be complex in how you match and there are different ways for you to suspend that match.”