Employees want more than a small stipend for their services. Work is more than the paycheck. They want to know they’ll have enough to make ends meet now and something left over for the future.
Unfortunately, inflation and rising living costs are often outpacing the average salary, forcing employees to become more savvy with their money and create a carefully thought-out plan for the financial future.
The 401(k) Plan
One of the most common ways for employees to secure a financial future is by setting up and regularly contributing to a 401(k) plan. Many employers offer plans that allow for pre-tax income to go directly into the account where it will be invested and allocated in a way that is conducive to your personal goals.
What does all this mean for the employee?
It means money for nothing or next to nothing. They set aside some of their salaries and the money goes to work for them. At first, the gains are conservative but, with decent market performance and compound interest, the end results are astronomical.
Your Role as an Employer
Not all employers offer 401(k) plans and those who don’t always provide employee-matching incentives. To establish yourself as a top employer and maximize employee retention, it’s prudent to offer 401(k) plans to your employees and provide education on how investing in their future is beneficial for long-term security and success.
In addition, top employers often match a percentage of an employee’s contribution. The amount you are willing to contribute is up to you, but the most common contribution falls between 7% and 14%.
Some employers contribute as much as 20%, which makes it incredibly hard for an employee to walk away from a position even when offered a higher salary. The promise of great wealth in the future far outweighs a pay increase today.
Additional Incentives for Offering 401(k) Plans
Offering 401(k) plans for your employees to contribute to retirement savings is an excellent move. On the one hand, you reap an immediate benefit in your corporate image. Employees and potential candidates perceive you more as an organization with values that cares for its employees. They envision longevity with your company and, regardless of daily circumstances that may affect their perspective, they will understand the value of your offering and be hesitant to leave once hired.
In terms of more monetary advantages, the IRS allows employers to deduct contributions on the federal income tax return. This puts more money back into the company and back on the bottom line, offsetting the plan’s overall cost.
In our modern day, it’s becoming more and more standard to include benefits including 401(k) plans. Contact Employee Retention Benefits today and find out what they can offer your organization and employees today!
