Small and medium-sized business owners are often forced to wear multiple hats as they strive to balance their priorities and maintain daily operations. One aspect of business employers shouldn’t inadvertently overlook is exploring ways to offer comprehensive employee retirement plans.

Offering retirement plans is an important modern business strategy and is beneficial for both employer and employee. It can be a powerful initiative that yields long-term advantages for everyone. In today’s post, we’ll take a look at three great reasons you should consider implementing a retirement plan for your employees.

1. Attract and Retain High-Quality Talent

One of the most significant benefits of retirement plans for employees is that they deliver an ability to not just attract, but retain high-quality talent. Providing competitive retirement plans makes your company a desirable place to work and, as such, should be factored into your employee retention strategies.

Retirement plans can serve as a critical factor in recruitment. For many employees, a comprehensive retirement plan can be the determining factor for candidates weighing their job options. One study suggests that a whopping 81% of employees said retirement benefits “make up a major portion” of what they seek in their job searches. Additionally, 66% would “like more help” from their employers to reach their retirement goals.

Employers choosing to ignore what good candidates seek increase their chances of losing out to their competition when it comes to attracting top talent.

2. Boost Employee Productivity and Loyalty

Employees who feel financially secure are usually happier in their jobs, and having access to employee retirement plans can go a long way toward boosting productivity. An increasing number of employees are worried about their financial future, but knowing they have the security of a retirement benefit can free their worries and put focus on productivity. Many are also more likely to go the extra mile in their job performances.

The numbers strongly suggest that a retirement benefit perk contributes to inspiring loyalty in employees, increasing their levels of satisfaction and dedication. According to a 2022 survey, roughly 60% of employees said the employee retirement plans through their jobs were an “important reason” to stay with their employers (up from an estimated 40% in 2010). Furthermore, 63% are willing to allow more withholding from their paycheck for a guaranteed retirement benefit.

The takeaway is that offering strong employee retirement plans can lower turnover rates. This means less of your budget spent recruiting, hiring, and training. Think about it this way: You can use that savings to invest in your employees and show them how important they are to you.

3. Tax Advantages for Your Company

Another tangible benefit for small and medium-sized businesses to establishing good employee retirement benefits are the significant tax benefits your business can receive. Your company may be eligible for tax credits equating to thousands of dollars.

• The Startup Credit: Allows a credit for some costs associated with starting and running a new retirement plan, up to $5,000 per year for the first three years.
• The Auto-Enrollment Credit: Employers adding auto-enroll to their retirement plans can obtain a tax credit of $500 per year (up to three years).
• The Employer Contribution Tax Credit: Employers can get tax credits for contributions made to employee accounts, up to $1,000 per year (up to five years).

Additionally, employer contributions to employee plans – and their own plans – are typically tax-deductible so long as they don’t exceed limits. This further boosts the financial benefits of establishing employee retirement plans.

Ready to Learn More About Retirement Plans?

Today’s top talent is seeking more than a paycheck; they want future financial security. Offering a comprehensive retirement plan can go a long way toward attracting and retaining employees.

If you’re a small or medium-sized business owner who is looking into options for employee retirement plans, Accounting Freedom can help. Contact us today to schedule a consultation and learn how you can implement effective retirement solutions and enjoy the natural benefits that accompany offering employee benefits.

Discover our retirement planning services to benefit both your company and your employees: Accounting Freedom Retirement Plans