Become a top employer!
Do you want to gain a competitive advantage in recruiting, retaining and rewarding employees?
You can, with a Smart 401k Plan Design and an organized course of action. By offering employees an optimized 401k plan in plain language, you can have a competitive advantage.
According to a recent Betterment for Business survey, approximately 70% of the respondents described a good 401k plan as an important or very important consideration in a job offer and 78% of the respondents indicated that they deferred the amount to capture the full employer match.
This is an opportunity to set your company apart from the rest. By changing expectations and how you position your 401k plan to current and prospective employees. This will provide your company a competitive advantage in any labor market and strengthen your company’s viability.
How do you change the expectation? Simple, you change the conversation. As an example, you have a prospective employee named Sam, who is 25 years old and who you are looking to pay $36,000 a year. When it comes time to make the benefit program offer, most companies communicate the benefit of the 401k program in some sort of match formula that most employees do not understand. It is typically communicated as “We match 25% of the first 6% you contribute to the 401k plan.” That is, of course, if the company offers a match or chooses to highlight the program.
Whether a company match is offered or not, re-frame the message to “how” the program benefits the perspective employee thus changing the conversation, and putting the focus on the prospective employee. Position the 401k program as the benefit it is, by say… “We offer a retirement savings account for our employees and by participating in the program and taking full advantage our employer contributions, you could accumulate assets of $15,723 after 5 years, $36,939 after 10 years and $480,240 by the time you reach age 65.[i] Our company match is free money that allows us to significantly increase the total amount you can put away towards your retirement. It is important to us, as an organization, to help provide our employees with the opportunity to have a successful retirement.” This is a format an employee can understand and provides the employee with a vision of their future and longevity with your organization.
Final Advice: Remember all employees have an interest in accumulating assets just as you do; very few have been shown how or have had it clearly explained to them to this point. It’s no secret; a happy work environment equates to employee satisfaction and retention.
Contact Joe Trybula CFP®, CPFA® at 800.307.0376 or email@example.com learn more about Smart 401k Plan Designs and plain language to optimize your company 401k program.
[i] The Hypothetical future value calculation of your 401(k) balance is calculated by accumulating the total contributions over the periods shown and assuming a 6.00% interest rate compounded annually. It illustrates what can happen when you start to save now, invest wisely and take control of your retirement future. Your results will vary. Investments include risk, including possible loss of principal. No rate of return can be guaranteed.