Why Retirement Plans Are More Important Than Ever

Written by The Peppermint Team

Peppermint was created by a group of business owners, entrepreneurs, and benefits experts who have been on both sides of the table as employees and employers.

April 4, 2022

Saving and investing are critical to achieving your goals and living the life you dreamed of.  To retire comfortably, you need to regularly set aside funds to build a nest egg. However, most people have trouble saving, or at least, saving enough to be able to retire with peace of mind.

The average American is now living longer and retiring later than ever before. There are bleak-looking retirement statistics from annuity.org that show why retirement planning is more important than ever:

  • In 2021, the expectation is about $1.04 million in savings for a comfortable retirement.
  • 3/4 of Americans agree that the country is facing a retirement crisis.
  • About 55% of workers plan to work in retirement, 35% of those say that the lack of retirement savings is a cause and 14% intend to make working in retirement a source of income.

As an employer, you can help empower your employees to save up for their future by offering retirement plans. From IRAs to 401ks to pooled employer plans (PEPs), there are a range of methods you can avail of that match your company goals and financial capacity.

Before discussing our area of expertise (Pooled Employer Plans), we’ll first dive into why retirement planning is essential.

Everyone eventually has to stop working

Inevitably, we will all eventually have to retire from our jobs. While retirement is something to look forward to, it can also be scary. What should we be doing to make sure that we live the life we want? 

That’s where retirement benefits come in. Consider offering a retirement plan to help your employees feel more secure about their future. It not only shows your employees you are invested in them, but also improves loyalty, morale, and engagement with your organization.

The average life expectancy is rising

According to the World Bank, the average life expectancy for Americans in 2019 was 79. Digging down a little further, life expectancy  for males is 76 and 81 for females. And of course, it goes without saying that the longer you live, the more money you’ll need to maintain your living expenses. Don’t forget that the statistics we mentioned above are for 2019. The numbers are steadily climbing thanks to continuous medical improvements and breakthroughs in public health. Barring any other pandemics, this upwards trend is expected. So it would help if you started getting your employees to think about retirement planning and offering a benefits package.

Inflation will kill the value of savings

Inflation is a sneaky little thief that robs your money and future financial security. It will make your savings less valuable and eat away at your money’s purchasing power. That is why it’s crucial for people to put their hard-earned money in savings accounts and investment instruments that yield higher returns. For context, the annual percent yield (APY) of bank accounts is 0.55-0.75% depending on the bank. On the other hand, the US inflation rate in 2021 was 4.7%.

If your employees save for retirement with only a savings account, their money  will simply lose its value and won’t be able to keep up with inflation. The good thing about retirement plans is that your employees can opt to put money in specific instruments or investments to harness better returns.

If you’re looking to get your employees started, you can talk to a pooled plan provider (PPP) like peppermint to learn how to maximize investment yield for you and your employees. Like the 401k, PEPs allow for flexibility in the asset allocation of your contributions, like bonds or mutual funds. In addition, the growth your money nets as you continue to invest in retirement plans is tax-free, allowing you to earn more.

Be prepared for any emergencies

In this world, anything can happen. At any point, there may be something that you or your employees need to spend money on, like damages to property, medical treatment, the death of a family member, car trouble, and other surprise costs in your day-to-day life. When that day comes, a retirement plan can also be a contingency plan that will help you in any emergency.

For example, your retirement plan will pay you a monthly income. It is also possible to draw on your retirement account during times of financial hardship.

Financial security leads to better peace of mind

Financial security will help your employees focus on their career and your business.By providing retirement benefits, you can stop your employees from constantly mulling about their future and potentially looking for other jobs that offer them better long term security. 

A good retirement plan will give your employees the peace of mind that they can live comfortably and maintain their lifestyle without relying on inheritance or social security benefits.

 That is one enormous burden off their minds.

As an employer, you can empower your employees and your business

You can help your employees stay in their jobs and even grow their careers when you offer them a retirement plan. It will also help you to keep your best employees. Studies have shown that employees who feel appreciated and valued are more likely to stay with you, so taking care of them can make all the difference in your workforce loyalty and turnover rates.

One of the easiest ways to prove to your employees that you value them is to help them secure their future by offering retirement benefits. This shows your willingness to keep your employees with you for the long haul. 

Retirement benefits always pay-off for business owners in the long run because you save money from tax breaks and higher employee retention.

Peppermint is here to help!

If you’re interested in setting up retirement plans that can benefit your business and your employees, we’re here to help. Peppermint is a pooled plan provider (PPP) that assists businesses from all industries and in all shapes and sizes to set up a 401k without the risks and big cost.

Small to medium businesses like yours can set up a Pooled Employer Plan which allows for several other businesses to pool their funds in order to open a retirement plan. With a PEP, you lessen the fiduciary risk, administrative costs, and time-consuming management of your plan because we, your PPP, do all the heavy lifting for you!

We have different plan options depending on your company’s needs and financial capacity. If you’re interested in exploring a PEP with peppermint, send us an email info@peppermintira.com or fill out this contact form and one of our retirement plan specialists will get in touch with you as soon as possible.

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