Innovative Employee Incentives #13: Retirement

Rachael Wilterdink > Employment > Incentives > Innovative Employee Incentives #13: Retirement

Most Americans don’t take full advantage of employer-provided retirement plans, nor do they save enough. Employers know that it’s vital for people to build up their nest egg so people can have a safety cushion and a comfortable lifestyle when their retire. There are many ways employers can help you prepare for your future. Here are a few:

Pensions

A long time ago, pension plans were the norm because the life expectancy was much shorter, and companies could depend on their former employees’ mortality rates. Today, however, very few organizations offer pension plans. People are healthier and living longer, which means paying out pensions for an extended period. Many companies can’t afford to foot the bill for that long. But, if you’re lucky enough to work at a place that offers pensions, make sure their plan is well-funded.

401k (or other eligible retirement plans)

401ks have been around for a while, and they’re the best vehicle to help you set aside your hard-earned money so you can enjoy life in your golden years. Most large companies provide a 401k plan or another comparable retirement program. There’s no law requiring that employers offer these types of accounts, and smaller companies may not have this as a benefit, so be sure you know whether a 401k is available before taking a new job.

401k Employer Match

Some companies provide an additional incentive for you to save money for the future – an employer match. The matching amount varies from company to company, generally a certain percentage of your annual income, with some being more generous than others. However, employer contributions are voluntary, so don’t count on there being one – ask to confirm.

Higher employer 401k Match

If employers want to stay competitive in this tough talent market, offering a higher match than their competitors is an effective way to get new people in the door and keep them.

Immediate 100% vesting

Some companies have a vesting schedule, meaning you may lose a part of your retirement savings if you leave before a specific date; this is tricky because it isn’t a question most people ask before accepting a job (but they should). If employers want to stand out, they offer 100% vesting immediately, meaning the money in the account is yours with no waiting period.

Safe Harbor Employer Contributions

My current employer offers Safe Harbor Contributions, but none of my previous employers did. Unlike employer matches, Safe Harbor contributions are employer-funded contributions to your 401k without requiring you to save any of your own money. Of course, you’re better off if you continue contributing, but this can give you a head start.

Roth IRAs (Individual Retirement Accounts)

Another vehicle for retirement savings is the Roth IRA. If your company offers both a regular 401k and a Roth IRA, you might be able to split your savings out between the two accounts. The advantage of Roth IRAs is that the money contributed is after-tax, which means when you withdraw the money, you won’t be required to pay taxes on the money since you already paid them. There’s a little loophole in that you can convert a traditional 401k into a Roth under certain conditions – I’m not a tax expert, so if you’re interested in this savings tactic, you might want to research it.

Company paid-for financial advisory services

I don’t know about you, but I don’t have a dedicated financial advisor (though maybe I should). Companies that want to educate their employees about financial planning for retirement may retain one on their employees’ behalf. I once had an employer that offered this service, and I found it to be a valuable resource when I had questions about specific financial matters.

Part-time retirement

Want to ease into retirement rather than go all-in? Try part-time retirement. If you’re still ready and able to work but don’t want to work full-time, ask your employer if you can go part-time. You may lose some other benefits (such as insurance), but if you still want to continue working, this might be an option, especially if you have a lot of institutional knowledge.

Final Thoughts

I certainly wish I could have started saving for retirement as soon as I turned 18 and got a full-time job. The power of retirement savings is time, so the sooner your start, the more your money will grow and the less you’ll have to put in to get to your retirement savings goal. The plans that employers offer can also make a big difference in when you can retire.

Thanks for tuning in. If you missed any of the previous blogs in this series, check them out now:

Did I miss anything (other than traditional IRAs, which I intentionally left off this list because they’re typically not employer offered, as far as I know)? Have you seen any different ways that organizations help their employees with retirement? If so, I would love to know, so let me know in the comments below!