What if you could lower your future payroll and healthcare costs simply by re-designing your company’s 401(k) plan? Well, the good news is that you can.
Two of the largest expenses employers face today are payroll costs and healthcare costs. Regardless of whether you are the CFO, COO, HR Director, or Owner of a company, these costs matter to you. They determine how you will hire, whom you will hire, and how much the company needs to produce just to keep up with these costs.
What does this have to do with the retirement readiness of your employees? Simply this — if your employees are not adequately prepared, or on track, to replace 75% of their income in retirement, they will likely work longer. And studies have consistently shown that when employees work past retirement age because they can’t afford to retire, the company’s costs go up.
The numbers can be staggering. Healthcare costs for a 67-year-old compared to a 35-year-old can be double or more. Not to mention, long-term care, disability and other health expenses more commonly associated with older adults. In addition, older, more experienced employees tend to earn higher salaries.
Does this mean you should only hire younger people, or fire everyone over retirement age? Certainly not. There are numerous advantages to having experienced leaders in your company who can help drive the company’s vision. And if you simply fire older employees, you are just putting off the problem (not to mention breaking the law).
The most appropriate course is to hire an experienced advisor who can look at a company’s retirement plan and implement changes that can significantly alter the retirement readiness of its employees. Using the company’s own census data, the advisor should also be able to show exactly how the demographics and retirement trends are affecting the company’s bottom line.
A good fiduciary advisor does more than just pick investment options for the plan. Helping employees prepare for retirement and improving the company’s bottom line are equally as important.