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Small business owners know a few things about their employees. And it seems as the economy continues to falter, many business owners also know this one thing: employees aren't ready to retire. It doesn't help that retirement plans are expensive for small business owners.
Around 75% of small business owners feel that America is hitting a retirement crisis because so many people are simply unprepared, according to Nationwide Financials. At the same time, only 20% of business owners say they provide 401(k) or other self-funded retirement plans for their workers.
The 401(k) is only one of several different retirement plans that employees can utilize. As a small business owner, how else can you help your employee achieve a financially secure retirement?
You could encourage employees to take on retirement plans themselves. Employees can open Individual Retirement Accounts (IRAs) with a financial institution. Some employees may also qualify for Roth IRAs, which will allow them to contribute money and withdraw funds tax-free.
The reason behind the dearth of employer-initiated retirement options for employees is that most plans are too costly. Business owners responding to the recent survey indicated that they would prefer programs that would allow them to choose when to match or not to match contributions as well as programs that would give them the ability to pool with other small businesses in order to reduce costs, according to The Washington Post.
Some small businesses are also encouraging lawmakers to pass the Small Business Add Value for Employees (SAVE Act), which would help create small business retirement plans. These plans, according to supporters, would create retirement plans that are lower in cost compared to traditional 401(k) plans. And, it would help small business employees retire.