By Alex Austin
2020 was a year like no other for many businesses, financial planners included. While much was upended, the need for business and personal planning has become more heightened.
Millennials and Generation Z will comprise 75% of the global workforce by 2025, according to a Deloitte study. These generations are focused on what employers can offer to help them save for retirement and protect their financial future.
What benefits can businesses offer to attract and retain talent? Below are a few planning ideas:
- OFFER RETIREMENT PLANS – Businesses of all sizes can benefit by sponsoring a retirement plan for their employees. Not only are employer contributions tax-deductible, but a retirement plan can be used for profit sharing and automated tax-exempt savings for employees. There are several different retirement plan options, and each differs in benefits, features, levels of complexity and administrative costs.
- CONSIDER A DEFERRED COMPENSATION PLAN – Deferred compensation is a portion of an employee’s compensation that is earned in one year but received in a lat-er year. These plans let employees reduce their immediate tax liabilities. An executive deferred compensation plan can re-ward highly compensated or key employees. If an employee leaves before fulfilling the deferred compensation agreement, they forgo the money, making eligible employees generally more loyal to their em-ployer. Business owners also retain their equity while providing incentives for employees to stay engaged.
- OFFER A FINANCIAL WELLNESS PROGRAM – Faced with economic uncertainty and market volatility at the onset of the coronavirus pandemic, employees flocked to their companies’ financial wellness programs. Financial wellness resources, including education about budgeting, emergency savings and debt management, can help employees consider a range of alternatives prior to making impulsive decisions. Deterring employees from overreacting during a crisis can have a positive, long-term impact on their retirement security.
- GROUP LIFE INSURANCE – Group life insurance is when a single contract covers an entire group of employees. The amount of coverage is typically a multiple of annual salary. The plan generally locks in insurability at a lower cost versus an individual policy. Group life insurance benefits provided by employers are deductible as a business expense.
At Foster Victor we help business owners consider these strategies, outline programs and implement solutions. As we kick off 2021, business owners should consider enhancing the benefits they offer to retain talent and provide financial peace of mind.
Alex Austin is a Wealth Coach at Foster Victor.