People know that retirement isn’t always easy from a financial standpoint. But there are also plenty of reasons why not enough employees take advantage of retirement plans.
Emphasizing the main benefits of retirement plans on employees early in life can help people make better decisions with their money.
It can help them develop better spending and saving habits to plan for retirement without making too many sacrifices.
Many people go through life living paycheck to paycheck. While they have steady jobs, that might not be a big problem. But things change once people retire.
Their earning potential hits a wall. There are no more opportunities to advance, maybe get a higher salary, employer benefits, affordable interest rates on loans, etc.
People in their golden years must rely on their savings to enjoy life for however many years they have left.
But with so few people actually saving for retirement, many Americans either end up struggling or are forced to work way past retirement age.
Of course, not everyone can keep working. Some jobs take immense physical, emotional, and psychological tolls on people. Therefore, not everyone can keep counting on an employer wiring money into their accounts every month and helping them out with health insurance.
The unpredictability is scary. Having access to emergency finances accumulated through retirement plans is one of the most important retirement advantages.
Saving early and accumulating retirement benefits from company plans are crucial for creating a comfortable lifestyle and having enough money to deal with unexpected emergencies.
Some of the best benefits of retirement planning are the tax benefits. Sure, everyone would like to have more spending money. But income is taxable, and everything from utilities to food to healthcare to entertainment gets more expensive over time.
Employee retirement planning is one of the most efficient financial instruments and savings vehicles.
First, contributions made to retirement plans are made pre-tax and considered deductible. Say you’re earning $60,000 per year and setting aside $1,000 per month with various retirement plans for employees.
Instead of being taxed for the full $60,000, you would only pay taxes on $48,000 for the full year.
Now, are retirement fund benefits non-taxable? No. The government still taxes whatever money you save.
But here’s one of the key advantages of retirement planning. You only have to pay taxes after you retire and take money from your retirement account. Furthermore, retirees enter a lower tax bracket. Thus, you won’t pay as much, and your money can compound to a more substantial sum over time.
Inflation is no joke. It doesn’t take pandemics, recessions, or other global economic crises to increase the cost of living.
The value of money changes over time, and lifestyles are more expensive to maintain every year. By the time people reach retirement age, prices can look completely different.
But unlike people who keep working and get higher salaries, retirees only have their savings.
Preparing for higher inflation is one of the main retirement planning employee benefits. Retirement planning or retirement savings aren’t the same as stashing money under the mattress.
It means setting aside money every month and investing so that it can grow over time, preferably enough to fight inflation rates.
The world’s millionaires and billionaires aren’t the only people who can leave behind a legacy. Anyone can create their own legacy, pass on money to their heirs to give them an advantage, or donate to charitable causes.
Creating a legacy is one of the top benefits of retirement plan investments. The secret is to start saving and investing with a retirement plan as early as possible in life.
The quicker people invest, the more time their money has to grow into a substantial sum that can serve their post-retirement goals.
What are the main benefits of retirement plans for someone who isn’t sure how long they want to work?
Just because people can retire at specific ages with full benefits, based on their industry and various laws, doesn’t mean they can’t retire early.
The fact is that no one is forced to work. People only work as long as they need money to survive and enjoy a certain lifestyle.
But one of the most fun retirement savings benefits is the potential to retire early. Someone who starts planning for their retirement in their 20s or early 30s could retire faster.
It’s a matter of putting the money to work through smart investments and taking advantage of the compounding effect.
People end up owning lots of assets over the years. They buy homes, cars, jewelry, clothes, maybe even vacation homes, etc.
It’s no secret that real estate assets are great as they can substantially appreciate in value.
But due to poor retirement planning, many have to sell their assets. It’s not uncommon to see retirees selling their houses to move into smaller properties because they’re more affordable to maintain.
It’s not uncommon to see people trading in their cars for something smaller, changing the type of vacations they take, and making all sorts of other lifestyle alterations.
That doesn’t have to happen. Asset and property protection can be one of the biggest retirement planning employee benefits.
Smart and early financial planning can help people do more than survive their golden years. It can help them maintain the same lifestyle or even do better than when they were employed.
It comes down to understanding how expenses change, how much things may cost after retirement, and figuring out their financial goals.
These are necessary factors to determine how much money to save and invest to avoid making sacrifices later in life.
One of the reasons not enough people have retirement plans is the fear that making savings now will make life tougher.
But eventually, reality always sets in. As people get older and realize they can’t keep working forever, they start contemplating various retirement plan options.
Unfortunately, the more someone waits, the less money they can save and the more expensive it is to get the full benefits of a retirement account.
Younger employees always get better rates on retirement accounts.
Besides, long-term investments historically beat short-term investments. Money needs time to grow and adapt to various market and economic conditions.
The cost savings retirement fund benefits are invaluable for someone who starts setting aside money early in life, takes advantage of potential employer contributions, etc.
Some people bounce from company to company their entire lives. Maybe it’s the nature of the job, or they’re constantly seeking better salaries.
In some cases, people simply experience downtime periods or can’t find open positions requiring their expertise.
But one of the retirement planning employee benefits is that it carries over from one employer to another. Many retirement plans, especially employer-sponsored plans, are offered in lots of industries and by companies of all sizes.
Therefore, switching jobs, changing employers, or even bouncing between different industries doesn’t have to affect someone’s retirement planning.
It’s not like an insurance policy where the inability to make payments could lead to substantial financial loss or cancelation.
Depending on their financial situation, people can save, take a break, then save some more. That’s still better than not saving at all.
Retirement benefits from company-sponsored plans can include free money. Take, for example, the 401(k) retirement plan.
In 2022, people under 50 can contribute up to $20,500 annually to their 401(k). Those over 50 can set aside up to $27,000.
Of course, not everyone can set aside over $20,000 every year.
Imagine a person who can’t put more than $600 in their 401(k) every month. They could save $7,200 every year. But what happens when the employer matches that contribution as part of the company-sponsored retirement plan?
Suddenly, that employee is saving $14,400 every year in non-taxable money.
Many employers are willing to match employee retirement fund contributions instead of giving their employees more cash in hand at the end of each month.
In many ways, this can be considered “free” money. It isn’t taxable until after the retiree liquidates their retirement fund. In addition, the compounding effect’s monetary benefits can be substantial over 20, 30, or 40 years.
Having peace of mind regarding finances is one of the most underrated benefits of a retirement account.
People always worry about money, whether they can afford healthcare, good food, paying utilities, enjoy vacations, etc.
Retirement planning helps people set money aside for their golden years. If that money is also invested, the money compounds and grows over time.
By the time people retire and are no longer employees, they won’t have to worry about where the next paycheck comes from.
This type of peace of mind and financial independence can help people lead less stressful lives even when not punching the clock every day.
Financial independence may even help people try out new things in life, and maybe indulge in activities they never experienced before.
Someone working a government job or public service job will likely have a pension plan. Unfortunately, pension plans are rare in the private sector.
Most people who are attracted to the higher salaries in the private sector are in charge of creating their own retirement advantages. If they want retirement plan benefits, they may have to either set up individual retirement savings accounts and funds or choose one of the many available retirement plans for employees.
The good news is that the higher pay in the private sector should give employees enough money to work with and set aside, even if it’s just a small amount.
What’s important to remember is that leaving the private sector and retiring doesn’t come with any government-sponsored guarantees and financial help.
Sure, there’s always social security, but that’s almost never enough. Besides, social security regulations and amounts can change all the time.
Who can say with certainty it will even exist 20 years from now?
Retirement planning can greatly impact a private sector employee’s quality of life and financial security after retiring.
Should someone who is guaranteed to retire with a pension avoid other retirement plans? It depends on how much money the pension gives them every month.
If it’s enough to secure their dream lifestyle, maybe retirement planning isn’t necessary.
However, there’s nothing wrong with setting up multiple retirement plans if a person can afford to save more money every month.
Having multiple emergency funds and revenue streams during retirement is a great way to gain financial independence and enjoy more of what life has to offer.
More people are in a good enough position to plan for retirement than meets the eye. It’s true that some don’t have the financial means to set aside substantial amounts of money.
But it’s also true that some people don’t save and invest because they spend money on things they don’t need.
Unless someone is guaranteed to retire with a pension, taking advantage of retirement plan benefits is vital for one’s comfort, independence, post-retirement security, and peace of mind.
If a lifestyle already seems hard to maintain, imagine the struggles of not having a monthly paycheck anymore or even the possibility of earning one.
Retirement planning is a crucial aspect of financial planning, preparing to withstand inflation, protecting assets, and ensuring the family is taken care of when a provider is no longer working.
There are many retirement plan options, ways to save, and investment vehicles these days with enough flexibility for every budget. That’s why retirement planning is a no-brainer. It has long-term positive effects and even helps people in the present with cost savings and tax advantages.
Todd Taylor, oversees most of the marketing and client administration for the agency with help of an incredible team.
Todd is a seasoned benefits insurance broker with over 35 years of industry experience. As the Founder and CEO of Taylor Benefits Insurance Agency, Inc., He provides strategic consultations and high-quality support to ensure his clients’ competitive position in the market.
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