Everyone knows the importance of saving for retirement. Everyone knows that saving money consistently and giving it time to grow is the best approach to ensuring adequate funds for the post-retirement years. Yes, we may all know that we should be saving for retirement, but that does not mean that we are doing it. The fact is that setting aside money for the future is difficult.
I think we would all agree, though, that saving money is easier when a savings program is established and implemented automatically. This is one reason that many businesses offer their employees the opportunity to put a part of each pay check into a retirement plan. This deduction occurs automatically; employees never see the money and are not required to do anything in order for the money to be deposited.
This system works splendidly for a number of reasons. First of all, it requires little effort on the part of the employee. Once the automatic withdrawal is set up, the employee doesn’t have any part in making sure that the withdrawal is actually made. Secondly, because the employee never actually has that money available for use, there is no danger of spending the money before it can be saved. Thirdly, employees are motivated to stick with the savings because often there is an accompanying tax benefit.
So if employer-sponsored retirement plans are good for the employee, they must be good for the business too, right? Well, yes and no. Yes, in general they are a good thing for businesses because they encourage workers to be responsible for their own retirement. This alleviates stress about the future, especially among employees who are nearing the age of retirement. But, on the other hand, sponsoring a retirement plan for your employees does add another level of complexity to your payroll operation. That’s where The Payroll Department can make it easy for you.
If you would like to offer a retirement plan for your employees but worry that adding this benefit will make your payroll operation too complicated, you should consider letting The Payroll Department handle it. In addition to taking care of all the details involved in payroll (including ensuring the prompt payment of all applicable taxes), The Payroll Department can also oversee automatic retirement plan contributions. Call Teresa Ray at 317-852-2568 and find out how easy it is to offer a retirement plan for your employees. Believe me, at retirement time, they will thank you for it!
-Jessica of The Payroll Department Blog Team