It’s never too early for young employees to start saving for retirement.
But rising healthcare costs, inflation, and increased longevity can make it challenging to know just what an individual will require to retire comfortably. Employers can help younger workers prepare for retirement planning through employer-sponsored plans such as 401(k)s and Health Savings Accounts (HSAs).
To help employees get started with retirement planning, Complete Payroll Solutions offers a retirement-planning worksheet that shows how different levels of contributions impact finances down the road. That way, workers at various ages and salaries can see how much they should save for retirement.
Once workers have an accurate picture of their income needs during retirement, if they’re like the majority of Americans, they’ll likely realize they need to save more. In fact, the 2018 Retirement Confidence Survey from EBRI revealed just 17 percent of workers feel very confident in their ability to live comfortably.
To boost their confidence and help employees successfully prepare for the next stage of life, you can offer employer-sponsored plans like 401(k)s and Health Savings Accounts (HSAs).
These plans allow workers to make pre-tax contributions from their paychecks and invest them, without having to pay taxes on the money they set aside until it’s withdrawn. But many employees aren’t contributing enough to their 401(k)s. To increase participation in these plans, automatically opt workers in. And automate contributions to make it easy for workers to save, and even consider an auto-increase feature.
Since the average 65-year-old couple retiring this year will need $280,000 to cover health care and medical costs during retirement, according to Fidelity Investments’ 16th annual retiree health care cost estimate, a triple-tax advantaged HSA, coupled with a high-deductible health plan, is a smart investment strategy because the balances roll over year to year. In retirement, workers can withdraw the funds tax free to pay for Medicare premiums, prescriptions, and more. To help employees maximize the benefits of HSAs, encourage them to fully fund their account each year.
For more information about how Complete Payroll Solutions can help your employees prepare for the future, contact us at 866.658.8800 or through our website.