Retirement Planning
Ben Cole
Cole Brothers Marble and Granite
Many of us avoid thinking about retirement planning or put off planning to a later or more convenient time — a time that is likely to never come.
Or maybe you have some lame excuse like the slabs sitting out in your yard are your retirement, or that you plan on working till the day you die. The bottom line is that everyone should have some form of real, tangible retirement planning and should be putting money aside for the inevitable future when you want to retire, or can no longer work. In fact, company plans like a 401k may be a good option for your company, helping both you and your employees find peace of mind knowing that money is being put aside for your senior years.
These past few months I have been working on both my personal and company-wide retirement plans. Although my knowledge of stocks and bonds is fairly extensive, I knew little about 401k plans and other options that are available that have many benefits, especially when it comes to tax planning.
So, I turned to a financial advisor who had a long track record of working with small businesses, helping them set up the best plans and strategies that worked for their individual needs. As my advisor told me, “Tax planning will have the greatest effect on your saving and retirement income versus getting one or two more points of return in the stock market each year.” His depth of knowledge and openness about fees put my mind at ease.
Before I go off on too much of a tangent on 401k’s and what retirement plan is right for your company, I do want to stress that I am not an expert. At least not yet. But I do want to give you some basic knowledge about 401k plans and just get you thinking about what might be possible and beneficial for your company.
A 401k plan is essentially a company sponsored retirement plan. It involves the company contributing to both the owner’s and employees’ retirement savings. And that is about as bare bones an explanation as you can get.
The reality is that there are different types of 401k plans depending on the size and type of company. The 401k plans typically have tax advantages for both the owner and the employees. What this means is that it’s not like you are just doling more money out to the employees. I know most owners want to do what’s best for their employees but may also feel that they are already giving enough to their workers. But some 401k plans are set up where the tax advantage to the owner is great enough that essentially you are avoiding giving more money to Uncle Sam and passing this money on to the employees. Who would not rather give money to their employees than to give it to the government?
The further benefits of putting a program like a 401k in place is that it helps give employees confidence in their long-term future both with the company and for later in life. It shows that you care about their long-term well being. It is also an attractive perk when trying to attract or retain existing talent. Furthermore, it can be a building block for a strong, successful company. And of course, we are not just talking about the employees’ long-term benefit but also yours.
I know one of my initial fears regarding a 401k was that the company would be responsible for paying contributions to the employees even if the company was having a bad year or the economy was in recession. With the plan we implemented, we have the option and flexibility to pay out nothing if times are tough (as they can be in this cyclical industry). Again, learning the facts and getting better informed helped me overcome an unnecessary fear that had stopped me from implementing a retirement plan much earlier.
Maybe your company is not ready to incorporate a 401k.
If you find that a 401k plan is beyond your current means, or not the right fit for your company, then I would still recommend some other form of retirement planning. Maybe you set up a Roth IRA for yourself.
You could bring a financial advisor in to sit down with your employees and explain some of the options they may want to pursue on their own. A financial advisor could help explain to them that social security is meant to function as a part of a retirement plan but is not a plan that can be lived on by itself.
The bottom line is that you, as an owner, have a responsibility to both yourself and your employees to properly prepare for the time when you are no longer working. Being proactive and learning about the options that are available to your company is the smart thing to do. Lead your team to a bright, successful, and secure future.
Ben Cole is a stone industry consultant and Vice President of Cole Brothers Marble & Granite, a family business in Pittsgrove, New Jersey. Ben has a BS in Biology from Virginia Polytechnic Institute.