How a Better 401(k) Can Attract & Retain Employees | Lehigh Valley
For business owners, attracting and retaining good employees has become more important—and more challenging—than ever. Competitive pay matters, but today’s employees are also looking at the complete benefits package when deciding where to work and whether to stay.
One benefit that can make a meaningful difference is a well-designed 401(k) retirement plan.
A 401(k) plan is more than a way for employees to save for retirement. When it is designed thoughtfully and communicated effectively, it can help increase employee satisfaction, strengthen workplace loyalty, and give your business an advantage when recruiting top talent.
For businesses throughout Allentown, Bethlehem, Easton, and the greater Lehigh Valley, improving your company's 401(k) plan may be an opportunity to create a stronger employee benefits package while supporting your employees' long-term financial goals.
Why Employees Care About Retirement Benefits
Employees want to know that their employer cares about more than what they accomplish today. They also want to feel that their employer is helping them build a financially secure future.
A strong retirement benefit can demonstrate that commitment.
Employees may consider several factors when evaluating a job opportunity, including:
Salary and bonuses
Health insurance
Paid time off
Workplace flexibility
Opportunities for advancement
Company culture
Retirement benefits
Employer contributions or matching
Financial education and support
While compensation is important, a competitive 401(k) plan can help differentiate your company from other employers competing for the same talent.
A Better 401(k) Can Increase Employee Happiness
Employee happiness isn't just about creating a fun workplace. Financial stress can have a significant impact on how employees feel about their jobs and their overall lives.
When employees are worried about whether they are saving enough for retirement, understanding their investments, or preparing for the future, those concerns can follow them into the workplace.
A well-designed retirement plan can help employees feel more confident about their financial future.
1. Employees Feel Valued
Offering a 401(k) demonstrates that an employer is thinking about employees' long-term financial well-being.
Even something as simple as an employer match can send an important message:
“We want to help you build your future.”
That feeling of being valued can contribute to employee satisfaction and loyalty.
2. Employees Can Feel More Confident About Retirement
Retirement can seem overwhelming, especially for employees who don't know how much they should be saving or how their investments work.
A strong 401(k) plan, combined with employee education, can make retirement planning feel more manageable.
When employees understand their benefits and know how to use them, they may feel more confident about their financial future.
3. Financial Education Can Reduce Confusion
Simply offering a 401(k) isn't always enough.
Employees may have questions such as:
How much should I contribute?
Should I contribute to a traditional or Roth 401(k)?
How should I invest my contributions?
Am I saving enough for retirement?
What happens if I change jobs?
How does my employer match work?
Providing access to retirement education and guidance can help employees better understand the benefit they're receiving.
That can make your 401(k) feel like a valuable resource rather than simply another line item in an employee benefits package.
A Competitive 401(k) Can Help Attract Better Talent
When someone receives multiple job offers, benefits can become a deciding factor.
A company that offers a competitive retirement plan may stand out against an employer that offers little or no retirement benefit.
For small and midsized businesses, this can be especially important.
A smaller company may not be able to compete with a large corporation on salary alone. However, a thoughtfully designed benefits package can help level the playing field.
Your 401(k) could become part of your recruiting strategy.
Instead of simply saying:
“We offer a 401(k).”
You can communicate the actual value of the benefit—such as employer contributions, educational resources, convenient enrollment, and tools that help employees make informed retirement decisions.
A Better 401(k) Can Help Retain Employees
Hiring an employee is only the beginning.
Replacing an experienced employee can be expensive and disruptive. There are recruiting costs, training expenses, lost productivity, and the time required for a new employee to become fully effective.
A strong benefits package can give employees another reason to stay.
When employees feel that their employer is invested in their future, they may be more likely to see a long-term future with the company.
A retirement plan can become particularly valuable as employees build account balances over time and become more engaged with their financial goals.
The Importance of Employer Matching
One of the most recognizable features of a 401(k) is an employer match.
When an employer contributes to an employee's retirement savings based on the employee's contributions, employees may view the benefit as an immediate financial advantage.
For example, an employer might choose to match a certain percentage of employee contributions, subject to the terms of the plan.
Employer matching can encourage employees to participate and contribute while making the overall benefits package more attractive to prospective employees.
However, a matching contribution isn't necessarily the only way to improve a 401(k) plan. The right plan design depends on the goals of the business and its workforce.
Plan Design Matters
Not every 401(k) plan is designed the same way.
Business owners should consider whether their plan is structured in a way that makes sense for their employees and the company.
Areas to review may include:
Employee eligibility
Employer matching contributions
Vesting schedules
Investment options
Plan fees and expenses
Automatic enrollment
Automatic contribution increases
Roth 401(k) availability
Profit-sharing opportunities
Employee education
Administrative support
The goal isn't necessarily to create the most complicated plan.
The goal is to create a plan that works for your business and your employees.
Don't Overlook the Employee Experience
A 401(k) can be an excellent benefit, but employees need to understand and use it.
Consider what the employee experience looks like from start to finish.
Is enrollment easy?
Can employees easily access their accounts?
Do they understand their investment options?
Do they know how much they should consider contributing?
Do they understand the employer match?
Can they get answers when they have questions?
A plan that looks great on paper but is confusing or difficult to use may not provide the employee experience your business wants.
That's why employee education and communication can be just as important as the plan's design.
A 401(k) Can Support a Stronger Company Culture
Benefits communicate what a company values.
When an employer provides resources that help employees plan for retirement, it can reinforce a culture that values long-term financial well-being.
Employees may feel more appreciated when their employer provides benefits that extend beyond their paycheck.
That can contribute to a workplace where employees feel supported—not just as workers, but as people with financial goals and responsibilities outside of work.
How Business Owners Can Improve Their 401(k) Plan
If you're a business owner, you don't necessarily need to start over with an entirely new retirement plan.
Start by reviewing your current plan.
Ask:
Is our 401(k) competitive with what other employers are offering?
Are employees participating?
Do employees understand the benefit?
Are our investment options appropriate for our workforce?
Are employees taking advantage of the employer match?
Are plan fees reasonable and clearly understood?
Is the plan easy for employees to use?
Are we providing enough education and communication?
These questions can help identify opportunities to improve both the business and employee experience.
A Better 401(k) Can Be a Win-Win for Employers and Employees
A well-designed 401(k) plan can benefit more than just your employees.
For employees, it can provide an important tool for saving for retirement, increase financial confidence, and create a greater sense that their employer is invested in their future.
For employers, a competitive retirement plan can help attract qualified candidates, encourage employee retention, strengthen workplace satisfaction, and create a more valuable overall benefits package.
The key is making sure your 401(k) is designed with both the business and its employees in mind.
Is Your 401(k) Plan Working as Hard as Your Employees?
If you're a business owner in Allentown, Bethlehem, Easton, or anywhere in the Lehigh Valley, your 401(k) plan should do more than simply exist.
It should be a meaningful part of your employee benefits strategy.
At Cornerstone Portfolios, we help business owners evaluate their retirement plans and explore opportunities to improve plan design, employee participation, education, and overall plan effectiveness.
Whether you're considering a 401(k) for the first time or you've had the same plan for years, a plan review can help you determine whether your current strategy still makes sense for your business and your employees.
Your employees work hard for your business. Your retirement plan should work hard for them, too.
Ready to Review Your Company's 401(k)?
Contact Cornerstone Portfolios to discuss your company's retirement plan and learn how a better-designed 401(k) could help support your employees and your business. Schedule Here!
Serving businesses throughout Allentown, Bethlehem, Easton, and the greater Lehigh Valley.