Do you know most of us will live approximately 13 to 15 years past what has traditionally been considered retirement age? The U.S. Centers for Disease Control says the average American male lives to 76 and the average American woman to 80. Experts estimate we’ll need 70 to 90 percent of our preretirement income to maintain our current standard of living when we stop working. And yet few of us are saving enough for retirement.
Part of the problem is that according to the U.S. Small Business Administration, 72 percent of workers at small companies (companies with less than 100 employees) have no employer-sponsored retirement plan available to them. By starting a retirement savings plan, you will help your employees save for the future, help you attract and retain qualified employees and even gain significant tax advantages for your business and your employees. All while helping you secure your own retirement.
Starting a retirement savings plan can be relatively easy and inexpensive:
- Today small businesses can offer a retirement plan for about what we pay per month for cable television – even if you have just a handful of employees.
- Business owners can also take advantage of a tax credit for the costs of setting up a retirement plan. The credit equals 50 percent of the cost to set up and administer the plan up to a maximum of $500 per year for each of the first three years of the plan.
- Employee contributions are deductible from the employer’s income and employee contributions (other than Roth contributions) are not taxed until distributed to the employee. Money in the plan grows tax-free.
- A plan can be put in place in less than a week and will only require about an hour a month of on-line maintenance time. And you don’t have to set up an employee match unless you choose to do so.