Planning for retirement is important for today’s working population as social security benefits are running out and employer pension plans of years ago no longer exist. Setting aside appropriate finances and planning for that money can be a stressful time for many. A mix of fewer employers offering retirement benefits and many people just not having the means to set aside extra cash on their own each month has created more dependency on programs that are increasingly strained.
To help aid with this problem, many states have begun running retirement programs that help businesses and employees work with integrity and honor so they have money to retire with.
Why State-Sponsored Retirement
The startling fact is that millions of current working-age adults have no retirement savings at this point. From millennials still newly entering the workforce to Baby boomers – the problem is increasingly worse for those on low incomes and who work for very small businesses. Without an employer-sponsored 401k, individual IRAs, or other assets, their outlook for retirement looks grim.
Oregon was the first state to start offering this benefit as a mandate back in 2017. Now many states across the country are making it propriety to help curb the national retirement crisis. California and Illinois have also made the program mandatory and others have added legislation for a voluntary state-based retirement program for its citizens.
Most of these state-based plans are designed as IRAs and mandated for businesses that don’t offer a retirement plan and are of a certain size. They will utilize low-risk investments chosen by the state and typically require about 3 percent of the worker’s salary to be taken from their check each month.
What Your Business Needs to Do
Depending on the state where you operate your business, it’s important to see what if any legislation is currently active or will be added soon that requires this retirement planning to be added. Some states even assess penalties and fines for non-compliance. Setting these wages aside from a worker’s paycheck is to be handled by you, the employer, and can help you to save significant costs on the investment and management of retirement funding while also boosting employee morale as they save for their future retirement years.
At DOAAR, we know how important it is to ensure that the hard-working years become a fruitful retirement for you and your employees. If you want to remain confident your later years will be free from financial stress, our expert team to help you plan, move your money, and invest where it makes sense. We also provide experts who can help you navigate your payroll needs with our entire suite of accounting and financial services.