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Small Businesses Looking for Ways to Enhance Retirement Benefits for All Workers

Retirement Planning

President Obama recently announced that his administration will be exploring different ways to encourage saving for retirement, and small businesses are now doing what they can to help part-time employees get the same benefits as their full-time counterparts.

According to local Iowa news affiliate KIMT, Obama has been consistently introducing new proposals that would make it easier for young people to start planning for the future, regardless of where or how much they work.

Brad Barber, an entrepreneur who owns 13 Cabin Coffee franchises in six different states, believes that much of the onus to save for retirement should be placed on employers.

“One of the things that employers need to do is they need to effectively communicate to their employees how important and it is to start saving and getting in that habit,” said Barber.

One of President Obama’s most notable proposals to enhance retirement benefits involves tax incentives for small businesses that implement their own savings program. The president has also endorsed a savings plan for part-time small business employees who work at least 500 hours each year for three years.

“It’s good for the employer because they don’t pay as much of the income taxes and Social Security out of their check and neither does the employee, so it’s a win-win for the employee and the employer,” added Barber.

Only about 39% of part-time employees had access to retirement benefits in 2015, and the vast majority of these savings programs are not adequate for long-term prosperity.

Casey Martin, Senior VP of Investments at Raymond James, encourages young people to start saving now in order to avoid running out of money during retirement.

“To save for retirement plans, time is always your friend. The earlier you start, the better off you’ll be,” said Martin.

Retirement goals vary depending on how old an employee is, but as U.S. News and World Report recently noted, people in their 20s are in the best position of their lives to prepare for retirement, even if they’re still stuck with a part-time job.

“The best thing to do when you get your first job is to put money in the 401(k) or an IRA, even if it’s just a little bit,” said Ann Terranova, a certified financial planner for Union Financial Partners in San Francisco. “It sets up a habit of saving that someone is going to have the rest of their life.”

President Obama’s newest proposals have given hope to an entire generation of future retirees, but Casey Martin still believes that part-time employees of small businesses are at a disadvantage.

“They made it simpler in the recent years, but it still is complex. So if you don’t work for a big major corporation, a lot of times your retirement plan is lacking with the smaller businesses,” said Martin.

When announcing his proposals to enhance retirement savings for all, President Obama also said that his administration plans to create more portable retirement plans to move between employers.

It remains to be seen whether any of these proposals will be enacted, but getting the conversation started is always the first step in making substantial change.

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