What to Do if Your Employer Doesn’t Offer a 401(k): Building a Secure Financial Future 

Author: Jason Gross, AIF ®, CRPS / Reviewer: Siân Killingsworth
25 Jul 2023 / 401(k) Plan Information, Personal Finance, Ubiquity Insights

As employees, we understand the importance of securing our financial future, and having a retirement plan like a 401(k) plays a vital role in that endeavor. We know that approaching our employers to discuss implementing a 401(k) plan can be daunting. Never fear – we’re here to guide you through initiating the conversation with your boss.

We also have suggestions for effective ways to save for emergencies in the absence of a 401(k) plan. Building a solid financial safety net is just as crucial as planning for retirement, and we’ll provide you with practical steps to achieve both.

Understanding the Benefits of a 401(k) Plan

One of the best ways to get what you want is to help your employer understand how they can benefit from offering you a 401(k). Doing so can bring many benefits to the business overall, fostering positive outcomes for both you and the business owner. Help your employer understand the key advantages a 401(k) delivers by sharing this:

1. Government will cover the costs: The federal government wants to help employees start saving for retirement. They’re so serious about this they’ll cover the costs for your employer to offer you a new 401(k) plan for three years! Additional tax credits are available to business owners for automatically enrolling employees and providing matching contributions.
2. Tax Advantages for Employers: Offering a 401(k) plan provides small business owners with tax incentives. Employer contributions are typically tax-deductible, reducing the overall tax burden. Matching contributions can also be considered deductible business expenses.
3. Attracting and Retaining Top Talent: A comprehensive benefits package, including a 401(k) plan, is crucial for attracting and retaining skilled employees. Retirement benefits are the second most-requested benefits after health. It sets your business apart and demonstrates a commitment to employees’ long-term financial security.
4. Enhanced Employee Retirement Readiness: A 401(k) plan empowers employees to save effectively for retirement. A recent AARP study showed employees are 15 times more likely to save for retirement when offered through a workplace!
5. Improved Employee Loyalty and Productivity: Offering a 401(k) plan fosters loyalty among employees, leading to increased motivation and productivity and happier employees. It positively impacts the overall performance of your business.

Initiating the Conversation with Your Employer

Approaching your boss about implementing a 401(k) plan doesn’t have to be intimidating. Here are some friendly tips to navigate the conversation:

• Educate yourself: Research the benefits of a 401(k) plan and gather information on associated costs for the employer. This knowledge will help you present a well-informed case.

Example: “Hi [Boss’s Name], I’ve been doing some research on retirement planning options and came across the benefits of a 401(k) plan. Did you know the federal government will cover the costs of a new plan now? There are also tax benefits for you!  I believe it could be a great asset for both the company and employees like me.”

• Schedule a meeting: Request a meeting with your boss at a time that works for both of you. Choose a moment when they are likely to be available and not overwhelmed with other tasks.

Example: “Could we schedule a meeting to discuss the possibility of introducing a 401(k) plan at our workplace? I believe it’s an important topic that could benefit the entire team, and I’d love to share my ideas and learn more about the company’s perspective.”

• Prepare a compelling case: Highlight the advantages of a 401(k) plan, such as improved employee retention, tax benefits, the fact the government is covering the costs and enhanced financial well-being. Relate these benefits to the company’s objectives.

Example: “Implementing a 401(k) plan could help us attract and retain top talent, as many employees are seeking comprehensive retirement benefits. Moreover, it offers potential tax benefits for the company and demonstrates our commitment to supporting employees’ financial security. Plus the cost to you after tax credits is minimal if anything.”

• Be open to compromises: Acknowledge any concerns your boss may have regarding costs or administrative burdens and express your willingness to explore different options or contribute to the plan’s setup and management.

Example: “I understand that implementing a 401(k) plan involves certain costs and administrative aspects. I’d be happy to assist in researching providers or contributing my time to ensure a smooth setup and management process.”

Saving for Emergencies in the Meantime

While waiting for a 401(k) plan to be offered in your workplace, it’s crucial to build an emergency fund. Here are the steps you could take:

• Set a savings goal: Aim for three to six months’ worth of essential expenses. Calculate a reasonable target based on your monthly budget.

Example: “My goal is to save six months’ worth of living expenses, around [X dollars]. This safety net will help me navigate unexpected financial situations.”

• Automate your savings: Set up automatic transfers from your paycheck to a separate savings account. This ensures consistent contributions to your emergency fund.

Example: “I’ve set up an automatic transfer of [X dollars] to a dedicated emergency savings account. It’s an effortless way to build up my emergency fund over time.”

• Minimize expenses and maximize income: Cut back on unnecessary spending and redirect savings towards your emergency fund. Explore side gigs or freelance work to boost your income.

Example: “I’ve reduced unnecessary expenses like dining out, redirecting those savings to my emergency fund. I’ve also started freelancing to increase my income.”

• Prioritize debt repayment: Focus on paying off debts to free up more money for your emergency fund.

Example: “I’m actively reducing my debt by prioritizing high-interest loans and credit card balances. Paying off these debts will increase my emergency savings.”

• Explore high-yield savings accounts: Open an account with competitive interest rates to help your emergency fund grow.

Example: “I’ve opened a high-yield savings account to maximize growth. It offers a higher interest rate, ensuring my money works harder.”

Securing your financial future is a shared responsibility. Discuss the 401(k) plan with your boss and focus on building your emergency fund. Approach the conversation professionally, highlighting the benefits of a 401(k) for both employees and employers. Your commitment to financial well-being today ensures a more secure future for you tomorrow!

 

Please refer to Important Information for details.