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Small Businesses have a big retirement problem. According to Bureau of Labor Statistics, at companies with fewer than 50 workers the not even half the employees have access to a 401(k) or pension. At companies with 500 workers or more, 90 percent of employees have access to a retirement plan. Setting up an employee retirement plan can seem daunting for small business owners—if not impossible. Let’s clear up some misconceptions and review a few of the many reasons why offering an employer-sponsored retirement account is a great idea for small businesses of all types.

Investing in Your Employees Creates An Invested Team

How badly does your team want retirement? According to a 2015 Glassdoor survey, 31 percent of workers valued a workplace retirement account, such as a 401(k) or pension plan, over an increase in pay.

Even your team members who would prefer a wage pump want help preparing for the future. The Employment Benefit Research Institute found that two-thirds of employed workers not currently saving for retirement say they would be likely to start if automatic paycheck deductions ranging from 3 to 6 percent were used by their employer.

By offering a retirement plan, small businesses may be able to attract more talent—and retain the valuable team members they already have.

Low-Cost, Low-Hassle Plans

There’s a toxic myth floating around that retirement plans have to be clunky, expensive, and require an annual 1.5-2% fee to a provider. That’s a misconception! Nowadays, there are low-cost options, specifically designed for small businesses. (Full disclosure, we think our plans are pretty great. Check them out here)

Besides providing lower costs, choosing a third-party plan provider allows you to delegate certain plan responsibilities to let you focus on what you do best—running your business.

Use Plans to your (Tax) Benefit

Did you know those fees to set up and run a retirement plan may be tax deductible? Using Form 881, eligible small-business owners can claim a credit of up to $500 for qualified setup and administration fees, and costs to educate employees about the plan for each of the first three years of the plan. Just keep in mind that whatever plan expenses you use toward this credit, you can’t use as business expense deductions.

In 2017, the Employee Benefit Research Institute found that nearly 73 percent of workers not currently saving for retirement would be at least somewhat likely to start if contributions were matched by their employer. The good news for employers is that the IRS usually allows them to deduct these matches, subject to contribution limits on qualified employee plans (including the employer’s own plan).

Remember that all deferred employer contributions, including earnings and gains, are tax-free for employees until distributed by the small-business retirement plan. This is why an employer contribution is so valuable.

Bottom Line: Start Saving Today

As a small-business owner, it makes sense to look into offering an employee retirement savings plan. It’s an easy to implement perk that your team will value, is available through lower cost options, and provides tax breaks to both employees and employers. Sponsoring an employee retirement plan attracts and retains the best talent for your business. Showing your employees you have their interests in mind creates a happier, more engaged, and ultimately more successful team.

Learn More:

Download our Definitive Guide to Small Business 401(k)

As you are planning your retirement, it is fun to think about moving somewhere new, maybe even a beach destination.

However, it is essential to consider a variety of factors that will help you identify the best fit for you and your new phase of life. The factors workers most frequently say are important to their decision-making are affordable cost of living (71%), proximity to family and friends (54%), good weather (49%), low crime rates (49%), access to health care (43%), and recreational activities (41%).

If you think you have found the location for you, you may want to vacation there during different times of the year or spend a month or more there at a time, just to make sure you get the full perspective of a resident versus a vacationer.

Some experts also recommend that you open a bank account, have a medical appointment, or conduct other kinds of personal business in your selected location to make sure you experience the aspects of the culture and understand what will be available to you once you move there.

Several organizations routinely analyze data to identify the best places to live in retirement. Their research can help you evaluate the things that are most important to you when deciding whether you want to relocate retirement.

Best places to retire in the U.S.A.

Forbes’ annual Best Places to Retire list takes into consideration things like access to medical care, crime rates, air quality, unemployment, cost of living, and factors that can make for a fulfilling retirement, such as opportunities for volunteering and exercise. According to Forbes’ analysis, and its admitted preference for college towns, here are the 25 best places to retire in 2017 (listed alphabetically).

  • Athens, Georgia
  • Bella Vista, Arkansas
  • Bethlehem, Pennsylvania
  • Boise, Idaho
  • Brevard, North Carolina
  • Clemson, South Carolina
  • Colorado Springs, Colorado
  • Fargo North Dakota
  • Grand Prairie, Texas
  • Green Valley, Arizona
  • Harrisonburg, Virginia
  • Iowa City, Iowa
  • Jefferson City, Missouri
  • Lawrence, Kansas
  • Lewiston, Maine
  • Lincoln, Nebraska
  • Maryville, Tennessee
  • Ocean Pines, Maryland
  • Peoria, Arizona
  • Port Charlotte, Florida
  • San Marcos, Texas
  • Savannah, Georgia
  • Summerville, South Carolina
  • The Villages, Florida
  • Wenatchee, Washington

Best cities to retire

If big cities are more your style, you might want to look at the Milken Institute’s Best Cities For Successful Aging report.

This study considers nine factors that make the “best” city for retirees: general livability, healthcare, wellness, financial security, education, transportation and convenience, employment opportunities, living arrangements and community engagement.

It has also found that cities with colleges rank higher on quality-of-life factors that affect older adults, including economic strength and recreation. Here are Milken’s top 10 big cities for aging successfully.3

  1. Provo-Orem, Utah
  2. Madison, Wisconsin
  3. Durham-Chapel Hill, North Carolina
  4. Salt Lake City, Utah
  5. Des Moines-West Des Moines, Iowa
  6. Austin-Round Rock, Texas
  7. Omaha-Council Bluffs, Nebraska-Iowa
  8. Jackson, Mississippi
  9. Boston-Cambridge-Newton, Massachusetts-New Hampshire
  10. San Francisco-Oakland-Hayward, California

If you are more comfortable in a smaller setting, those have been ranked too. The top 10 best small cities tend to have moderate living costs, quality healthcare, educational facilities, and a community feel.3

  1. Iowa City, Iowa
  2. Manhattan, Kansas
  3. Ames, Iowa
  4. Columbia, Missouri
  5. Sioux Falls, South Dakota
  6. Ann Arbor, Michigan
  7. Ithaca, New York
  8. Lawrence, Kansas
  9. Logan, Utah-Idaho
  10. Fairbanks, Alaska

How livable is your hometown?

Ever wondered about how your hometown ranks on the list of great places to live? AARP’s Livability Index will tell you. Follow this link and type in your address or town name to find out how livable your community is.

Best warm places to retire

Even with all the conveniences that cities have to offer, many people dream of living by the beach or in a warmer climate. AARP researchers found ten great places to retire – all of which boast at least 250 days of sunshine each year. Other factors considered include cost of living, the range of activities for retirees, and a low crime rate.4

  1. Asheville, North Carolina
  2. Grand Junction, Colorado
  3. Sarasota, Florida
  4. San Diego, California
  5. Las Cruces, New Mexico
  6. San Luis Obispo, California
  7. St. George, Utah
  8. Santa Fe, New Mexico
  9. Bend, Oregon
  10. Fort Worth, Texas

Best places in the world to retire

If you are thinking more globally, International Living’s Annual Global Retirement Index measures factors that are important to those who are considering a move to another country, including ease of buying property, ease of attaining a visa, cost of living, entertainment, healthcare, climate, and governance. Here are the top 10 international locations for retirees in 2018.

  1. Costa Rica
  2. Mexico
  3. Panama
  4. Ecuador
  5. Malaysia
  6. Columbia
  7. Portugal
  8. Nicaragua
  9. Spain
  10. Peru

Learn more

Despite some locations showing up on multiple lists (Lawrence, Kansas, and Iowa City, Iowa), researchers have identified places all over the U.S. and the world as great places for fulfilling the needs and desires of retirees. Wherever you decide to live, you will need retirement income to support your lifestyle.

If you’re a small business owner and need a 401k plan for yourself and your company, only Ubiquity offers flat-fee plans plus free expert advice. We’ll fully customize your 401k to meet the specific needs of your small business.

Check out our cost-effective, plan solutions

Resources for best places to retire

  1. Transamerica Center for Retirement Studies: Wishful Thinking or Within Reach? Three Generations Prepare for “Retirement,” December 2017
  2. Forbes: 25 Best Places to Retire in 2017
  3. Milken Institute Center for the Future of Aging: Best Cities for Successful Aging
  4. AARP: 10 Great Sunny Places to Retire
  5. International Living: The World’s Best Places to Retire in 2018

As tongue and cheek as this may be, it’s easy to nickel and dime your way out of retirement without even knowing your doing it. Want to know how? Check out this infographic on how you can save hundreds of thousands of dollars in your retirement by eating a few less tacos.

What comes to mind when you hear the word “retirement”? Perhaps you picture spending all of your days with family – playing daily rounds of golf, traveling the world or enjoying an endless stream of beachside cocktails. Ultimately, people equate retirement with relaxing – not with collecting a paycheck.

However, what if in between the leisurely activities you voluntarily chose to work throughout your retirement? There are actually some valid reasons for having a job throughout retirement, regardless of whether it’s part- or fulltime. Here are three:

1. You’ll stay active.

Sure, the idea of 24/7 relaxation and having no responsibilities sounds great in theory, but the reality is that many retirees are used to having a routine, and will get bored soon after retirement.

Having a job is a way to maintain your social structure. We’re not suggesting you have to continue working in the same field, especially if it was a high-stress career. Instead, choose something that allows you to be involved in your community and interact with others. Just because you retire, doesn’t mean your social life needs to as well.

2. You’ll receive a steady cash flow.

People who are about to retire, or have already retired, are very cognizant of their cash flow. If you’re no longer collecting a steady paycheck from a job, where will your money come from? Retirees rely on items such as rental properties, investments, patents, Social Security or any number of things, but the most reliable source of income is a job.

By working throughout retirement, you’ll maintain a steady cash flow. This is especially useful to retirees who are wholly dependent on Social Security, which unfortunately can’t always pay all the bills.

Even if you have cash flow sources outside of Social Security, the income generated by a job can help you pay for luxuries during your time off.

3. You can Influence what you leave behind.

No one wants to leave behind a legacy that includes outstanding debt, especially because your kin will become responsible for it. When you are about to retire or are in retirement, it’s really important to reflect what you’re leaving behind.

If you are entering retirement and still have outstanding debt, one way to whittle it down quickly is to work, especially if you choose a job that intersects with a hobby. You won’t have to worry about the debt going unpaid and will be doing something you enjoy at the same time.

Certainly, the decision to continue working throughout retirement is a very personal one. However, many retirees find it enjoyable due to the social interaction, continued responsibilities and financial advantages.

The looming retirement crisis is a term that sounds ominous – and it is. Millions of Americans dream of a retirement that includes their hobbies and loved ones. Unfortunately, the harsh reality is that many of those dreamers will never actually get to retire because of a seriously inadequate nest egg that is supposed to sustain them through their twilight years.

America needs to wake up and realize we have a serious problem on our hands. It’s not an abstract one, but rather an issue that has specific origins. We have no chance of reversing the problem without figuring out how we got to this point and what we need to do to prevent the looming retirement crisis.

Here are the main obstacles we face:

1. Coverage

Study after study has shown the easiest and most effective way for people to save for retirement is through an employer-sponsored retirement plan, whether it’s a 401k, IRA or another vehicle.

Over 40 million employees – especially those working at small businesses, don’t have access to a work-sponsored retirement savings plan.

Our solution? Mandated retirement savings plans. State governments are getting involved in this solution, but more needs to be done so that all workers have the opportunity to save at work.

2. Participation rates

Even among employees with the opportunity to save at work, there is an alarmingly low participation rate of only 52 percent, according to the Bureau of Labor Statistics. The retirement industry and government need to find a way to get people to utilize their plans and save money for their future. When employees have to opt for a plan, many wrongfully assume they need the money more now than they will later.

Our solution? Auto-enrollment. Research indicates that when people are auto-enrolled in a retirement plan, they stick with it after seeing how easy it is to use and its benefits.

 

 

3. Saving enough

In an earlier post, we discussed the new reality of retirement savings sources: Pensions are basically extinct, and Social Security is unstable. That means you alone are responsible for saving enough to last you through retirement.

The problem is that most people’s nest eggs are underfunded. According to the Employee Benefit Research Institute, 57 percent of workers report that the total value of their family’s savings and investments is less than $25,000 (this figure does not include the equity in their home or a defined benefit plan). Of that group, 28 percent of people have less than $1,000 saved.

Our solution? Auto-increasing savings amounts. For workers enrolled in a defined contribution plan, it is difficult to remember to keep increasing their deferral rate; plus, many people second-guess the decision as they believe they need the money more now than they will later. By auto-escalating deferral rates, we can help people save more without putting the burden on them to elect to save more.

4. Investing appropriately

Investment selection and portfolio allocation both seem to trip up savers very frequently – and with good reason. After all, most people don’t have expertise in the markets, and yet their future ultimately depends on these very complicated concepts and products.

It’s no surprise we are concerned that people are not investing appropriately for their age, risk tolerance or current market conditions. How can you know what is considered appropriate for you when you’re tasked with doing this on your own?

Our solution? Cost-effective professional advice. When there is a plumbing issue in your house, you call a professional plumber. It’s that same logic that should encourage the retirement industry and employers to offer professional resources to assist savers with their investment selection and ensure its suitability for their unique situation and goals.

Download Ubiquity’s Definitive Guide to Small Business 401k

Retirement on a Shoestring

Sylvia Flores / 8 Aug 2017 / Personal Finance

Retirement? No. Work till your dead? Yes.

My father is older than my mother, although he is very much like the glamorous southern bell that admits his age to NO ONE. He had the tiniest pension in the world from his jet-setting career that may or may not have been used to purchase a house, and so, retirement is Social Security.

My traditional family halted dramatically when he chose to chase dreams rather than a paycheck. I mean, not that dad isn’t a show-stopping artist, because he is. And in his hay day, he was making some pretty large bills on paintings, because people used to have money to blow on art. Do you remember those days? You know, before the downfall of our economy, when we all had tons of (pretend) money?

Here’s a timeline of events:

  • Dad quits the job, becomes an artist, we move to Maui because Oregon’s economy went through a major bottoming out.
  • We live in a house the size of a shoebox (700 sq. ft.) and there are amazing amounts of tourist dollars from all over the world flowing through the island. Unrealistic sums of money. The kind you wipe your tears of joy with – if any of it was yours…
  • Hawaiian market bottoms out, my mother would like to be closer to her aging parents and sisters, and we move back to the family farm, which, if you are a Harry Potter fan, looks like the Weasley House.
  • Dad retires with a savings account in the teens (as in five-figures) and takes Social Security, which is well below the national average check of around $1,200 – in fact, it’s less than half of that.
  • Mom gets a job that she still works at today, and has a 401k plan through her work.
  • Health premiums are through the roof! Dad gets on Medicare, mom stops paying over $1,000 per month for his insurance.
  • Even with Medicare, dad and mom pay more in healthcare premiums than all other bills combined.

Okay, that brings us to a pretty current status. Mom works like a mad woman and supports my dad. She cooks, cleans, sews… all the stuff that moms used to do traditionally. She also has a firm grip on what it’s going to take to retire – for both of them.

Her 401k is the ONLY thing that ensures they have a future at all. Despite the fact that the market tanked and she lost over half of her savings – she spoke with her Advisor, and he said the following:

“Stay the course.”

Good advice. She did, and now her 401k has bounced back to where it was and on her current trajectory, she’ll be able to retire at around 66 (though she is going to try to wait to 70). Her house is paid off, but unfortunately, it is in the middle of nowhere, about 30 miles away from the nearest hospital, riddled with scary stairs, and lots of farm work…

I’ll tell you what’s going to happen. Our family is going to combine. Aunts, uncles, sisters, cousins, friends, whomever – we’ll live under one gigantic roof and combine resources. We’ll create the family compound and take care of one another. And it won’t be taboo anymore. Kids moving back home or parents moving in with kids will be the new show of success. If other countries can make it a successful go, so can we.

Congrats! You graduated college and accepted your first full-time position. The transition from college life to “the real world” can be quite challenging and, at times, confusing. However, right before you rush through that HR paperwork, realize that those forms may hold the keys to your first retirement plan.

Namely, your first 401k plan. Even though retirement seems like the last thing a new college grad should be thinking about, your commitment to your future starts now. By enrolling in your new employer’s 401k right off the bat, you are taking a giant step toward complete financial independence.

You might be done with classes, but don’t give up on learning just yet, especially when the subject is your future! Check out this 401k 101:

Look into your enrollment options.

Despite when your first day of work was, your enrollment period might not begin for another few months or even a whole year. Every company operates on a different enrollment schedule.

If you can’t enroll immediately, check with HR on when you will become eligible. Set a reminder on your calendar to revisit the open enrollment discussion when it gets closer to that period.

Why? Letting this slip off your radar will cause you to miss out on a tax break and compound interest (more about this below) — which is like flushing money down the toilet!

Find a happy medium in your involvement.

When it comes to your money, no questions should be off-limits, especially if you are new to your employer’s 401k plan. Take advantage of your plan provider’s representatives who are there to advise you on the nuances of your plan, investment choices and company match options during the open enrollment period.

Don’t discount the power of compound interest.

As you may have learned in your college economics class, those who begin saving earlier will wind up with more cash. This concept is called compound interest. Think about it this way: The earlier you save, the more vacations you will be able to go on in retirement (hello, world traveler)! It might seem like those first few dollars you save are entering a black hole, but your assets, or shall I say “vacation fund,” will build over time.

Don’t give up so easily.

Some companies, unfortunately, don’t have a way for you to save for retirement at work. While that’s a huge bummer, there are still options for you. Don’t shrug your shoulders and give up on your future – there are viable, easy solutions!

Turning to your local bank to begin an Individual Retirement Account (IRA) is likely your best bet. In an IRA, you still have the ability to invest pre-tax dollars. Not only do you give yourself the opportunity to save, but your bank may also be more likely to loan you money in the future because you are establishing positive financial habits from the get-go.

Hopefully you have a better idea of how to go about enrolling in and taking advantage of your first retirement plan. You not only passed college, but you just aced 401k 101.

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1160 Battery Street, Suite 350, San Francisco, CA 94111 / Support: 855.401.4357

© 2018 Ubiquity Retirement + Savings / Privacy Policy
1160 Battery Street, Suite 350, San Francisco, CA 94111 / Support: 855.401.4357