For many small businesses, opening retirement accounts for employees is a great idea. It benefits workers, makes them more inclined to stay with the company long-term and can even lead to corporate tax savings. But retirement saving is a tricky proposition – there are a number of pitfalls to be aware of, and no entrepreneur should begin allocating retirement funds without being absolutely sure of what he or she is getting into.
There's no shame in admitting that one needs a little financial investment advice. Here are a few tips for retirement planning in the workplace:
Don't count on Uncle Sam
According to data recently released by Country Financial, the Baby Boomer generation isn't optimistic that Social Security can significantly help them into retirement, though only 31 percent have said the government should play a larger role. Also, just 28 percent think it's possible for middle-income families to save for their own retirements. Be mindful of this – workers know they can't do it alone, and they would love your help.
Ask for help
Speaking of help, there's no shame in seeking outside assistance with retirement saving. Accounting and expense reporting are arduous tasks, and investments can be tricky. One bad decision can ruin your employees' futures, so it's prudent to seek outside help from accounts or financial planners.
Be leery of friends or family
It's tempting for many employers to ask a cousin or a best friend to be the company's investment consultant. This is to be avoided – while it might seem like a good bonding experience and an easy way to mix business with personal relationships, it's also a potential conflict of interest. Your investment decisions might look sketchy if your employees – or worse yet, the government – finds out your consultant had ulterior motives to help you out.
Don't get behind the times
Stocks, bonds and mutual funds fluctuate dramatically over time. So, too, do investment plans, as JD Supra Law News explained. An investment strategy that looked great 10 years ago might not work anymore, so it's important to stay abreast of the changing economic climate.
Retirement planning can be a dangerous game, but with careful planning and professional help when necessary, it can work out. If your investment strategies can help your employees retire with a little extra security, they will undoubtedly thank you later.