Let's talk about some hard numbers.
Why? Because almost half of the Small Businesses in America don't provide their employees with a core set of the benefits they need. This leads to
- Millions of Americans go into debt (or going into MORE debt) when faced with a financial emergency.
- Millions of Americans retire at or below the federal poverty line because they rely completely on social security.
- Millions of Americans work while sick because they can't afford to see a doctor.
How can employers help their employees save more?
By offering an Emergency Savings Account to employees, contributions to those accounts can be paid directly from a paycheck. In 2023, nearly all states have an average hourly wage of $20/hour or more, so let's use that as our example through this article. That means a given employee would have a monthly salary of about $3400 or a little over $41,000 annually. If that employee contributed just 3% of their income to their Emergency Savings Account (about $4 per day), they could easily cover that emergency expense in just five months! In general, most employees won't miss the deductions from their paychecks. Automated contributions are the key!
How can employers help their employees save for retirement?
Let's face facts - 401(k)s are the de-facto retirement benefit that most employers offer, but they are expensive! There are alternatives that any small business can afford, and they can co-exist with or replace existing 401(k) plans. With a SIMPLE IRA, employers can give their employees 1% of their total income as a contribution directly into their retirement account! For our employee making $20/hour, the employer gives that employee $34 per month towards retirement! And this $34 does not impact the employees' income or taxes. What's even better is that the employee can also contribute directly to this account. With the employer and employee contributing 1% of their income, that comes to about $70 per month in retirement savings!
What if an employee has a bit more income to save? Not a problem; they can also contribute up to $6500 per year into a Roth IRA or up to $125 per month. When you include the $34 per month from the employer in the SIMPLE IRA, the $34 per month from the employee in the SIMPLE IRA, and between $34 and $125 per month into a Roth IRA, those retirement savings quickly add up! And when the contributions come directly from employees' paychecks, they might notice a small impact, but it is usually quickly forgotten.
What about employees' Health Insurance?
Ensuring your employee's physical and emotional health is cared for is critical to ensure employees remain healthy and productive. According to the Kaiser Family Foundation, 29% of Small Business employees with employer-sponsored health insurance coverage have their entire individual coverage premium covered by their employer. The employee is then welcome to pay for additional coverage for their family members on this same plan.
Not all Small Businesses can afford to provide their employees with group health plans, and not all Small Businesses qualify for government-sponsored Small Business Health Options Program (SHOP) plans. In this case, employees can often find affordable coverage directly from the healthcare exchange for themselves and their entire family. In 2022, thanks to government-provided tax credits, most families enrolled in healthcare through the healthcare exchange paid $50 or less per month for their health insurance premium!
How can Xiggit help?
Studies have shown that employers investing in their employees' financial and physical well-being will have lower turnover and more energetic, productive teams. The team at Xiggit can help you understand your options and bring together an affordable program that you and your employees will love. Our programs are low-cost and completely automated, requiring no additional administrative overhead on the employer's part. Ready to learn more? We'd love to talk to you!