Business Retirement Plans of the Modern Age
We are pleased to announce BaldwinClarke’s article series: Selecting a Business Retirement Plan. The series will review retirement plan options for business owners. This article introduces readers to employer retirement benefits through a historical lens. Later articles will discuss key principles, compare options, and explore strategies.
A tight labor market demands careful attention to employee benefits. Employer-sponsored retirement plans are central to these packages. Retirement plans include pensions, 401(k)s, stock bonus plans, and numerous others. Plan designs vary, but all serve similar purposes. Retirement plans attract and retain top talent. A suitable plan also fulfills an entity’s financial goals.
Retirement preparation has always been important. Prolonged life expectancies and surging health care costs now render it a necessity. Data reveals the full extent of both trends. Mortality tables indicate that today’s 65-year-olds have a 50% chance of living to age 90. What’s more, there is nearly a 20% probability they will live to age 100.[1] Life expectancy leaps are partly attributable to health care advancements. Medical interventions repel fatal diseases and life-sustaining treatments keep our ill alive longer. These innovations, however, come at a cost. Experts estimate that an average couple may incur roughly $315,000 in retirement health care expenses.[2] Longer and more expensive retirement periods require substantial savings.
Retirement costs are widely recognized. As such, many workers embrace and even expect employer-sponsored retirement plans. Research ranks retirement plans as a top-three priority for prospective workers.[3] Moreover, three-quarters of employees say they would switch jobs for better financial benefits.[4] Businesses are responding to these concerns. In 2020, approximately two-thirds of private sector workers had access to employer-provided plans[5] and most took full advantage. Widespread participation leads to a more satisfied, engaged, and productive workforce.
