The convergence of two frequently discussed national trends make right now an excellent time for owners of smaller companies to give careful consideration to adopting retirement programs.
The first of these trends is the continuing tightening of the labor force. Even in light of recent layoffs, hiring is a highly competitive undertaking, particularly when it comes to finding the most skilled and technologically advanced employees.
The second trend, supported by poll after poll, is the widely held perception that the Social Security system is less than secure. Even those who believe it will remain solvent over the long haul are largely unconvinced that it can or should be more than a supplemental source of retirement income.
What these trends indicate, when taken together, is that employers who don't offer retirement plans face several serious threats: They're at a disadvantage when competing for the best employees, and they're probably not adequately addressing their own post-retirement financial needs.
Just one of these threats could pose serious risk to the future well-being of the smaller business owner. Together, they're risks worth expending all efforts now to minimize in the future.
How to prepare
Don't worry, you say. The eventual sale of your company will provide all of the retirement income you need.
Maybe. Or perhaps there will be a sufficiently interested and talented family member to carry on, providing you with a steady retirement cash source.
The problem is that both assumptions have been proven wrong a multitude of times, leaving smaller business owners working harder and longer into their senior years than they ever intended.
Even those who've made the wise decision -- to remain competitive in the work force and secure their own long-term financial stability with a company retirement fund -- can find themselves confused over the next step. How do they begin to put together such a program?
Keep in mind that a bad retirement plan can be worse than having none at all since business owners can be held legally responsible for decisions that squander retirement savings. As John Lipaj, vice president at McDonald Investments, puts it, "The typical small business owner doesn't have the time or experience to research and monitor employees' retirement plans. They're too busy running their businesses."
That's why it's imperative to rely on the expertise of trusted professionals.
The next logical step, according to Martha Lanning, COSE's director of group benefits, is to offer quality retirement plans managed by topnotch professionals. Criteria should include generous selection options, investment flexibility, dependable consultative support and availability at preferred pricing for members, another way of maximizing the competitive advantage.
In COSE's case, members have a menu of provider options to help meet their retirement plan needs. For each alternative, from SEP through SIMPLE to 401(k), there are a wide range of plan choices -- from basic plans to full-service offerings -- from the nation's most respected retirement providers.
Taking similar steps will keep you focused on the most important thing -- running your business -- while industry experts focus on the details of your company's retirement plan needs. After all, says Lanning, "Our members want to run a business, not a retirement plan." Stephen A. Millard is executive director of COSE, the nation's largest chamber of commerce and the region's largest small business organization. COSE, which provides such small business advantages as health insurance, workers' compensation coverage, education, networking opportunities and government advocacy, will also serve as an educator and aggregator of energy buyers for increased savings. Millard can be reached at (216) 592-2436 or online at www.cose.org. For more information about the COSE Retirement Program, call (866) 284-1929.