Financial Empowerment

California is now requiring all small businesses with 5 or more employees to offer their employees some kind of retirement plan. If the business doesn’t want to provide one, then the state has a new plan call CalSavers* that they will automatically enroll your employees in. I won’t deep dive into the plan (as I’m no expert), but I want to discuss the idea behind the new law.

Although employees can opt out, it’s putting the idea of retirement savings in front of them to encourage them to save for the future.  

Why do we need to put it in people’s faces that they should be saving for retirement?

A recent Bankrate survey stated:

“55 percent of Americans say their retirement savings are not where they need to be, with nearly 35 percent saying they’re ‘significantly behind’ and another 20 percent saying they’re ‘somewhat behind’ their goals.”

This means most people need to save more toward retirement, hence the concept behind CalSavers. Helping people save for retirement is a noble goal whether or not you agree that the state needs to be involved.

As an employer, you have the option to help your employees or let them default to the state plan. It might seem easier just to let the state plan kick in. I get that.  

Financial Empowerment
Financial Empowerment

The question is: is that the type of employer you want to be?

I believe this is a reminder that we do not live in a zero-sum world. There is not a set amount of money to go around and if one person gets a bigger piece of the pie another will get a small piece. That’s just not how it works. 

Thinking that way is having a scarcity mentality.

This is a common mindset that doesn’t serve us as employers. We do not have to think of supporting our employees’ financial goals as oppositional to our company financial goals.  

As an employer, we have no obligation to support our employees’ personal financial growth other than paying a decent wage. However, we do have an opportunity to create a culture that encourages their financial growth by offering them benefits such as a retirement plan.

Yes, that means the company is obligated to offer a matching contribution up to a certain amount, so it’s not free like the state plan. But instead of thinking of the extra expense as a burden to the company, I propose that you see it as an opportunity to empower your employees financially.  

Financial Empowerment
Financial Empowerment

If your mindset is “how can I encourage my employees to be financially savvy?” then you will likely have happier loyal employees.

No, you aren’t obligated to play Santa Claus. But why not consider the difference you could be making in the lives of your employees and their perception of you as an employer?

In today’s challenging labor market, building a culture that supports your employees in any way will pay off.  Empowering employees to be more financially savvy could benefit the company in the long run through more loyalty.  

It’s common knowledge that it’s cheaper to keep employees than to have high turnover. Investing in the ones you have now could be a savings over time. Don’t just think about the cost of implementing a company sponsored retirement plan. Think about the other benefits to the company.

Every new concept has pros and cons, and you are not obligated as an employer to fund a company-sponsored retirement plan.  Even if you’re not based out of California, it’s worth looking at what it would mean to your company and to the financial well-being of your employees to offer a retirement plan.

Creating a company culture that encourages financial smarts is smart thinking. How you go about doing that is up to you, but offering a company-sponsored retirement plan could be a good first start. Think of it as a win-win. You build employee loyalty while helping them build retirement savings.

*CalSavers Retirement Savings Program

CalSavers is a retirement savings program for private sector workers whose employers do not offer a retirement plan. This program gives employers an easy way to help their employees save for retirement, with no employer fees, no fiduciary liability, and minimal employer responsibilities.

Employers with five or more employees must participate in CalSavers if they do not already have a workplace retirement plan.

Sherry Lutz Herrington is the owner of Sherrington Financial Fitness, a business consulting and accounting firm specializing in strategic business planning and solid financial accounting for businesses. She is also the author of Strong Women Thriving (, a blog which focuses on empowering women to be financially savvy, particularly after experiencing financial abuse. Sherry is currently writing a book that both shares her personal story and addresses financial abuse. She can be reached at for more blogs!

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