Savings are essential as it not only helps in meeting with sudden situations well but, it is also helpful for spending a relaxed life after retirement. Plan how would you want to live your life? Do you want to plan vacations after you retire? Set your goals now and then start saving money. Savings greatly depends upon how you plan to save and how much you will be saving. Savings through your employer is a good option available as it has many features that can benefit you after your retirement. Following mentioned are few reasons as to why employer savings option should be considered:
Savings through your employer
-The contributions are deducted from your pay which makes savings convenient. When you save through your employer, the contributions are deducted automatically from your salary. In addition to this, most plans also allow you to increase your contribution by means of the Annual Increase Program.
-Savings through your employer will help in reducing the current amount of income taxes. Making contributions on a pre-tax basis eventually means that all the income contributions will be deducted from the amount before tax is being calculated. This lowers your taxable income. This will not only help you save for your retirement life but, your current taxable income will also be reduced.
-Employers tend to match contributions up to a certain percentage which is somehow like earning free money. When employer makes matching contributions it will help your savings grow. Making higher contributions under such a situation can be very beneficial as it will increase your savings to a good amount.
-Savings through your employer provides you with various investment options. Workplace has various investment options available for their employers each of which have different characteristics. You select either one program or a mix of different options whichever suits your needs best.
-You can access your savings whenever you need it. However, this greatly depends upon the provisions supporting the investment plan. Employees are mostly allowed to withdraw or obtain loans from their funds in case they meet an emergency situation.
-The best thing about savings through your employer is that if you leave the job for whatsoever reason, you can take these savings with you.
-Coverage through your employer is a guaranteed issue. This eventually means that even if you do not have any other way of getting money in an emergency situation, you will not be turned down by your employer. Health insurance is the most common coverage provided by employers which include maternity as well as mental health care facilities.
Savings through your employer provides many benefits. You have the peace of mind that your money is being saved and you can use it after retirement to spend a peaceful and happy life. Traditional way of savings like savings in a current account has the drawback of easy withdrawal which eventually results in spending your savings. Although, employer savings can be withdrawn too however, it requires a procedure to be completed.