Helping Your Construction Employees Save for Retirement

Helping Your Construction Employees Save for Retirement: A Powerful Recruiting Tool

Helping your construction employees save for retirement. The passing of federal legislation and the re-opening of the economy after the COVID-19 pandemic has increased the demand for qualified, skilled construction work. Unfortunately, for many employers turnover seems to be outpacing that demand. The workforce shortage is the biggest challenge facing the construction industry, and many employers and contractors are wondering what they can do to give themselves a competitive advantage.

Offering a retirement plan is one of the best ways to attract high performing workers and keep them on your payroll. At Correct Capital, we partner with contractors and construction companies to create retirement plans that improve their bottom line and employee retention. Partner with Correct Capital and pave the way for a prosperous future for your employees and your business. Call us at 877-930-4015 or contact us online today.

The Current State of Employer-Sponsored Retirement Plans in the Construction Industry

It's not like employer-sponsored retirement plans are new to the construction industry. The "building-constructing-contracting" sector is above average among other industries in offering 401(k)s, profit sharing, and matching contributions. However, out of 48 listed industries in the 2022 DC Plan Benchmarking Survey, the construction industry placed:

  • 32nd in participation rate
  • 32nd in average account balance
  • 33rd in average deferral rate
  • 44th in immediate eligibility
  • 43rd in immediate vesting

Additionally, the industry's average retirement age is 61 (lower than the national average) and 20% of construction workers are already over 55. It's estimated the industry as a whole needs to hire additional 590,000 workers in 2023 on top of the typical hiring pace.

How to Attract Construction Employees

Attracting and retaining employees for construction companies and contractors is getting increasingly more difficult and competitive. Construction companies can differentiate themselves by offering:

  • Continuous learning/training
  • Career paths
  • Flexible scheduling and more work/life balance
  • Improved diversity and inclusion (especially helpful in recruiting younger generations)
  • An amended value proposition to include a company purpose, mental health, and social responsibility

Why Retirement Planning Is Important to Employees

The key to consistent success and growth when it comes to employee relationships is thinking long-term. Modern employees want to know the company cares, and one of the best ways to do that is to help set them up for financial success and secure their retirement savings. In Correct Capital's 2022 Annual 401(k) Participant Survey:

  • Most respondents said they would "absolutely" engage with a financial advisor (up 8% from 2021)
  • "Building a retirement nest egg" was their most pressing matter in life at the moment
  • 72% of respondents rated their comfortability choosing retirement plan investments as a 3 or below out of 5
  • The third most common response for how they're dealing with the current economic climate was "save more in general"
  • Market volatility was rated as the #1 obstacle to invest for retirement

By partnering with an independent advisory firm like Correct Capital to offer a retirement plan and manage its investments, you can address both the need to save more for retirement and the uncertainty many employees feel. What's becoming a greater pain point for many contractors can turn into a competitive advantage for you.

Retirement Plan Offerings for the Construction Industry

The construction industry's unique nature allows employers and their financial advisors several different options to offer employees:

  • 401(k)s — A highly-versatile and customizable plan that allows employees to contribute through payroll deductions and gives employers an opportunity to match.
  • Multiple Employer Plans — These plans, often called MEPs, involve two or more employers who offer the same plan through a sponsor or Contractor Associations. They significantly reduce liability, costs, and administrative duties while allowing smaller companies or start-ups access to a more robust plan.
  • Prevailing Wage Plans — For government contracts, these allow you to offer "fringe" benefits in a qualified plan instead of offering them as wage, reducing payroll and operational costs.
  • Employee Stock Ownership Plans (ESOPS) — These allow employers to pass shares in ownership to employees without giving up any control of the company. They're often an ideal option for succession plans and are best suited to contractors and construction companies.
  • KSOPs — A combination of a 401(k) and ESOP, these allow employees to contribute to a retirement plan as they would in a 401(k) and employers to match their contributions with company stock.

The "best" plan is often a combination of the above plans tailored specifically for your company. By partnering with experienced and creative financial advisors, you can set up a plan that works best for you and your employees while retaining the flexibility to alter the plan as needs change.

Benefits of Offering a Retirement Plan to Construction Employees

Offering and optimizing employer-sponsored retirement plans carries a number of benefits for both contractors and their employees:

Employee Benefits

  • Improved financial security in retirement
  • Employer contributes to retirement savings
  • Access to financial education
  • More fulfilling workplace experience (especially with profit-sharing plans)
  • Tax deductions or a Roth deferral if you prefer tax-free withdrawals once you reach retirement age
  • Survival benefits for family; if something happens, your plan balance can be passed to your heirs or designated beneficiary

Company Benefits

  • Attracting, retaining, and rewarding top performers
  • Demonstrates company values
  • Competitive advantage over contractors who offer lesser plans
  • Enhances job satisfaction
  • Tax deductions for matching contributions
  • Flexible plan options to fit your plan to your needs
  • More competitive bids due to lower operational costs
  • Increased employee productivity and incentive through profit-sharing plans
  • Compliance (for government contracts)
  • Word of mouth referrals
  • Succession planning and business continuity (with ESOPs)

No two companies are alike. To get the most benefit for your company and your employees, it's important to work with a financial advisory firm that understands your unique needs and prioritizes the success of you and your employees.

How Correct Capital Can Help With Retirement Plans for the Construction Industry

Correct Capital is an independent advisory firm that specializes in retirement planning and working with contractors and construction professionals. With Correct Capital:

  • We'll design a retirement plan that suits your needs and goals
  • Plan assets are held by professional trustees and custodians
  • We can establish the plan and adopt into an MEP
  • We'll educate and advise employees on details of the plan and retirement planning
  • We'll manage and monitor the plan's performance
  • We'll adapt the plan as necessary

As fiduciary advisors, our only obligation is to do what we believe is best for you, your company, and all employees covered in the plan. Backed by decades of combined experience and in-depth research and technology platforms, we create solutions that meet you where you are and bring your construction and contracting company where you need it to go. Call Correct Capital at 877-930-4015 or contact us online to speak with a financial advisor today.