THIS WEEK'S STORY
Stop your staff from draining their retirement on a bad week.
Lisa runs a small architecture studio here in the Bay Area. Eight people. Good ones. She called me last month, rattled.
"My best project architect just pulled money out of his 401(k)," she said. "His kid had a medical thing. He didn't have the cash. So he raided his retirement and ate the penalty."
She felt awful. She pays her people well. She figured that covered it.
I asked her one question. "Does your plan have an emergency savings option attached to it?"
It didn't. Most don't yet.
There's a newer setup that links a small emergency savings account right to your retirement plan. Your staff put money in. They pull it out when life hits. No ten percent (10%) penalty. The first four withdrawals a year cost them nothing.
I told Lisa to think about what her guy did. He had a real plan for retirement. One bad week wiped a chunk of it out. Plus the penalty. That money is gone. He's not getting those years of growth back.
The account fixes the order. Emergency cash sits in its own bucket. The retirement money stays where it belongs.
The numbers are simple. Each person can save up to two thousand five hundred dollars ($2,500) of their own money in there. Next year it goes to two thousand six hundred dollars ($2,600). You can auto-enroll them at three percent (3%) of pay. They can opt out or change it any time.
The part most owners miss: this costs you almost nothing. You're not funding it. They are. You're just opening the door.
Lisa set hers up. Took a phone call with her plan provider.
