Any fan of baseball probably knows that David Ortiz- “Big Papi”- of the Boston Red Sox recently retired. Well, as Big Papi prepares for his “golden years” at least he won’t have to worry about his finances. While the top, multi-year, mega million dollar contracts usually make the headlines, we don’t usually hear much about the “average” player compensation package? Curious as to how their “average” salary and retirement benefits differ from the “average” American worker? The comparison can be quite daunting.
The average salary of an MLB player is about $4 million. Furthermore, players in the MLB receive extremely generous retirement benefits. Business Insider states that players who play at least 43 days in the majors, will earn, at a minimum, a $34,000 annual pension – yep, that’s right, $34,000 per year in pension benefits after just 43 days of work, or actually…play. For players that have been in the league for over 10 years, the benefits rise to $100,000 annually. In addition, playing even just one day in the MLB earns a player lifetime health insurance.
Players like Ortiz are highly respected and their retirement becomes a celebration of their baseball careers. But can the average American worker expect to receive such high regards and benefits when they retire?
Unfortunately, the answer to that question is no. Bloomberg reports that almost half of U.S. workers don’t have a company-sponsored retirement plan. Furthermore, over half of these people work at businesses with less than 100 employees, making this an even more pressing issue for both small business owners and employees alike.
According to the Small Business Association, a whopping 72% of employees at small firms (about 41 million workers) reported that their workplace offered no retirement plan. On the flip side, 78% of workers in large companies reported that their workplace does offer a plan. This stark contrast between small businesses and large businesses is very problematic.
Small business owners face a handful of challenges in trying to find the perfect retirement plan for their employees. One reason for this is the difficulty in ensuring compliance. The government is frequently reforming legislation and regulations surrounding retirement plans, and transactions often need to be documented for compliance reasons. Many small businesses struggle with this and as a result, may be deterred from securing retirement plans for employees. Other employers cite the costs of establishing and administering a retirement plan, as well as the burden of ongoing administration as major obstacles.
With these obstacles in mind, more small employers than ever are looking for creative solutions to this retirement planning dilemma. A Professional Employment Organization (PEO) can play an instrumental role in helping small employers offer a retirement plan. According to NAPEO, 98% of PEOs offer some type of retirement plan to their client’s employees.
PEOs have a great understanding and expertise when it comes to helping business owners offer the best retirement plans for their employees. Working with a PEO provides the employees with great value, by giving them access to retirement plans from top-tier providers. Working with a PEO also benefits employers, since retirement plans and other benefits are key factors in employee recruitment and retention.
While you may not be able to offer a package quite as lucrative as in the MLB, with the help of a PEO, you will certainly be in a much better position to compete for top talent and with the right roster, improve your winning percentage.
Want to learn more about how Navigate can help you provide the best retirement benefits for your employees? Contact us or click here to request a free consultation.