Although Social Security and pension issues have been in the headlines for some time, many people still don't take advantage of employer-supported savings like 401(k) plans. Some of the reasons cited in a study done by Hewitt Associates, a global human resources services firm, include procrastination, fear of market fluctuations, and lack of discipline. But the bottom line is that it's important — to employers and employees — for employees to save money.

“Most people live paycheck to paycheck, and it scares me,” says Geno Benvenuto, of the Chicago-area design/build company Benvenuti and Stein. “People just don't save money.” B&S has a 401(k) plan to which the company contributes either 6% of an employee's salary or 25% of the employee's contribution, whichever is less. Last year, only 16 of B&S's 47 employees were signed up. Why should a company owner care?

There are three key reasons, says Jim Ellis, a CPA and principle in Ellis & Associates CPA's in Baltimore.

Employee retention. “If employment is tied to a financial retirement plan, the employee is less likely to leave the company, especially if the plan is vested,” Ellis says.

Tax deduction. “Depending on the tax bracket,” Ellis says, “an employer's contribution may save enough tax dollars for the company that it's not really costing the company anything to make that contribution.”

Owner benefits. The IRS wants you to help your employees, Ellis says, so “if more money is put away into employees' accounts, it allows the owner to be able to put away more money into his or her account.”

Benvenuto saw that many long-term employees were part of the plan, but he wanted more to get involved and to “tie [employees] to the company and get them to think long-term,” which in turn makes his company more stable and consistent. He had 401(k) plan representatives speak at a company meeting. “People listened, but didn't sign up,” he says. He then had a representative speak with each employee individually. “With a minimum contribution, some of the younger carpenters could have $600,000 by retirement,” Benvenuto says. Only eight more people signed up.

Though many won't save for retirement, Ellis says there are other ways to appreciate employees who help earn the profits. “Direct deposit is another avenue. They'll have a tendency to spend less if the money goes directly into their bank account. Shop on an annual basis for health insurance if employees are paying part of it. Set up a section 125 plan, where health insurance comes out of an employee's paycheck pre-tax. It saves payroll taxes at the company level and payroll plus income taxes at the employee level.”

Although you may not get every employee on board, it's worth educating them about the importance of saving.