"Why Middle-Wage Benefits Need a Sustainable Retirement Plan"

Introduction

Heading into 2025, following five volatile years rollicked by a global pandemic, wholesale voluntary terminations in the US (2022's "Great Resignation), and the virally widespread transition to hybrid-style working, mind-boggling change is in the wind. It includes tight economic times fueled by high inflation (reaching a peak of 8%), stagnant wage levels, and uncertain politics that followed the Capital insurrection on January 6th, 2021.

So, where does this leave hourly and monthly middle-wage earners striving for their place in the American Dream - owning a house, providing college education for their children, and retiring comfortably after working hard for decades? Our article covers this crucial demographic segment of the population - often applauded as the backbone of the country's prosperity, providing its citizens with a better lifestyle.

In this article we review the employee benefits emerging during a career lifecycle, from onboarding to termination. Understanding the difference between an employment package that nurtures staff members’ loyalty to a corporate culture and one that spurs them to look for another job and leave prematurely is vital. If your company relies on a workforce that includes workers earning $38,000 to $60,000 annually, you'll find groundbreaking take-home value in the content below.

What are the pain points of hiring middle-wage employees?

The pain points disturbing the vision of a committed workforce contributing to extraordinary performance with the energy and willingness necessary to participate in the organization's success are as follows:

• Spiking absenteeism.
• Unexpected early terminations (voluntary and involuntary).
• A team of unengaged clock-watchers meeting minimum KPIs at best.
• The high cost of hiring and rehiring to offset unacceptable employee churn.
• According to The Employee Benefit News and Work Institute's Retention Report, replacing middle-wage workers costs 33% of their annual salaries.
• The inability to project performance accurately with an unstable HR infrastructure.
• ROI drifting down as revenues disappoint and overheads trend upward.

So, read on if your business is experiencing a significant gap between what you expect as a stakeholder in your company's future and the reality.

Why can't small- and medium-sized businesses (SMBs) get their value proposition to middle-wage employees right?

It's puzzling when you have gone the extra mile to offer industry-best Basic Employee Benefits (BEBs), as follows:

• A competitive salary with generous raise opportunities and bonuses for long-term employees.
• Sponsored healthcare insurance with a top-class provider.
• Generous vacation and sick leave days.
• The flexibility to cater for remote working when and where relevant.
• A structured and nurturing onboarding program that welcomes recruits to a supportive team.
• Ongoing training in AI-enhanced technologies that further employee advancement and education. 
• Wellbeing and physical fitness programs, including mental stress counseling.

A 401(k) retirement option with matching company contributions.

Why aren’t your BEBs working? Put yourself in your employee’s shoes for insightful clues.

When you do that, the answer is not complicated. Consider the following:

1. Owning a home has become a goal drifting further away: Prices since COVID-19 are sky-high, and the same trajectory will continue for the foreseeable future. 
2. Current homeowners benefiting from fixed low-rate mortgages (negotiated years ago) aren't selling, thus creating an inventory shortage in the face of accelerating demand at all residence levels in every category.
3. Mortgage rates for entry-level buyers sit stubbornly between six and seven percent - more than double the recent lows.

   2. Renting is no more straightforward than the challenge of owning: 

1. In 2021, leasing a home jumped by 18%, slowed slightly to 12.2% the following year, and stagnated from then going into 2025. 
2. Still, a rental for $3,000 monthly in 2020 jumped to nearly $4,000 beginning in 2023 (a 50% compounded increase over 24 months).

    3. Healthcare expenses: Even with employer-sponsored health insurance, out-of-pocket costs such as premiums, deductibles, and copays are on the rise, steadily pressuring already tight budgets.

  4. College education without scholarships or government subsidies and extra tuition in children's formative years is a cost that continues to climb. 

1. Few middle-wage parents securely know they can give their kids the gift of learning to the maximum their talent allows, based on cash restraint. 
2. That's a hard pill to swallow in a First World economy.

    5. Emergencies and luxuries: Even two-income families, some with third jobs, are finding it hard to make ends meet. Why? 

1. Taxation, unexpected emergencies, unavoidable gifts to loved ones at anniversaries, and travel have eaten away at reserves, leaving little in the jar for a rainy day (or retirement). 
2. Vacations to the Bahamas or another nearby island, an “unwind-necessity” affordable before 2020, are massively expensive and a pipedream today.

In short, your middle-wage staff members feel culturally disconnected despite your HR inclusion and BEBs being up to speed. The elephant in the room is this: Employees can't see a clear road to retirement with an organization unable to guarantee a soft landing at age sixty-three when their careers end.

"Nest egg stress" lies at the core of the deteriorating employee performance, the principal instigator of the rising churn rate you may be experiencing. It disrupts commitment, deflects company loyalty, and encourages job-hopping to find that “happy retirement career haven” elsewhere.

Retirement Benefits Under the Microscope.

Stakeholders’ usual retort to the point we’ve made above (in bold and italics) is, “What about our 401(k) Retirement plan? That should do the trick.“ Kudos to you for offering it. Many competitors don’t. However, for the targeted employees we’re focusing on, it doesn’t work most of the time, exacerbated by the fact it’s on their minds consistently, manifesting itself as a severe worry. So, what’s the problem with the  401k plan - a traditional solution?

It requires participants to contribute dollars every month/week from their salaries.

• Unfortunately, even if the company offers to match contributions, your staff members in this category don't have the funds spare when they're virtually living paycheck to paycheck (as described above). 
• Based on this, your 401k may be attractive to the C-suite but not the worker population, no matter how many bells and whistles in its structure. 
• For many middle-wage employees, it may as well not be on offer.

Don’t throw your arms up in despair; we have a solution!

The Radish retirement model, relying on the Ted Benna-initiated IRS tax deferment benefits, annual contribution limits, and investment growth offered in the 401(k) program, is ideally suited to middle-wage employee aspirations. Here are the compelling advantages:

1. It applies to almost every industry, from healthcare to education, manufacturing, logistics, hospitality, retail,  distribution, and more. 
2. The employer carries 100% responsibility for the employees’ Radish plan contributions, thus releasing all the budgetary pressure on staff members entering the program.
3. You, the employer, validate (2) above by tying all Radish contributions to an incentive program that achieves ROI-centric KPIs. As a result, when you deposit dollars into employees' retirement accounts, they're genuinely sharing incremental profits generated by meeting or exceeding KPI milestones. 

• See our Caregiver Case Study for a detailed example of how KPI incentives work amazingly well for middle-wage employees. 

   4. Radish has designed the plan around low-cost administration. How? By following a strategy that includes the following protocols:

• Employers have 100% investment control, thus erasing the need for multiple investment options (like the 401k).
• It can run parallel to existing or future 401ks. In other words, employees can own both.
• Employers establish the performance KPIs and the rewards attached to each employee.
• Employers can start Radish, stop it, and alter the inner workings without regulator oversight.
• The employees have access to their built-up nest eggs almost instantly to meet emergencies, although premature withdrawals may upset the tax benefits of a full retirement term.

The Radish model innovatively draws on the 401(a) methodology, emerging as a drawcard feature that creates excitement in the recruitment marketplace and renews existing employees' enthusiasm to settle into long-term careers. Introducing Radish into your strategy consolidates retirement stability and employee retention in your business simultaneously with profit upliftment.

Conclusion

It’s crucial to realize that all the BEBs outlined above - from competitive salaries to wellbeing counseling - must be functioning within your strategy for the Radish Plan to get the traction it needs to retain employees. In other words, underpaid, undertrained, underinsured, and overworked-with-no-bonus staff are unlikely to appreciate the value of an attractive savings program (Radish or a 401k).

Conversely, when your BEBs are firing on all cylinders without a Radish-style retirement option, they’re not enough to guarantee the turnstile of employees leaving the company will stop turning. Robust BEBs and a Radish model go hand in hand, with Radish being the component that switches on the spotlight to shine on resilient employee loyalty.