Workers putting retirement on the back burner are taxing employers
A majority of employers (83 percent) report having a significant number of employees nearing retirement, but only half (53 percent) know when they will retire, according to a survey of 143 large companies by Willis Towers Watson. This disconnect presents employers with several challenges that is forcing them to rethink their approach to managing the retirement patterns of their work forces.
According to the survey, 80 percent of employers view their older staff as crucial to their success. But without a firm grasp on when they will retire, employers are unable to anticipate when they should set out to hire new staff.
“With growing numbers of workers either planning to retire or delaying their retirement, the stakes are high,” Alan Glickstein says, managing director of Retirement, at Willis Towers Watson.
The number of older Americans in the workforce has been on the rise since 2002. The Bureau of Labor Statistics projects that by 2022, nearly 31.9 percent of 65 to 74-year-olds will still be working, compared to 26.8 percent of the same age bracket in 2012.
This increase is due to the aging baby-boom generation, according to Mitra Toossi, a BLS economist. She writes that people are choosing to work later because they are healthier and living longer than previous generations. Toosi notes that changes in Social Security benefits and employee retirement plans have created incentives to keep them working.
The Willis Towers Watson survey found that nearly half (49 percent) of employers expect delayed retirements could cost their companies in increased benefits and wages over the next five years.
Along with rising costs, some 37 percent of employers are concerned that employees who continue working past their retirement age will block promotions for younger employees.
To arrive at helpful solutions, Glickman recommends that employers first provide a channel of communication with their older employees to discuss retirement. The idea is to facilitate a discussion to find out where the employee is in their career and what their plans are. This discussions will help an organization plan accordingly, Glickman says.
Another strategy Glickman suggest companies incorporate are phased retirement programs. According to the survey, just one in 10 employers offer phased retirement programs but the number is expected to grow to 23 percent by 2020.
“It allows for a nice orderly transition of their work responsibilities and gives the worker a taste of what it's like to spend more time away from work,” Glickman says.
Glickman adds that a phased retirement program sets an employer up with a time table as to when their employee will expect to retire and it brings a level of transparency to the whole thing.
“This works for both parties in a very effective way,” he says. “It generally gives a smooth landing for everyone.”
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Talk to your Voya representative for more information, or read more about our Plan Health tool.