The baby boomer generation may be approaching their retirement years, but many continue to work instead of choosing a traditional retirement path. Some have not saved enough for retirement and cannot afford to stop working, while others simply enjoy their jobs and see no reason to retire based on age alone.
Employers generally value the experience that senior workers bring to their enterprises. Too many retirements in a short time can drain companies of useful knowledge and resources. However, employers have to plan for an aging work force in several ways, including the costs of providing benefits to older workers. According to a recent report by LIMRA, a majority of employers are doing just that.
The LIMRA Secure Retirement institute found that 73% of employers have planned for the increased benefits required to handle older workers within their companies. LIMRA also confirmed the need for employers to do so, finding in a separate study that 30% of pre-retirees (defined as workers within ten years of their full retirement age) plan to work until age 66, while 20% plan to work until seventy or beyond. Only 5% of workers felt that they were "extremely well prepared" for retirement.
Employers overwhelmingly understand the benefits of retaining their older, more experienced workers. The survey showed that 90% of employers believe retaining older employees is good for business. 80% agreed that companies lose "experience, leadership, and institutional knowledge" when older workers leave their workforce. 70% of respondents would like advice from their plan providers on the best ways to transition their older workers into retirement smoothly.
Employers also understand that higher costs are inevitable with an older workforce through higher salaries and other employee benefits such as increased vacation time and potentially higher healthcare costs. LIMRA found varied responses regarding plans to deal with those costs. Almost half (49%) of the companies will attempt to absorb these extra costs within the business, but 41% responded that they would pass the cost increases on to their employees.
Other companies were looking to balance the costs by reducing it elsewhere, including decreasing healthcare benefits (33%), their employer contribution to employee's retirement plans (28%), other benefits such as life and disability insurance (24%), or reducing workforce costs in more traditional ways through slowing salary growth/reducing salaries and lowering the overall number of employees (30%). Only 5% of employers plan to do nothing.
A shift toward an older workforce affects both ends of the age spectrum, and almost half of the companies surveyed said that they are struggling to balance the needs of workers on either end of their careers. Fewer annual retirements mean fewer opportunities for younger workers to advance up the ladder or to be hired into the company to replace those who are promoted. LIMRA found that 60% of employees are concerned about the effects of delayed retirements on the career paths of younger workers.
We wonder why that number is not 100%. You cannot attract the best employees if they feel that their path for advancement is throttled by very slow advancement.
The LIMRA survey verifies that most employers have at least analyzed retirement issues and are making some plans to deal with it, but professional assistance would be helpful in their efforts. If your company is one of the few not making any plans, you may want to talk with your Human Resources group before your retirement day arrives.