How to Help Your Employees Answer the Question: “Will I Have Enough to Retire?”

Forty percent of workers aged 45 and above are delaying their retirement, according to the 2022 In-Plan Lifetime Income Survey.

More and more employees are choosing to delay retirement and stay in the workforce. But what does that mean for you and your business? This can have many effects on your workforce dynamics, including both personal and financial shifts that must be addressed. First, we need to understand why employees need to delay retirement. Then we can then focus on possible solutions to this growing problem.

Why Employees Delay Retirement

Employees have many reasons for choosing a delayed retirement. The reasons range from maintaining a connection with others to staying active and creating a sense of purpose. However, the main reason is money. Employees are not in a position to retire, so they continue to work into their 60s and 70s. According to the Nationwide Retirement Institute survey, 73% of employees plan on delaying their retirement due to insufficient income. This concern is going to grow as well. Those close to retirement age are worried about inflation, with 66% citing it as their top concern. As employers, we need to understand our employees’ problems better and try to help to ease those concerns.

The Problem with Delaying Retirement

For businesses, having consistency and retaining your employees can be important, but having them hanging on at the end of their careers can cause immediate problems and, eventually, your bottom line.

• Productivity
  • Studies have shown that when people work because they cannot afford to retire, their productivity and engagement decrease over time. Engaged employees with both the knowledge of their position and the physical and mental ability to complete the job's tasks are certainly the goal.
• Costs
  • Health benefits for older employees generally cost more because of the added needs that come with age.
  • More established employees generally have higher wages/salaries than other positions.
• Unable to Hire New Employees
  • When your workers remain employed longer, it removes your ability to hire new and fresh talent. Thirty-six percent of employers say that delayed retirement affects the ability to hire new talent. And, the stagnation can be demotivating for your other employees who see a lack of growth opportunities.

An engaged workforce, regardless of where they fit in their lifecycle, is vitally important. Building in practices and strategies to help support an older workforce can do a lot to share your organization's culture and growth. This culture can then in turn help build up your employees so they are able to retire on time. On-time can vary depending on the person, but generally, most employees look to retire around 65-67 years of age. Therefore, the best thing you can do is help your employees and your culture facilitate their retirement on schedule.

How to Help Your Employees Retire On Time

Just 56% of private-sector employees are on track to retire. If half of the employees cannot retire, how can we help boost those numbers? There are internal and external factors, so, as a company, it is essential to focus on the factors you can control. At its core, all solutions center around helping our employees save. The more someone saves, the more likely they’ll be prepared to retire.

• Build Financial Education Into Your Benefits
  • Employees are seeking out and willing to receive help. Over 50% of employees are interested in financial planning tools, education, and access to a financial planner.
    • Build a financial wellness program into your employee benefits offering. There are options for supporting your people, from providing education and how-tos to access to financial advisers who can coach people through big decisions and life events.
    • Consider offering financial planning to employees. Many people are reluctant to pay an advisor for a financial plan because it’s expensive, yet it can have a significant impact on the future. With benefits like personal financial planning for your people, you can make it easier for them to identify their goals, make a plan, and simplify saving for the future.
    • Encourage financial education in your workplace. From lunch-and-learns with an adviser to offering tips and resources, there are simple ways to help your employees on the road to financial freedom. Check with your retirement plan adviser or benefits consultant to see what’s available for you to use.
• Maximize Your Retirement Plan For Success
  • Automation. Implementing automation into your plan to allow your employees to save passively can greatly increase the amount they will have at retirement age without much effort. The two most commonly used forms of automation are auto-enrollment and auto-escalation.
    • Auto-enrollment provides the employee immediate enrollment into the retirement plan from their employment start date.
    • Auto-escalation automatically increases the employee's contribution on a yearly basis.
  • If you can offer these tools to employees, you provide them an advantage to help them better prepare for retirement with minimal effort.

What’s good for your people is also good for your business. With employees who are less financially stressed, you may see improvements ripple throughout your company, including:

• Enhancements to the financial stability of your people and positively impacts your organization’s ability to attract and retain top talent.
• A better understanding of the financial health of your workforce, allows you to make better decisions and plans for the future.
• Enabling key leaders to focus on running the business and worry less about their personal finances.

In the end, helping your employees retire is beneficial for everyone. Not only is it great to see an employee retire, but it can also positively contribute to an organization’s growth and bottom line. Making simple changes to your employee benefits, financial wellness and retirement plan design can make a big difference in the lives of many of your employees.

Want to read more about financial wellness solutions? Check out our recent article, What Every Plan Sponsor Should Know About Having a Customized Financial Wellness Solution.

Investment advice offered through OneDigital Investment Advisors LLC, an SEC-registered investment adviser and wholly owned subsidiary of OneDigital.