Disturbing, but far from surprising; almost 70 percent of employers believe most of their employees could work to age 65 and still not save enough to meet their retirement needs.
It’s especially alarming given the employer’s outsized role in assuring an affordable quality of life for their employees.
A new survey from Transamerica Center for Retirement Studies asked employers when and how they believe their employees envision retiring, the extent to which they have business practices to support them, and the current state of retirement benefits offered.
No. 1: Be an Aging-Friendly Employer
“With Generation Z’s coming of age, we will soon have five generations in the workforce, an exciting and extraordinary opportunity to foster innovation through inter-generational collaborations with exchanges of knowledge, experience, and ideas,” Catherine Collinson, president of TCRS, said in a statement.
Most employers (71 percent) consider themselves to be “aging-friendly” by offering opportunities, work arrangements, and training and tools for employees of all ages to be successful. However, the survey findings show that some employers may not be as aging-friendly as they think they are.
The survey examined employers’ perceptions of the most common reasons why employees recently retired. It’s not surprising that employers’ most frequently cited reasons include age, financial ability, health issues and family responsibilities.
However, a noteworthy 27 percent of employers say their employees retired because of one or more employment-related reasons, including organizational changes, were laid off or terminated, and/or took a retirement buyout/incentive.
No. 2: Enable Workers to Work Past Age 65
“People are living longer than in any other time in history, which is putting a strain on Social Security and intensifying shortfalls in personal retirement savings,” Collinson said. “Therefore, many workers envision working past traditional retirement age. However, their ability to do so is highly dependent on the support of their employers.
The survey finds:
- Nearly three-quarters of employers believe that many of their employees expect to work past age 65 or do not plan to retire (72 percent);
- Seventy-seven percent of employers feel that many of their employees plan to continue working either full-time or part-time after they retire; and,
- Four out of five employers say they are supportive of their employees working past 65 (81 percent).
“As much as employers may believe they are supportive of their employees working past age 65, actions speak louder than words,” Collinson added. “According to the Bureau of Labor Statistics, only one in four Americans age 65 to 74 was employed in 2016.”
No. 3: Adopt a Flexible Retirement Program
Despite the potential benefits, relatively few employers have programs in place for employees seeking to transition into retirement. Just 39 percent of employers offer pre-retirees flexible schedules.
Even fewer enable pre-retirees to shift from full-time to part-time or to take on positions that are less stressful or demanding. Only 27 percent encourage pre-retirees to participate in succession planning, training, and mentoring.
No. 4: Enhance Retirement and Employee Benefit Offerings
“Employer-sponsored retirement benefits are proven to be one of the most effective ways, if not the most effective way, to help workers save, invest and prepare for retirement,” said Collinson.
Two-thirds of employers offer such benefits, specifically, a 401k or similar employee-funded retirement plan, including 90 percent of large companies, 88 percent of medium-sized companies, and 60 percent of small companies.
Nevertheless, among employers currently offering retirement benefits, fewer than half extend eligibility to their part-time employees and just over half offer the Roth 401k option.
Only one in five plan sponsors have adopted automatic enrollment, including 19 percent of small, 20 percent of medium, and 31 percent of large companies.
And despite plan sponsors’ emphasis on helping their employees’ save for retirement, strikingly few offer assistance to pre-retirees with regard to how they can manage their savings when they are getting ready to retire.
Employers know that employees place importance on non-retirement employee benefits that could help improve or protect their financial security (e.g., health insurance, disability insurance, life insurance, employee assistance programs, workplace wellness and financial wellness programs, long-term care insurance, and others).
However, the survey finds the level of perceived importance exceeds employers’ actual offering of such benefits.