When employees delay retirement, the impact extends far beyond the individual. Shifting retirement timelines can increase employer costs, disrupt workforce planning and create challenges for both leadership development and long-term business growth.
In many cases, employees are not continuing to work because they want to, but because they don’t feel ready to retire. They may be asking themselves:
- Have I saved enough?
- Can I afford to retire without outliving my savings?
- What will I do in retirement?
Retirement income education, planning tools, and thoughtful plan design can help employees answer these questions with greater confidence to better understand when they are financially ready to retire. That can have a positive impact on your workforce and your bottom line.
The Cost of Delayed Retirement
Delayed retirement can have significant business impacts:
- Higher employer costs
- Job planning challenges
- Reduced organizational agility
According to the Kaiser Family Foundation, employers with workforces where at least 35% of employees are age 50 or older pay approximately 5-6% higher health insurance premiums than employers with younger workforces. That’s an average of $531 more per employee for single coverage and $1,367 more for family coverage each year.
Stalled retirements can limit career advancements for emerging leaders. When leadership transitions are repeatedly postponed, top talent leaves, future leaders aren’t developed and organizations lose predictability in their workforce planning.
Additionally, this impacts organizational agility. When employees remain in key positions longer than expected and are not learning new skills (how to open a PDF, efficiency tools, AI), it can hurt the business as new skills and perspectives may be needed to adapt to changing business priorities.
Why Retirement Income Matters
As retirement approaches, many employees shift their focus from how much they have saved to if they have the enough saved to retire.
This is not always an easy question to answer. A retirement account balance doesn’t tell employees how much income it may provide or whether it will be enough to support their lifestyle throughout retirement.
Research finds more than four in five workers say they are interested in guaranteed monthly income options, suggesting many are looking for greater certainty about how they’ll replace their paycheck in retirement.
Expanding retirement education beyond saving and investing can create opportunities to help employees better understand their retirement readiness, increase their confidence and assist them in making more informed decisions about the time to retire.
How We Can Support Retirement Readiness
Building retirement readiness is an ongoing process. By introducing planning resources early and providing ongoing support, employees may be better prepared to retire when they’re ready.
Here are several ways we can help support retirement readiness:
- Offer retirement income education. We can help employees understand not only how much they need to set aside, but how savings, Social Security, pensions and other income sources may work together to support retirement.
- Provide retirement planning tools. Offering retirement income projections, calculators and other resources that help participants estimate future monthly income and determine whether their current savings strategy is likely to support their retirement goals.
- Encourage periodic retirement readiness assessments. Regular check-ins can help participants identify potential shortfalls in projected retirement income, adjust their savings strategy and stay on track toward meeting their retirement income needs.
Strengthen Your Workforce Strategy
Retirement readiness isn’t just an employee benefit; it’s a workforce strategy. By helping employees better understand when they’re financially prepared to retire, employers can improve workforce planning, strengthen succession and support the long-term success of their business.
We can help you evaluate your plan’s retirement readiness strategy and identify opportunities to better prepare employees for retirement while supporting your organization’s business objectives.
This information is provided as a general guide to educate plan sponsors. It is not intended as authoritative guidance or tax/legal advice. Each plan has unique requirements, and you should consult your attorney or tax advisor for guidance on your specific situation.
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