Delaying Retirement May Not Be Your Employees’ Best Exit Plan

Delaying Retirement

Delaying Retirement May Not be Your Employees’ Best Exit Plan. Many Americans are choosing delay retirement and remain on the job longer. According to a recent Motley Fool article, the most common retirement age is 63. However, more workers than ever have plans to remain a part of the workforce until even later in life. According to a recent CareerBuilder survey, 30% of 60-year-olds plan to work at least until age 70. And among all workers, 23% intend to work until age 70, the survey found. While there are many great reasons to keep the career candle burning until later in life, some employees may find they’re burning that candle at both ends, which could result in their best-laid plans going up in flames.

There are multiple reasons why today’s older generations are working longer. For some, it’s voluntary. They are stimulated by and passionate about their work and aren’t ready to give up the daily interaction and mental challenges of being an office, surrounded by their colleagues. For others, the decision to work past traditional retirement age is financially motivated — some simply don’t have enough savings to leave their jobs. They need to continue collecting a paycheck so they can “catch up” on building up their retirement nest egg.

Many of your later-career employees may be considering putting off retirement. There are some smart reasons for retiring later rather than sooner, as the Motley Fool article linked above points out. Here are a few:

– Employees who work longer have an opportunity to save more for their retirement, and more

time to grow their money.

– They may also benefit from additional matching contributions to their retirement

plan (if your organization offers one. In other words, more “free money” to pad their nest egg.

– Longer careers mean shorter retirements. So those who work longer may be able to make

their savings stretch further, and/or withdraw more each year.

– Staying on the job means an opportunity to remain on the company health plan, which means

they get to hang onto their retirement healthcare dollars longer, too.

– Delaying retirement also means putting off collecting Social Security. The longer they wait, the

more they can potentially boost their benefits.

 

These are all great reasons for your employees to plan on keeping their jobs for the long haul,

but doing so shouldn’t be their only exit strategy. That’s because it isn’t always possible to

control the timing of retirement. In fact, many workers don’t get to decide when they leave the

workforce.

 

The Motley Fool cites data from the 2017 Retirement Confidence survey, which found that 48%

of retirees left the workforce earlier than planned. Of those, 41% cited health problems or a

disability as the cause, 26% said changes at work such as a downsizing or workplace closure

prompted them to retire, and 14% said they left the workforce to care for a spouse or another

family member.

 

While aspiring to retire at age 70 or beyond is admirable, it may not be practical. The best

strategies for your employees to ensure they can enjoy a comfortable, financially secure

retirement at any age are still the tried and true: save as much as they can and invest their

savings effectively to grow their money in line with their risk appetite and years to retirement.

It’s also a good idea to encourage them to stay as healthy as possible, which can help not only

increase their longevity and quality of life, but also help them remain at work longer if they

choose. Workplace wellness programs that teach good diet and exercise habits can help them

achieve their goals. In addition, remind employees regularly to aim to help their families stay as

healthy as possible, too, so they can keep them around as long as possible, of course, and so

they don’t have to leave work sooner than planned to care for them.

 

No matter what their retirement age, it’s important for today’s workforce to have adequate

savings when that all-important day arrives. You can help them do that by encouraging your

employees to save early and often and to maximize all of the benefits their workplace

retirement plan has to offer. Every employee can benefit from understanding how they can

make the most of their retirement plan, whether retirement is 10 months or 10 years from now.

And perhaps if they truly understand the opportunity the plan and use it to its fullest potential,

they can plan on retiring early instead of working longer.

Robyn Kurdek

Robyn Kurdek

Freelance writer with nearly 2 decades of financial industry experience, with niche expertise in the defined contribution (DC) industry. I also have defined benefit (DB) plan knowledge. I write all types of content for retirement plan participants, sponsors and advisors, including web copy, newsletters, white papers, fact sheets, blog posts, financial wellness articles, and more. "I speak DC."
Robyn Kurdek
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