The Value of On-Time Retirement
More employees are delaying retirement, inching the average retirement age up to 68 years old. High inflation and market volatility are chief among the reasons employees are currently delaying retirement as is increased life expectancy, lack of confidence about whether they’re ready to retire and uncertainty about how much money they need to retire. Delayed retirement may increase employee stress and defer an employee’s ability to focus on interests, hobbies and life goals they don’t have time for while working.
Delayed retirement can also have significant implications for employers. Employers spend an average of $50,000 per employee each year that the employee delays retirement. Generally, this is a result of higher labor costs and increased healthcare premiums. Additionally, when tenured employees stay at the company longer, it can hamper career growth for mid and entry level top performers, impacting employee engagement and retention.
Now more than ever, employers feel an increased responsibility for their employees’ financial wellness and retirement readiness. Here’s how you can help your employees confidently retire on-time, keep labor costs down, and promote talent mobility for your workforce.
24/7 Access to Digital Tools
Digital financial planning solutions provide real-time information that helps in decision-making and encourages employees to make progress toward their retirement goals. Financial planning tools can help employees to set and manage a budget and make decisions about investments, retirement, and healthcare plans. Additionally, 24/7 access to digital financial planning resources that enable employees to have a single comprehensive view of their 401k, investments, assets, and savings can help employees feel more financially secure.
Retirement Planning Education
One of the main reasons employees delay retirement is the uncertainty about whether their financial plan is on track. Employees who are informed and confident often make better financial decisions. Education on how to create a retirement budget, planning for healthcare expenses, and maximizing their Social Security benefits can get employees closer to their retirement goals. By offering in-depth retirement planning education, you can support employees’ financial, mental, and emotional journey to retirement.
Personalized Financial Advice
Access to fiduciary financial planners who can help employees navigate the complexities of retirement is another valuable way to help ensure employees are prepared to retire with confidence. Certified financial planners are also a critical partner to HR teams as they help employees understand their overall financial health and offer necessary education and advice on investment plans, decumulation strategies, retirement planning, tax planning, and healthcare options. Financial planners can evaluate an employee’s retirement roadmap, provide financial guidance based on their unique goals, and validate their ability to retire.
Employer matching programs for retirement plans and health savings accounts can incentivize employees to improve their financial health and demonstrate that the company is invested in their future. Employees may be more likely to save for retirement and future healthcare expenses when their employer also makes contributions. If you offer a 401(k) match, remind employees of the contribution your company is making toward their retirement goals and encourage them to contribute at least enough to get the full match.
Employee Resource Groups
Foster open forums with Employee Resource Groups (ERGs) where employees from similar backgrounds can share experiences in a safe environment. For instance, by establishing and nurturing generation-specific ERGs, employees who are nearing retirement age can share their financial goals and experiences while building community and belonging in the workplace. Ultimately, this can help employees build confidence in their retirement goals.
Employers should invest in solutions and programs that help their employees enhance their financial security and give them increased confidence to retire on-time. Increasing retirement readiness can help alleviate employee financial stress and offer advancement opportunities for early to mid-career top performers - all of which helps drive employee engagement, productivity and retention.