According to the U.S. Bureau of Labor Statistics, one-third of the U.S. labor force is 50 or older. As more employees begin to reach the traditional retirement age, employers need to examine their policies and procedures to address the potential loss of talented and experienced workers.
Encouraging employees to delay retirement not only improves their financial security in retirement but it also keeps experienced and productive employees on the job. While 4 in 10 current workers expect to work in retirement, current retirees are not showing a desire to work for pay. Only 17 percent of retirees are still working for pay, and only 13 percent of retirees not currently doing so say it’s possible they will return to work. LIMRA Secure Retirement Institute (LIMRA SRI) research shows that if employers start using incentives, more employees are likely to stay working. Working longer can have significant financial benefits, retirement delays of as little as 3-6 months have the same impact on standards of living in retirement as saving an additional 1 percentage point of income over 30 years1.
The study, Selecting the Right Carrots: How Employers Can Incent Employees to Delay Retirement, highlights flexible hours, part-time or consulting-based employment, flexible location and financial rewards top employees’ list of desired incentives to delay retirement. LIMRA SRI finds that on average, workers who receive all of their desired incentives say they would work an additional 14 years.
Allowing employees the flexibility to work outside of the office is the most valued incentive and could result in those employees working an additional 15 years, on average. The next most valued incentives are having flexible hours and getting financial rewards. Employees who can have flexible work hours or financial incentives to work longer are likely to work an additional 13 years, on average. Allowing employees to drop to part-time or work as a consultant, on average, adds an additional 12 working years to the employee’s commitment to the company.
LIMRA SRI research finds a third of workers’ expectations were guided by having a specific age in mind when thinking about retirement. For Baby Boomers – who are closest to retirement – being eligible for Medicare and Social Security was more important than it was for younger generations. The primary reason workers expect to retire at a specific age is that they will be financially able to do so. This is especially true for men as half mentioned this as their driver of retirement. However, defining retirement by a particular age can be risky, as it doesn’t account for the actual savings and assets available to support the person in retirement.
Workers across all generations reported one of the driving forces behind the timing of their retirement is a fear of waiting too long and not being able to do everything they had planned. Thirty percent of workers cite fear of missing out as a reason to retire at a certain time.
As employers continue to grapple with managing an aging workforce and all its implications, considering options to keep talented people is a worthwhile strategy. It not only helps the employer, it can bolster employees’ financial security when they finally do decide to retire.
This study is based on a January 2018 survey, fielded by Ipsos, of 945 Americans.
1 Source: The Power of Working Longer. Stanford Center for Economic Policy Research. January 2018, Gila Bronshtein, et al.