Employers are concerned about the loss of valuable older workers as well as the rising numbers of delayed departures, but new survey results suggest that employers have a limited grasp of their workers’ retirement plans and motivations.
Willis Towers Watson’s 2018 Longer Working Careers Survey found that a large majority of employers (83%) have a significant number of employees at or nearing retirement. Yet only half (53%) express having a good understanding of when their employees will retire. And 81% say managing the timing of their employees’ retirements is an important business issue, only 25% say they do this effectively.
At the same time that employers are concerned with the expected loss of talent, they are also concerned over workers delaying retirement. In fact, over half (54%) believe the loss of talent due to retiring workers will be more significant than other labor market risks over the next five years. Moreover, nearly half (49%) expressed concern that delayed retirements will increase benefit costs over the next five years, while 41% are concerned they will increase wage and salary costs.
Most organizations also appear to underestimate the financial challenges facing older workers and thus the likely timing of retirements. According to the results, 71% of employers believe that most of their older employees are likely to have adequate funds to retire when they choose. What’s more, 77% of respondents expect that most of their older employees are not likely to need to work into their 70s for financial reasons. Yet, more than half of older employees report “financial worries” and more than a third feel “stuck” in their jobs and expect to retire after age 70 for financial reasons.
“Many employers say they are not managing the retirement of their older workers effectively,” explains Alan Glickstein, Willis Towers Watson’s managing director for Retirement. “With growing numbers of workers either planning to retire or delaying their retirement, the stakes are high. As a result, employers are rethinking how they manage their workers’ retirement patterns and are taking action.”
As a result, firms are looking to develop new strategies for balancing the “supply and demand of older workers’ talent,” and integrating physical, social and financial wellbeing programs, the results show.
Among the strategies that a majority of employers either have adopted or plan to adopt over the next few years include:
Well-being enhancements:Two-thirds of employers (66%) offer financial wellbeing or retirement planning programs tailored to older employees approaching retirement. Another 19% are either planning to offer these next year or considering these programs for 2020. More than one-third (36%) have modified working conditions to conform to preferences of older employees and that is expected to increase to 43% by 2020, the report notes.
Flexible employment:30% of respondents allow workers to change positions, such as shifting from management to individual contributor; this could increase to more than half by 2020. More than a quarter (27%) provide part-time employment, which could increase to 45% by 2020, according to the findings.
Consulting arrangements:Nearly half (49%) allow their retired employees who are collecting benefits to work as consultants or contingent workers; another 10% might add this by 2020. A similar percentage of respondents say they hire experienced retired employees in their industry on a consulting or contingent basis.
Phased retirement:While just 1 in 10 employers (9%) offers a formal phased retirement program, that number could grow to 23% by 2020, the report notes. Informal phased retirement programs are much more common, however, since they avoid some of the administration and compliance challenges of a formal program, the report emphasizes. It further notes that these informal phased retirement programs are offered more often to senior workers in professional roles and less so to those in sales, administration or hourly positions.
The survey conducted during August 2018 is based on responses from 143 large U.S. employers that collectively employ 2.9 million employees.