Baby boomers and other staff may need help. Assist them in creating a timeline for retirement including actionable, flexible work strategies.
Unfortunately, not everyone reaches retirement age with enough in their 401(k) or other savings. An unstable economy, dwindling social security funds, and lack of sufficient savings are just a few reasons that some people stay at the job in their later years.
A Northwestern Mutual study reported that 21% of people in the United States say they don’t have anything saved up for retirement. Among baby boomers, 33% mentioned having inadequate savings. That amounts to just 1 in 3 boomers having anywhere from a worrisome $0 to $25,000 saved up for their golden years.
Do you know if your employees have a retirement plan in place? The good news is that there is still time to help them.
21% of people in the United States say they don’t have anything saved up for retirement. Among baby boomers, 33% mentioned having inadequate savings.
Why you should help with employee retirement
One of the top reasons to help current employees ease into retirement is to get them on board with succession planning. When a member of your staff with many years of experience working for your organization retires, who is going to fill the void?
A succession plan lets you prepare for the future. Start by identifying in-house talent you can mentor to fill the vacant position. Or an internal team member can act as an interim replacement until your HR department finds a suitable external candidate.
The National Institutes of Health’s Office of Human Resources has identified 4 key steps for successful succession planning:
- Identify a project manager that will keep track of the progress for each stage of the plan
- Get buy-in from senior leaders and important stakeholders to help support the plan
- Consult with the incumbent leaving the team. Get them started documenting all the required skills necessary to fill their position
- Search for potential successors by looking for candidates with existing skills and knowledge. With a bit of training and coaching, they can level up to fill the vacated position
Without a succession plan in place, all the knowledge leaving with the person retiring (or even considering early retirement) could be lost. Advance preparation will let you create a step-by-step plan to gradually transfer the skills and know-how of the soon-to-be retiree to their successor.
The upcoming wave of Boomer retirements
More and more members of the Baby Boomer generation (anyone born between 1946 and 1964) are retiring every year. And, by 2030, all baby boomers will be over 65 years old. According to the U.S. Census Bureau, this change in the labor force will result in an imbalance between the number of working adults and retirees as 1 in 5 Americans will now be at retirement age.
CNBC reported that the average age of planned retirement varies by generation:
- Gen Y, or Millennials (1981-1996) are thinking of retiring at an average age of 59
- Gen X’ers (1965-1980) are planning on retiring at an average age of 60
- Baby boomers are planning to work until they hit an average age of 68
This difference in average age resulted from how confident each generation felt about their future financial security in retirement. Baby boomers reported being the least confident. Only 79% feel that their current savings will last them through their retirement years, compared to 82% of Gen X and 88% of Gen Y.
What can you do to help your workers ease into retirement?
Help by creating a timeline for retirement
According to AARP, flexible work arrangements are a great strategy that lets you retain skilled workers. Flexible strategies are a win-win for both your business and your team.
No matter when they are thinking of retiring, it’s never too early — or too late — to help your employees start planning.
Here is a handy chart as to when the varying members of your team will reach certain retirement-related milestones
- 50+: The age when your employees can start making catch-up contributions to their retirement accounts
- 59 ½: The age when employees no longer have to worry about early withdrawal tax penalties when removing funds from savings plans
- 62: The earliest age workers can file for Social Security benefits
- 65: The age at which they can sign up for Medicare
- 66 to 70: Depending on the year they were born, this is the retirement age at which they will receive the maximum Social Security benefits
How can you provide retirement options to help your employees ease into the next stage in life? According to AARP, flexible work arrangements are a great strategy that lets you retain skilled workers. Flexible strategies are a win-win for both your business and your team. Not having to hire or train new staff reduces costs, and your employees benefit from an improved work/life balance.
Here are 3 examples of flexible work strategies you can implement at your organization.
Does your HR department offer full-time employees the option to transition to part-time work? This is a great solution for any members of your team interested in working fewer hours and spending more time with family.
They can begin to transition to fewer days per week or fewer hours per day for a year or two before they plan to take full retirement. This lets your employee continue to interact with co-workers and earn income while finalizing retirement plans.
Consulting is a great option for newly retired employees who find they have too much free time. This lets them work on a part-time basis and earn a supplemental income while consulting for a set number of hours per month.
Consultants choosing to move out of the area after retiring can work on a fully remote basis. Local consultants could select a hybrid model where they work from home most of the time with occasional days spent at the corporate office.
What’s your biggest 2022 HR challenge that you’d like to resolve
Answer to see the results
One problem with phasing a full-time employee to part-time work is, who will pick up the slack? Job sharing is one option. This is where 2 or more members of your team share the duties of one full-time position.
The skills, duties, and expectations of each employee remain the same. But, now each person on the job-sharing team has more time to spend with family, volunteering in the community, or enjoying hobbies.
Whether your employees have many years left before they reach retirement age or are currently considering early retirement, always encourage them to save. Help ease your employees into retirement by offering a generous compensation plan along with employer-sponsored 401(k) or Roth 401(k) savings plans.