Approximately 10,000 Baby Boomers will reach age 65 every single day until the year 2030, according to the Pew Research Center. Boomers in your organization may not be heading for the door anytime soon, but preparation will be key when this labor exodus begins.
As the U.S. workforce continues to see an entire generation reaching retirement age, the issues surrounding transition into retirement become more and more prominent. Finding ways to make this significant milestone easier can benefit employees and employers alike. Let’s take a look at some retirement transition options and what both the employer and employee can gain from them.
Retirement Transition Options
For employers, assisting with retirement transition can mean many things. In the end, it often means that the employee will begin working a reduced schedule in some capacity and eventually progress into full retirement. However, there are many ways this can work in practice, and there are also other benefits employers can offer during the transition. Here are some examples of options employers may implement. Employers may:
- Offer part-time schedules, such as working only X hours per day or X days per week.
- Allow the employee to retire, but continue to work as a contractor on a project-by-project basis, and slowly reduce the total number of projects.
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- Allow remote work, thus transitioning the employee into staying home.
- Change the employee’s benefits package, such as offering perks like financial planning or memberships to retirement organizations.
- Reduce restrictions on time off, and allow the use of either paid or unpaid time off to let employees transition into spending time working on their passions, such as volunteering.
- Allow long stretches of time to be taken in a given year, even weeks or months at a time (this could be paid or unpaid, depending on the circumstances and accrued PTO).
- Offer early payment of partial pension benefits (if a pension exists), while the employee is still working part-time.
Regardless of which aspects of phased or partial retirement the employer implements, it’s a good idea to decide on eligibility parameters up front. For example, consider the minimum age at which the employee will be eligible, as well as the minimum number of years he or she needs to have been with the organization before being able to participate in the program. Create the plan options up front. Doing so will increase uptake and reduce instances of employees attempting to push for custom solutions that are more difficult to track and implement consistently.
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Employer Benefits to Offering Partial or Trial Retirement
Offering these types of solutions can have a lot of benefits for employers. Here are a few:
- Employers get to keep productive, resourceful, satisfied employees on the job longer.
- A gradual transition gives time for the retiring employee to fully train his or her successor. The retiring employee may also be asked to participate in an employee mentoring program, which will effectively transfer knowledge. This will slow the “brain drain.” (The brain drain occurs when older workers have been with the company for a long time, acquiring years of organizational knowledge that leaves with them if they do not take steps to transfer this knowledge before leaving.)
- For employers that offer the option of taking extra time off in the years leading up to full retirement, their financial liability can be reduced when the employee reaches the final day of work with the organization—there will be less total accrued vacation time that has to be paid out upon the employee’s departure.
- Starting the employee retirement transition paves the way for other workers to advance and gain new skills, which benefits both employees and the employer.
- Retirement transition programs can be seen as an incentive for nonretiring employees to stay longer with the organization in order to partake in the benefit themselves later on. In other words, it can encourage employee loyalty.
- This type of benefit can improve the image of the organization, both to the public and to potential employees.
In tomorrow’s Advisor, we will show how a partial or trial retirement program can benefit your employees as well, plus we introduce the free (thanks to sponsor Halogen Software) interactive webcast, 4 Strategies for Aligning Your Talent and Business Plans.