Employers invest a tremendous amount of time and cost in employee benefit offerings which are designed to help their employees save and financially prepare for retirement. Ironically, few employers are focused on the actual process of retirement and its workforce-related implications.
For example, a survey of 1,802 employers by nonprofit Transamerica Center for Retirement Studies® points to the increasingly important need to help older workers transition into retirement, including creating more flexible solutions that enable a phased departure from the workplace, instead of working full-time one day and gone forever the next.
Awareness Isn’t Yet Translating into Action
Many employers are well aware of their employees’ desire and need to work past age 65, but they are woefully slow to act on that awareness. Our survey finds that 69% of employers say most employees at their company could work until age 65 and still not save enough to meet their retirement needs.
Today’s workers, many of whom are still recovering from the Great Recession, are seeking to extend their working lives because they want or need the income and benefits, and to a lesser extent because they enjoy what they do. The notion of the traditional retirement at age 65 is becoming increasingly irrelevant to them. Employers recognize this situation yet the survey finds that few have implemented any business practices to support them.
A Big Question: Ageism in the Workplace?
Most employers (71%) consider themselves to be “aging-friendly” by providing growth opportunities, work arrangements, training and tools for employees of all ages. However, a closer look at the survey findings with regards to corporate culture reveals a gap that may exist between many companies’ self-perception and the reality of ageism in the workplace.
The survey examined employers’ perceptions of common reasons why employees recently retired and found the most frequently cited reasons were related to age, financial ability, health issues and family responsibilities. However, 27% of employers say their employees retired due to one or more employment-related reasons, including organizational changes (15%), layoffs or terminations (12%), and/or took a retirement buyout/incentive (11%). The age-old tale of employers’ moving out their older workers and replacing them with younger, less expensive workers appears to be alive and well.
I recently encountered an example of this during a recent Uber ride with a 50-something driver who had been a long-tenured foreman overseeing manufacturing projects at an aerospace company. He was laid off from his job more than a year ago and was still searching for a new one in his field. Although companies are hiring and he’s had many interviews, he told me that he’s never received an offer.
Through the process, he’s learned that employers are now paying far less than he was earning– and that they seem to think that he would be unwilling to accept this lower level of pay given his background and experience. Of course, he’s not thrilled with the idea of a smaller paycheck – but he wants and needs a job.
Older job seekers, like the out-of-work manufacturing foreman, are having a tough time breaking through the “HR firewalls.” Now is the time for HR teams and recruiters to knock down these barriers and open their hearts and minds to workers of all ages to keep the workplace vibrant and productive, with inter-generational collaborations and mentorship. That shift would also help put employees in a stronger financial position to transition into retirement, if and when they are ready to do so.
Supporting Older Workers through Policy Changes
To acknowledge and support older workers, start by updating company policies. Employers can move toward aging-friendliness by implementing or updating Diversity and Inclusion (D&I) business practices and adopting an official D&I Policy Statement that recognizes age among other commonly-referenced demographic factors (e.g., gender, race, religion, sexual orientation). It’s wise to involve outside legal counsel when undertaking such company-wide policy changes.
For additional resources, the Global Coalition on Aging and World Economic Forum have developed Guiding Principles for Age-Friendly Businesses, a set of seven principles that focuses on an age-neutral workplace, supportive working environment, inclusive culture, life-long learning and participation, financial planning for longer working lives, healthy aging and supportive caregiving.
Sharing in the Investment of Continuing Education
Employers can align resources to help ensure equal access to support across the workforce. One critical offering is continuing education. A 4-year college education is important, but it’s naïve to think it can support a 40-year or longer career. It’s wise for employees to keep their skills up-to-date and for employers to offer training classes, outside conferences, tuition reimbursement and more.
Still, it is ultimately up to employees to take the initiative and capitalize on such opportunities when they’re available. Continuing education should be a core value in professional development, part of annual goal-setting for employers and employees alike. It’s truly a shared investment.
Continuing education can also help mitigate risks for companies and prevent the skills of valued workers from becoming obsolete. Recruiting and training employees is an expensive business proposition — and so is the loss of institutional knowledge when seasoned employees leave. People of all ages, especially those who are strong performers, have the capacity to develop and update job skills that are transferable to new situations. Continuing education programs are a win-win for both employers and their employees.
Varied Paths to Retirement
Phased retirement options are needed to accommodate the shift toward employees’ needing—or wanting—to remain on the job longer, but currently only 39% of employers offer pre-retirees flexible schedules. Even fewer enable pre-retirees to shift from full-time to part-time (31%) or assume less stressful or demanding roles (27%). In addition, just 27% encourage pre-retirees to participate in succession planning, training and mentoring.
There’s no one-size-fits-all approach to phased retirement programs, which is why employers should explore a range of options which can help them optimize their workforce management, talent development, and succession planning – and generate goodwill among employees.
Employers are at a crossroads where they can choose to recognize new retirement paradigms or continue to resist them. HR professionals have an opportunity to bring new and invaluable perspectives to senior management that can help foster the evolution of progressive, flexible approaches to retirement that meet the needs of employees of all ages and, at the same time, help mitigate risks and potentially boost the company’s performance.
Catherine Collinson serves as CEO and president of Transamerica Institute® and Transamerica Center for Retirement Studies®, and is a retirement and market trends expert and champion for Americans at risk of not achieving a financially secure retirement. Follow Catherine on Twitter @Cath_Collinson and TCRS @TCRStudies.