Authors: Tom Belmont Jr. Lauren Bump Alan Markfeld Chad Roedder
Preparing employees for retirement puts employers in control. Rather than a scramble to replace high-value roles or deal with employees that have "retired at their desk," a roadmap for achieving retirement goals and organizational succession planning creates a retirement-ready workforce and helps ensure a productive transition of knowledge and skills.
More than 4.1 million Americans are set to turn 65 in 2024 and each year through 2027.1 Yet despite this so-called "silver tsunami," the number of workers retiring each year is on the decline. Social Security and pension changes, healthcare treatment advances, increased life expectancy and better work accommodations for seniors are all contributing factors. Still, many do choose to retire, and organizations should prepare for the loss of tenured talent.
Gen X (ages 44—59) represents the largest portion of the workforce for most organizations.2 A thoughtful and targeted approach to supporting this burgeoning later-stage workforce is well worth the effort. For the pre-retirees' part, solid financial planning that accounts for life's variables is key to preparing for retirement. Employers play an important role in equipping employees with the education and tools needed to properly plan for the future.
Building a generation-specific strategy to connect with employees
Different generations have unique needs and preferences when it comes to benefits. For example, younger employees may prioritize flexible work arrangements and career development opportunities, while older employees may value retirement income planning and healthcare benefits. A generation-specific strategy can increase the odds of successfully connecting with employees of any age.
By leveraging internal data, surveys, focus groups or external research, employers can gain insights into the specific needs and expectations of each generation. Targeted communications can then help employers effectively reach and engage those different groups. These communications may involve using various channels, such as email, social media or in-person meetings, and crafting messages that align with the values and preferences of each generation.
The importance of financial planning in preparing for retirement
Sixty-one percent of Americans say they're more afraid of running out of money in retirement than they are of death.3 Luckily, employees aren't alone on this journey, and employers have a part in helping them financially prepare.
Beyond offering and promoting retirement plans such as 401(k)s or 403(b)s, employers can better equip their employees for the future through access to targeted education and vetted financial advisors. Not only does one-on-one consultation support appropriate retirement income, but it also helps define the path forward for spending accumulated funds while accounting for healthcare costs and lifestyle, among other factors.
Retirement readiness workshops, educational resources and communications establish financial literacy and address issues for employees. Topics may include considerations for achieving their desired retirement lifestyle; Social Security and Medicare benefit navigation, including taxes and spousal benefits; retirement income strategies, such as estate planning, health and financial power of attorney, and long-term care; and how to work with a financial planning professional.
Financial planning and preparing for retirement are important for employees in all generations. Careful consideration of how to reach the workforce and motivate investment in their post-career future eases financial stress and helps enable on-time and comfortable retirement.
Managing organizational and individual healthcare expenses
Older workers tend to use more healthcare resources than their younger counterparts. As a result, a distinct approach to managing this specific reality is warranted. Employers can manage their own healthcare cost exposure while also encouraging a healthy lifestyle for employees before they retire. Wellbeing programs help to set younger workers on a healthy track and support older workers who seek to maintain their health. These programs often include activities such as exercise classes, health screenings and educational sessions on healthy living. Additionally, promoting preventive care through communication and incentives can encourage employees to undergo regular checkups and screenings, which may prevent more costly health problems in the future.
Various health insurance coverage options are available for older employees, depending on their age and what the employer has decided to offer. These choices can be tricky to evaluate, and decision-making support can be especially helpful for this cohort of the workforce as they choose the plan that best suits their needs and budget. Preparing for retirement may also include other considerations including long-term care insurance and use of a health savings account.
Deliberate succession planning for business continuity
Gaps in knowledge pose a formidable challenge in managing retirement turnover. Succession planning helps ensure that there's a smooth transition of leadership and key roles within the organization. It helps to identify and develop potential successors who can step into critical positions when needed, minimizing disruptions and maintaining business continuity. Just over half of employers engage in ongoing succession planning, most often for executive-level positions.4
A deliberate and transparent transition process sets the organization and rising leaders up for success in preparing for retirements. This process could be an initial discussion between the soon-to-be retiree and succession candidate on interest and expectations, followed by a series of meetings to facilitate knowledge sharing, shadowing and executive coaching. New leader integration should also provide guidance on common challenges, establish predictable milestones and include mentoring.
Elder mentoring is a facet of business that leverages the experience and respected authority of seasoned employees near or at retirement age. Corporate elders still have the capacity to contribute value to the organization but may wish to take a step back from the workload they maintained at the height of their career. These individuals can serve as brand ambassadors, sharing lessons learned with the next generation of leaders and demonstrating their pride in the organization.
Whether it's a full transition to an elder mentoring role or a hybrid transition, knowledge and idea sharing from corporate elders has the potential to create efficiencies and better leaders across all levels of the workforce. And creating a connection between new, younger talent and seasoned mentors is a powerful way to build culture and support recruitment and retention.
