Retirement Transitions: A Missed Opportunity for Many Employers

A new report, “New Frontiers: Employers and the Evolving Workforce” by the Transamerica Institute and Transamerica Center for Retirement Studies explored employers’ top concerns, including an in-depth view of employers’ business concerns, workforce management priorities, business practices, and health, welfare and retirement benefit offerings.

“Employers are navigating a dynamic environment filled with both opportunities and challenges,” said Catherine Collison, the CEO and president of the Transamerica Institute and the Transamerica Center for Retirement Studies, in a statement accompanying the report. “The confluence of megatrends, such as the use of AI, population aging and labor shortages, are reshaping the future of work. How are employers addressing these new realities? What does it mean for workers?”

Reevaluation of Benefit Offerings
According to Transamerica’s data from fall 2024, two-thirds of employers (66%) reevaluated their health, retirement and other employee benefit offerings in 2024 to: align them with employees’ current needs (37%), make them more competitive (32%), reduce costs (26%) and benchmark the industry (14%).

Large (91%) and midsize (86%) companies were more likely to have reevaluated their employee benefit offerings than small companies (60%). Only 19% of employers did not reevaluate their benefits, nor report plans to do so.

Additionally, employers said they are reevaluating how they support their workforce, according to the report, not just during employees’ careers, but as they approach retirement. As part of this evolving approach, plan sponsors have a critical role to play in helping employees navigate the complex transition their savings into retirement.

Plan Sponsors’ Role in Guiding Retirement Transitions
Workers face complex decisions on when and how to transition their savings and finances into retirement, and 401(k) sponsors can work with their plan providers to assist them, according to the report, with several resources available to them.

Relatively few 401(k) plan sponsors offer targeted support to employees nearing retirement. Those that do reported that:

• 44% provide access to a financial adviser;
• 43% offer educational resources;
• 39% refer employees to the company’s plan provider;
• 39% provide education about the retirement transition;
• 35% host seminars on transitioning into retirement;
• 34% share retirement planning materials;
• 33% offer an income annuity as a payout option;
• 28% allow systematic withdrawals; and
• 28% refer employees to an IRA provider outside the company’s plan.

In contrast, 73% of employers that do not offer any retirement benefits said they take no steps to help pre-retirees prepare for the transition.

Education About Social Security and Medicare
As part of their retirement-related educational offerings, more than eight out of every ten 401(k) plan sponsors (82%) said they provide information about Social Security, according to the Transamerica report. This included 80% of small companies, 88% of medium-sized companies and 85% of large companies.

Similarly, 86% of plan sponsors reported offering information about Medicare benefits, with consistent rates across company sizes—86% for small, 87% for medium and 85% for large employers. By comparison, only 26% of employers that do not offer retirement benefits reported providing information about Social Security, and just 23% said they offer information about Medicare.

Formal Phased Retirement Programs
Approximately 41% of employers reported offering a formal, phased retirement program to help employees gradually transition into retirement. However, 56% said they do not currently offer such a program—though 23% plan to implement one in the future, while 33% have no plans to do so. Larger employers were more likely to have a program in place: 62% of large companies and 60% of midsize companies, compared with just 37% of small businesses.

Among employers that do not offer phased retirement, the most common reasons were:

• The company is not large enough to support a program (64%);
• Lack of employee interest (23%); and
• A preference to handle retirement transitions on a case-by-case basis (23%).

The survey was conducted by the Harris Poll on behalf of Transamerica Institute and TCRS between September 17 and October 4, 2024, among a nationally representative sample of 1,893 U.S. employers.