Willis Towers Watson published a white paper, “Working late: Managing the wave of U.S. retirement,” exploring employer’s lack of confidence when it comes to tracking their employees’ plans for when and how to retire.
“Older workers can be some of employers’ most important employees—valued for their knowledge of industries, companies, and customers, and their contributions to organizations’ continuity and future success,” the white paper says. “However, demographics of the U.S. working population illustrate that the pace of their departure is increasing, as 83% of employers report a significant number of employees at or approaching traditional retirement age.”
According to Willis Towers Watson, just over 80% of organizations acknowledge the importance of their older workers and managing the retirement process. Yet only about half believe they understand the process well, and just one-quarter feel they have found an effective approach.
“There are also important disparities in perception—between managements’ views of when pending retirements will occur, and the plans of the workers,” the white paper says. “Employers are concerned both about increasing retirements and the resulting loss of seasoned employees’ skill and experience, as well as rising numbers of delayed departures leading to higher salary and benefit costs.”
Accordingly, Willis Towers Watson finds firms are taking a new look at retirement patterns, developing new strategies for balancing the supply and demand of older workers’ talent, and integrating their workplace programs for physical, social, and financial well-being.
When asked why managing the orderly retirement of employees is important, 83% of those surveyed ranked “orderly transfer of knowledge of the organization” as their top concern, while 60% pointed to “concerns over workforce productivity.” About one-third pointed to “roadblocks in promoting younger employees.” Interestingly, the costs of keeping on older workers was relatively less important—a top three concern for just 20% or so of those surveyed.
“These workforce concerns are nearly universal, ranking high at firms with both younger and older work forces, and irrespective of the structure of their benefit programs,” the white paper says. “Complicating management’s task of developing strategies for orderly retirements is a sizable misunderstanding of employees’ motivations and circumstances, in particular their perceived retirement resources and freedom to stop working.”
Among employees, 69% say they hope employers will make working past conventional retirement age easier. Most older employees, about two-thirds, would prefer to remain at their current employers, even if a comparable job was available elsewhere.
“Still, 55% of employees over 50 expressed a desire to retire as soon as they can afford to,” the white paper says. “For many, however, reaching that goal could be delayed. More than half of older employees report financial worries, and a significant minority—about a third—feels stuck in their jobs. Accordingly, many older employees expect to defer retirement until after age 70.”
From the employer perspective, most organizations appear to underestimate the financial challenges facing older workers, and thus the likely timing of retirements, Willis Towers Watson says.
“Seventy-one percent of employers believe that most of their older employees are likely to have adequate funds to retire when they choose, and 77% expect that most of their older employees are not likely to need to work into their 70s for financial reasons,” the white paper says. “Many employers also seem to misunderstand employees’ motivations for working longer. While over half of employees would prefer a fast track to retirement, only one in five employers believes that their people are eager to leave, and would retire at the point they qualify for benefits.”
According to the white paper, employers in many cases plan to make it easier for older employees to work longer and support knowledge transfer in the next few years.
“At about one-third of employers, older workers can downshift their roles from management positions to working as individual contributors,” the white paper says. “Such programs may be expanded to half of organizations by 2020. Other measures include shorter work weeks, or scaling back to part-time or part-year employment at many organizations. Roughly half of companies currently engage former employees who are drawing retirement benefits as consultants or contingent workers. About as many hire people who have retired from other firms with relevant industry experience.”