“Dealing with an aging, financially unprepared workforce is a reality that should concern employers,” explains Rick Unser, Vice President of Lockton Retirement Services. “Employers face serious financial implications if they do not take steps now to help their older employees leave the workforce and successfully transition to retirement.”
Unser cites a recent EBRI study which found 41% of workers 55 and older expect to retire beyond age 65 (see “Many Employees Still Working after Age 65”). An aging employee population that feels it must remain in the workforce results in higher employer expenditures for health benefits, work-related accidents with more severe outcomes, and productivity losses, according to Unser.
Lockton’s client experience has shown that health care costs for employees over the age of 65 are more than double that of employees aged 45-55. In addition, workers’ compensation data has shown that while the statistical rate of work-related accidents does not increase dramatically for employees over age 65, when incidents do occur they are more severe and involve more paid time away from work. A NCCI study shows the average costs per claim for older workers were more than twice as high on lost-time claims (more than $27,000 vs. slightly more than $12,000 for younger workers).
Lockton employs a strategic, multidisciplinary approach to address the complete needs of aging employees where retirement readiness is only one successful byproduct of a comprehensive program. The set of workforce interventions and risk management strategies include:
- Assessment of current income replacement ratios of employees with Lockton's interactive proprietary "Retirement Readiness Dashboard”
- Plan design to encourage employee retirement readiness and maximize the impact and effectiveness of employer fixed or discretionary contributions.
- Investment consulting services to secure cost efficient and appropriate investment choices based on the needs of employee demographics
- Customized targeted education campaigns to modify employee savings behavior
- Evaluation and engagement of independent service providers to deliver the desired level of investment advice and one-on-one support