The study of aerospace and defense industry retirees by the Employee Benefit Research Institute (EBRI) in cooperation with EBRI, the HR Policy Association, and 11 aerospace and defense industry companies says that making workers feel needed, offering them a full or partial pension while working part time, and making seasonal or contract work available may help convince pre-retirees to stay on longer than they planned. In fact, had incentives been offered, a majority (63%) of workers might have been dissuaded from retiring during their last 24 months in the office.
The reason the two-year window is important, the survey discovered, is that in general, workers begin thinking seriously about retirement not long before they actually retire. Twenty-two percent of the surveyed retirees first began thinking seriously about retiring only six months before they left the company, while another 22% began thinking seriously about it a year beforehand. Twenty-eight percent started thinking about it 18 months (10%) or two years (18%) before.
The survey tested 19 possible employer incentives that might encourage retiring workers to postpone retirement. Half of retirees (48%) said feeling truly needed for an assignment would have been extremely or very effective in encouraging them to delay their retirement. In fact, of those ranking this as one of the top two most effective incentives, 72% say it might have prompted them to stay around for two more years.
Also among retirees, 38% reported that being able to work seasonally or on a contract basis would have been effective in encouraging them to stay in the office. Among those rating this as one of the top two incentives, more than three-quarters (77%) say it might have prompted them to delay retirement for two years.
EBRI said other incentives that received significant support from recent retirees include:
- Doing more meaningful work (36% effective, 67% two years or longer).
- Being able to work part time (36% effective, 64% two years or longer).
- A pay hike (33% of all retirees say it would have been effective, while 56% ranked it among top two most effective and had it been offered they might have stayed two years or longer).
- Telecommuting, so as to avoid the daily commute (28% effective, 68% two years or longer).
Role of Employee Benefits
Benefits were found to be an incentive for many workers, EBRI said. Half of retirees with a defined benefit pension said receiving a full pension while working part time would have been effective in delaying their retirement (50%), and almost as many feel this way about receiving a partial pension while working part time (44%). Seven in 10 of those rating each of these incentives among the top two most effective report they would likely have stayed at least two more years if it had been offered to them (72% for full pension, 71% for partial pension).
Other benefits related incentives, and their effects, include:
- Continuing to receive company-subsidized health benefits at the same level as full-time workers while working part time (46% effective, 56% two years or longer).
- Locking in pension benefits that were already earned (42% of those receiving pension effective, 54% two years or longer).
Employee benefits typically play an important role in the retirement decision, and most of the aerospace and defense industry retirees surveyed have benefits that are becoming increasingly rare in the private sector: a defined benefit pension plan (98%) and retiree medical insurance (70%). The vast majority (95%) also report having a workplace retirement savings plan, such as a 401(k).
Aerospace and defense industry company workers retire when they do is because retirement becomes affordable (76% rate it as extremely or very important), the survey found. The two other reasons for retiring mentioned by a majority of retirees are their job satisfaction (63%) and a desire for more personal or family time (60%).
Online interviewing for the survey was conducted by Greenwald between March 24 and April 7, 2008, based on responses from 4,981 workers who retired in 2003 or later and are currently between the ages of 55 and 65. Of the total survey sample, 3,321 were engineering/technical services retirees, 79% were men, and 83% were married at the time they retired.