Delaying Retirement a Boon for Employees and Employers, Study Says
There are those who argue for encouraging older workers to not prolong their career longevity so as to reduce costs for employers and facilitate upward mobility for younger generations. But a recent study suggests the exact opposite — that employers actually should encourage employees to delay retirement.
In “Selecting the Right Carrots: How Employers Can Incent Employees to Delay Retirement,” the LIMRA SRI Secure Retirement Institute
argues that employees working longer benefits not only them but their employers as well.
Employees appear to have more on their minds than simple economics regarding when they are going to retire. LIMRA SRI says it found concern among employees of all ages that they were afraid of staying on the job too long and missing opportunities to fulfill their plans.
But finances are a factor too, of course. LIMRA SRI found that one-third of employees based their decision regarding when to retire on attaining a specific age, and that the most important reason for that was the expectation that they would be able to afford to do that by that age. But it argues that defining retirement by a specific age can be risky, because doing so does not account for what the actual savings and assets one may have available to live on during retirement may be.
Extending employment longer that that target age can benefit employees, LIMRA SRI argues. It cites “The Power of Working Longer
,” in which Gila Bronshtein, Jason Scott, John Shoven and Sita Slavov found that delaying retirement by as little as three to six months can benefit individuals’ standard of living during retirement as much as saving an additional 1 percentage point of income over three decades would.
So how does retaining older employees — many of whom likely are at their peak earning level and also receive various benefits, which can make them expensive employees to keep — benefit an employer? LIMRA SRI suggests that more is in play than simple monetary concerns. It argues that encouraging employees to stay on the job past normal retirement age allows an employer to continue to benefit from the experience and productivity of workers who have been part of its workforce and the field for a longer amount of time.
So what can an employer do to keep older employees? LIMRA SRI has several suggestions.
LIMRA SRI found that the notion of affording employees the flexibility to work outside the office could result in them prolonging their service for an average of 15 more years.
Allowing employees to work flexible hours are likely to work an average of 13 years more, and allowing them to work part-time can add 12 more.
LIMRA SRI found that allowing employees to work as a consultant could add an average, of 12 additional years to an employee’s tenure.
Financial Incentives. LIMRA SRI says that financial incentives to work longer could result in an employee staying with the employer for an additional 13 years.
“As employers continue to grapple with managing an aging workforce and all its implications, considering options to keep talented people is a worthwhile strategy,” says LIMRA SRI, adding, “Encouraging employees to delay retirement not only improves their financial security in retirement but it also keeps experienced and productive employees on the job,” says LIMRA SRI.