Employers Haven’t Caught On to New Vision of Retirement

Today’s workers are expecting to transition into retirement but face a significant obstacle: few employers have employment practices to support them, a survey shows.

A report, “The New Flexible Retirement,” from the Aegon Center for Longevity and Retirement (ACLR) in collaboration with Transamerica Center for Retirement Studies (TCRS), says globally, 51% of workers now expect to retire at age 65 or later, or not at all. In the U.S., this is the plan for 65% of workers.

More than half (56%) of workers globally envision a flexible transition to retirement. In the U.S., two-thirds (66%) of those ages 55 and older envision a flexible transition, and 77% said it is because they want to remain active.

However, most employers are not embracing this new vision of retirement. Just 24% of survey respondents globally said their employers offer the option to move from full-time to part-time work, and only 21% said their employers offer work more suitable for older workers (e.g. less stressful or physically demanding work). Just 19% globally said their employers offer flexible retirement plans which allow them to work beyond the usual retirement age.

In addition, only 17% indicated their employers provide health care in retirement, 15% financial advice and 14% retraining or re-skilling. Nearly one-third (31%) of workers globally reported their employers do not offer any of the efforts to support a flexible retirement.

In the U.S., 25% of workers ages 55 and older said their employer offers the ability to move from full-time to part-time work, and only 4% said they offer retraining or re-skilling.

“How workers can successfully extend their working lives is a complex issue. Workers in jobs that involve manual labor may find it difficult to continue in their current profession. Others may encounter workplace biases against older workers,” says Catherine Collinson, executive director of ACLR and president of TCRS. “Employers play an all-critical role and can make or break workers realizing their vision of a flexible retirement.”

"Employers may be overlooking the opportunity to tap into the knowledge, skills, and loyalty of older workers. By adopting business practices to support a flexible retirement, employers can benefit from improved succession planning and the ability to optimize their workforce management," says Collinson.

The report offers suggestions for how employers and policymakers can help workers transition into retirement:

• Governments should consider reforms to Social Security benefits that can positively influence workers' behavior and attitudes to retirement. Examples include increasing the age at which government benefits begin and providing enhanced benefits for those deferring their entitlements.
• Governments should identify and remove disincentives in Social Security and workplace retirement plans to working past a fixed retirement age. Examples include the ability to start receiving retirement benefits while continuing to work.
• Finally, employers can and should promote an aging-friendly work environment and culture designed such that workers of all ages thrive. Flexible work arrangements and ongoing training help workers maintain a good work-life balance and keep their skills current. Employers should conduct a review to see how changing demographics will affect their workforce and assess the value of retaining older workers as a way of retaining institutional knowledge and address potential labor shortages in the future.

"A clear strategy for promoting the new flexible retirement can benefit workers, employers, and governments in addressing the challenges created by population aging and building retirement systems that are affordable, sustainable, and achievable for all," concludes Collinson.

The report may be downloaded from http://www.aegon.com/en/Home/Research/Flexible-Retirement-Report/.