Employers are concerned about losing talent and institutional knowledge to retirements, but they're also worried about the potential impacts of employees putting off retirement—and they're adopting new strategies to address both concerns.
Those were some of the findings of the 2018 Longer Working Careers Survey conducted by Willis Towers Watson.
According to the research, most employers (83%) have a significant number of employees at or nearing retirement.
However, only half (53%) express having a good understanding of when their employees will retire.
Additionally, while eight in 10 employers (81%) say managing the timing of their employees' retirements is an important business issue, only 25% report doing this effectively.
Eighty percent of respondents view older employees as crucial to their success, so it's not surprising that employers are concerned with the expected loss of talent.
In fact, over half (54%) believe the loss of talent due to retiring workers will be more significant than other labor market risks over the next five years.
In addition, 50% expect difficulty finding workers with similar knowledge and skills over the next five years, and 48% worry about the loss of organization-specific knowledge.
The research found employers are also concerned about workers delaying retirements.
Almost half (49%) expressed concern that delayed retirements will increase benefit costs over the next five years, while 41% are concerned they will increase wage and salary costs.
Almost four in 10 (37%) worry that workers who stay on the job past normal retirement will block promotions for younger employees.
Strategies for Managing Retirement
According to the survey, most employers either have adopted or plan to adopt one or more of the following strategies over the next few years:
- Well-being enhancements. Two-thirds of employers (66%) offer financial well-being or retirement planning programs tailored to older employees approaching retirement. Another 19% are either planning to offer these next year or considering these programs for 2020. More than one-third (36%) have modified working conditions to conform to preferences of older employees, a trend that's expected to increase to 43% by 2020.
Many employers misunderstand their employees' motivations and circumstances for retiring.
- Flexible employment. Thirty percent of respondents allow workers to change positions (e.g., shift from management to individual contributor), and this could increase to more than half by 2020. More than a quarter (27%) provide part-time employment, which could increase to 45% by 2020.
- Consulting arrangements. Nearly half (49%) allow their retired employees who are collecting benefits to work as consultants or contingent workers. Another 10% might add this by 2020. A similar percentage hires experienced retired employees in their industry on a consulting or contingent basis.
- Phased retirement. Just one in 10 employers (9%) offers formal phased retirement programs, but this could grow to 23% by 2020. However, informal phased retirement programs are much more common since they avoid some of the administration and compliance challenges of a formal program. Employers offer these informal phased retirement programs more often to senior workers in professional roles, and less so to those in sales, administration, or hourly positions.
"Older workers are clearly a sought-after resource, and our research shows there is a definite supply of employees who would like to work into their 60s or beyond," said Lauren Hoeck, director, Retirement, Willis Towers Watson, in a statement.
"Many employers misunderstand their employees' motivations and circumstances for retiring. Therefore, they do not have a grasp on their likely retirement patterns and are vulnerable to the workforce issues associated with employees who linger for financial reasons but have lower engagement and productivity.
"We believe employers can effectively draw on the expertise of older workers, and this opportunity will require careful management."
About the survey: The 2018 Longer Working Careers Survey is based on responses from 143 large U.S. employers that collectively employ 2.9 million employees. The survey was conducted in August 2018.
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