Action Steps on Phased Retirement: What’s an Employer to Do?
Editor’s note: This is part 2 in a 2-part series concerning phasing in to retirement and its implications. Part 1 is here.
An increasing number of employees are phasing in to retirement or plan to do so. This is attributable to a variety of economic and society factors. And it has implications for employees, but also for employers and plan sponsors and those who serve plans.
What should an employer, plan sponsor, or service provider do in light of the growing number of employees who phase in to their retirement? There are a variety of actions they might find wise or at least useful.
Help employees put plans in place. In 2023 research, Nationwide found that a strong majority of employees who are close to retirement – 88% – told them that they felt “more in control” of their finances going into the future if they had a plan in place for retirement.
Nationwide Vice President of Annuity Business Development Mike Morrone in his recent blog post advocates helping clients “remain calm, nimble, and informed” and have plans in place that will better ensure that they have a secure retirement.
Employ business practices. Employers have a “vital” role in helping them to be more in control, argues Transamerica in its 2024 report on the retirement outlook of the American middle class. They suggest that employers can fulfill that role by:
- enhancing business practices that support employees and the benefits they offer “to better align with employees’ needs”;
- implementing age-friendly business practices; and
- offering and facilitating phased retirement and creating opportunities for “encore careers.”
Adjust the office environment. Resume Builder in its report about its September 2024 survey argues that, in light of the intention an increasing number of senior employees express to move towards retirement gradually, employers should provide office environments in which older employees can build relationships and sense that they are part of a team.
Be flexible about venue. Employers can better meet the needs of older employees if they are sensitive to their needs regarding where they do their work, including being flexible regarding remote work – which could better meet some seniors’ needs, suggests Resume Builder.
Offer a retirement plan. The bread and butter of retirement planning and preparation – offering a retirement plan – is part of the equation, as well. Strong majorities in Willis Towers Watson’s 2024 Global Benefits Attitudes Survey evinced a belief in the importance of employer-provided retirement plans – 66% say they are “more important than ever” and 72% say it is the main way that they save for retirement.
The Big Picture
Chris West, WTW’s U.S. LifeSight PEP leader, stresses the importance of employers’ role. He argues that through defined contribution plans, pooled employer plans, and lifetime income solutions, employers can enhance their benefits and give employees greater flexibility as they prepare for retirement.