At what age do you think your employees start thinking about retirement? I mean really thinking about retirement? Is it when they graduate college and start working or is it a few months before they actually retire?
We all know that HR has generally done a good job at educating employees on the importance of saving for retirement through their 401(k) plan, but research suggests it's not the paycheck and finances that employees think about or miss most in retirement: it’s the social connections and the routine.
Understanding the Importance of Retirement Lifestyle Planning
I’ve recently recalled hearing a retired employee say on the first day of retirement that they missed the walk to work and seeing their colleagues for lunch. It’s a fact that employees are living longer. The days of retiring on the beach and the golf course are a thing of the past. Employees are leaving the workforce to start new careers or jobs that offer meaning and purpose.
Because people are living longer, family dynamics are changing. People are retiring with aging parents, grandkids, and - in some cases - adult children still living at home. All of these factors will impact an individual’s retirement situation.
One frustration that I hear HR say time and time again is: “I wish employees would give us more notice that they are ready to retire.” It is typical to see an employee walk into HR just 3 months before retirement and say, “I’m Retiring.” This short notice transition can have a major disruption to the company.
One HR client asked an employee why they only gave three months notice, the employee said, “I was afraid if I gave more notice, say a year, that the company would treat me differently for thinking or discussing retirement.” The employee was afraid of being labeled as a short timer and possibly even pushed out.
The other end of the spectrum is the ‘reluctant retiree’ who is well past retirement age and doesn’t want to leave the company. There is an uncomfortable elephant in the room here and no conversations are happening. In these cases, employees are generally part of a RIF or Voluntary Retirement Program that pushes an employee out of the organization when their not ready.
There is a better way.
What if HR could create a benefit that allowed employees to start having conversations about retirement that was not threatening to the employee's job status with the company?
We all know that at age 55 most employers begin to help employees with financial planning. It’s common that they’ll bring in their 401(k) provider to do a workshop on retirement saving and planning. Also, in some cases, they will provide one on one counseling to make sure employees are ‘on track’ with their retirement savings plan.
Start Talking About Retirement Early and Often
What if, at age 55, employees also started thinking about other aspects of retirement that would provide a smoother transition, prompting to them to ask themselves tough questions like “what am I going to do with my time and who am I going to spend my time with?” Many of these conversations impact the financial conversations and are very natural to have. We just need to stop ignoring them.
If HR would consider creating a benefit vehicle that allows employees the opportunity to have these conversations early, then employees would trust that the company was interested in their future.
If HR also considered proving a retirement lifestyle transition plan a year before retirement, employees would work with the company to help with knowledge transfer, succession planning, and training their replacement while they start planning for the next major journey in their life.