Few employees aware of retirement transition benefits

Employers have either dropped the ball when it comes to offering employees retirement transition assistance like flexible work arrangements, retirement seminars or financial counseling, or employees are just not aware of the benefits their employers offer.

Either way, fewer than 10% of retirees and pre-retirees polled for a Transamerica Center for Retirement Studies report said that their employers or past employers offered this type of assistance.

Workers over the age of 50 were more likely to say their employers offered retirement transition assistance, but the proportion doing so was still low at less than 25%, Transamerica found.

Also see: “The unintended consequence of 401(k) auto-enrollment.”

If employers are offering these options to employees, “word is not getting out to these bases,” says Catherine Collinson, president of Transamerica Center for Retirement Studies and the author of The Current State of Retirement: Pre-Retiree Expectations and Retiree Realities.

Retirement education has been a huge topic of conversation for years, with much of it focused on how to get people to sign up for and contribute to their 401(k) plans. Less attention is paid to when people should retire and how they can make that happen.

Employers, especially large ones, are getting more progressive, in large part because of the baby boomer generation, says Collinson. That generation has “rewritten the rules throughout their entire lives and now they are redefining retirement,” she says.

Also see: “Longevity the focus of new training program for benefit pros.”

Many of them are working longer or easing into retirement instead of quitting their jobs cold turkey.

“It seems like a huge opportunity for employers to offer these types of arrangements from a workforce management perspective. If someone says they are looking to retire in a couple of years and they want to transition, an employer can work out a much smoother transition plan than if the employee decides to retire on two weeks’ notice,” Collinson says.

Collinson says she’s surprised at how few employers offer financial counseling about retirement or seminars about transitioning to retirement. Employers do so much in this arena, from sponsoring a 401(k) plan for employees to automatically enrolling them into the plan.

“It seems logical they would have transition assistance,” she says.

She points out that many retirement plan providers do offer this type of service, so the question is, are employers taking advantage of those services and are they widely communicated to employees?

Also see: “Student loan debt hindering retirement savings.”

“The retirement landscape is changing, with many workers planning to work past the traditional retirement age of 65. This new vision of retirement among workers is a tremendous departure from the experiences of those already in retirement,” says Collinson. “Many retirees stopped working before age 65, largely for reasons outside of their control. Their financial realities serve as a cautionary tale for workers, employers, and policymakers.”

More than half of pre-retirees over the age of 50 who were surveyed said they plan to work at least part-time in retirement. Out of retirees surveyed, only 5% are currently working and 2% were unemployed but looking for work, the report found.

Pre-retirees are also more likely to view retirement as a “transition that involves shifting from full-time to part-time, working in a different capacity or working as long as possible until they can’t work anymore,” the report found.

Sixty percent of retirees retired sooner than expected and 66% of those did so because of changes at their workplace, job loss or unhappiness with what they were doing. Only 16% retired because they felt they had enough saved up to live comfortably in retirement, Transamerica found.

Also see: “Michelin, NIH see value in recruiting older workers.”

And if people leave the workforce earlier than expected, is it possible for them to re-enter the workforce?

Workers of all ages bring experience, wisdom and tremendous value, says Collinson. There are ongoing studies looking at how generationally diverse work teams can outperform work teams that aren’t as diverse.

“Through the [2008] recession, employers were solely focused on their businesses. There was so much going on through the recession. Now that we are out of the recession and many are recovering or are fully recovered, now the world is different,” Collinson says. “It is time to focus on staying in step with employees’ expectations. It is helpful for employees but can be very beneficial for employers from a workforce management perspective.”

Collinson encourages employers to consider offering employees flexible work arrangements, allowing older workers to shift from full-time to part-time work or work in a different capacity.

Also see: “Workers willing to give up raises in exchange for secure retirement income.”

“We should be encouraging life-long learning and training as a mutual investment between employees and their employer, making sure people are keeping their job skills up to date and their skills competitive,” she says.

If employers want to encourage workers to retire, they need to help raise awareness of the opportunities available to employees who leave the workforce, she says.

Paula Aven Gladych is a freelance writer based in Denver.