Timing is everything, it is said. That premise can hold regarding retirement as well — for employers as well as employees, says a recent blog entry.
In its recent blog entry “When Employees Retire Matters to Them… and to Employers,” Fiduciary Plan Governance, LLC argues that when an employee retires matters not only to that individual, but also to their employer. “employers also have a stake in the timing of employee retirements,” it asserts.
Delays in retirement, the firm argues, can cost an employer. “Over time, employers may suffer financially when employees are unprepared to leave the workforce on time,” it says, although it doesn’t define at what age leaving the workforce “on time” occurs.
They further cite a report by Prudential, “Why Employers Should Care About the Cost of Delayed Retirements,’ which says “Having employees able to retire “on time” is a win/win scenario for both employees and employers.” Prudential found that a one-year increase in average retirement age results in:
- incremental annual workforce costs of approximately 1.0%–1.5% for an entire workforce;
- costs of $2-3 million for an employer with 3,000 employees and workforce costs of $200 million; and
- an incremental cost of more than $50,000 for an individual, the differential between an employee at retirement age and a newly hired employee.
- encouraging saving through an employer match automatic enrollment and auto escalation;
- Offering investment alternatives for plan participants who want professional account management of their account, and for those who don’t choose any options; and
- including guaranteed lifetime income products among distribution options.
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