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BUSINESS

Why Companies Should Help

Employees Retire on Schedule

By Gil Castillo

hen it comes to retirement readiness, the numbers • Employees who must wait to receive the promotions and raises
W are not encouraging: according to they feel entitled to will likely look elsewhere for their next career
step, costing your company valuable resources plus actual costs
investmentnews.com, more than half of our fellow
Americans do not have enough retirement savings in turnover and hiring.
to cover their living expenses after they leave the working world.
Have you considered how this lack of planning and funding might Addressing employee benefits costs
affect your business? When workers stay on your payroll past traditional retirement age,
Retaining older, near-retirement workers can certainly offer big they often also stay on your health insurance, which costs your com-
benefits to your business and employees. After all, highly experi- pany money. While every additional employee costs your company
enced workers have a lot of knowledge and wisdom to share with to insure, in the case of an older worker, the cost is usually quite a
younger colleagues, and it's tough to find good workers of any age. bit more. Insuring a young individual costs about one-third what
However, what about the other side of the coin? As with most you'd pay to insure an older person.
things, there are trade-offs. First, the greater the number of older, Let's say you employ Mary, who's 67 years old. Mary doesn't have
more experienced workers in your employ, the fewer opportunities the retirement savings she needs to quit working, so she decides to
exist for younger workers looking to learn and make their mark. stay in her job for several more years. If she retired, she would use
Second, retaining older workers who would prefer to retire is likely Medicare for her health insurance, but since she's still employed,
to result in increased costs for your business. she decides to retain your company's insurance, which she feels al-
lows her more flexibility in choice of doctors and services. Just this
Following the career life cycle one employee undoubtedly costs your company thousands in med-
Most employees have certain expectations in their careers. Often, ical benefits alone. When large numbers of employees make the
these expectations involve a steady progression up the career ladder same choice as Mary, the altered employee lifecycle can make your
and wage scale, along with the accumulation of knowledge that company's health care costs skyrocket.
comes with those career moves and experiences. This natural career Related reading: Why More Americans Are Delaying Retirement
life cycle depends on a predictable pattern of young workers enter-
ing the full-time workforce after completion of school and older Ensuring productivity
workers exiting the workforce at or around traditional retirement Over the years, many studies have suggested that engaged em-
age. But with over half of workers unable to support themselves in ployees are more productive. That may signal a problem with certain
retirement, how will this lack of preparation and funds affect this past-retirement-age workers, since an employee who has no choice
established pattern and life cycle? Older workers staying on the job but to continue working past his preferred retirement age is unlikely
create a ripple effect: to be fully engaged. According to a Prudential report, "employees
• When an employee stays at work past the expected retirement who are not able to retire when they wish may experience financial
age, that employee's position is not available to a younger, more stress, a lack of engagement, and lower productivity." An employee
inexperienced worker. who knows he didn't save enough to retire comfortably may be pre-
• Since promotions are generally based on knowledge and experi- occupied with money worries and unable to give his work as much
ence, each employee working past expected retirement affects concentration as he could without those stresses.
numerous others down the management chain. Now employees
must wait longer to be promoted into roles they had thought Encouraging employees to retire on schedule
would be available upon another employee's retirement. Now that we've addressed some of the negative consequences

26 San Antonio Medicine • March 2018