Retirement is now among the top three most important benefits for employees. Compared to a decade ago, the impact of retirement benefits has become twice as significant in influencing an employee’s decision to join or stay with an organization.
WTW research also found that nearly half of younger employees (ages 50 and below) plan to retire before they reach 65. In contrast, 30% of older workers (ages 50 and above) plan to push out retirement until the age of 70 — or never stop working.
These diverse expectations about retirement coupled with labor shortages that might be here to stay create significant workforce challenges. It’s the perfect time to look into a phased retirement program for your workforce.
Phased retirement offers employees a smoother and more gradual transition out of the workforce. While it is not a new concept, an increasing number of companies are revisiting formal phased retirement programs as a creative tool for workforce planning. Modern phased retirement programs consider how employees’ expectations have changed and why the reasons for staying or leaving an organization are more complex than ever.
Allowing older workers to phase their retirement can be beneficial not only for employees but also for the business and the wider economy. Recent research suggests that labor shortages may be here to stay, as older, skilled generations leave the workforce with less available talent to replace them. Moreover, employees are already feeling the negative impacts of these labor shortages, and many report feeling burdened with heavier workloads. Phased retirement programs can ease the burden, help retain critical talent and encourage better knowledge transfer and development of more junior employees, which improves productivity and engagement across the workplace.
So, what do modern phased retirement programs look like, and where should employers begin?
When done right, phased retirement programs embrace a holistic view of the retirement experience instead of focusing just on compensation and benefits design elements. Phased programs maximize talent attraction and retention while maintaining knowledge transfer across the organization, providing real ROI to the business.
Use this roadmap to help build a phased retirement strategy:
Ensuring long-term success for your business requires having a future-focused perspective, where you equip your organization with resiliency to withstand sudden shifts in the business, economic and demographic landscapes. A phased retirement program can effectively achieve this while delivering other benefits: addressing the growing interest and concerns of diverse employees around retirement, providing a more thoughtful response to workforce challenges and enhancing your employee experience to help with attraction and retention. Planning to understand your workforce needs and then implementing strategies like phased retirement to optimize your talent deployment can ensure operational agility and drive real value to your business.
Discover the growing importance of health and retirement benefits in attracting and retaining talent. Explore the benefit options that employees prefer.