Retirement Planning Revisited - How Employers Can Benefit

By CPI Staff

Nearly every company has been forced to explore tighter spending controls and reductions in workforce in light of the economic downturn last year. Perhaps this focus has left you thinking of retirement planning only as a component of outplacement programs. Or maybe it has heightened your sensitivity to sound financial planning for retirement - because some employees approaching "retirement age" have now postponed retirement plans because their investment portfolio values fell. But have you ever considered a broader approach to retirement planning - thinking of it not only as an employee benefit, but also as having a positive impact on the corporate bottom line? Some companies are starting to come to that realization.

Facilitating Retirement

Perhaps your company is one that still hopes to achieve further reductions in workforce, and is evaluating a voluntary retirement program. This is where offering retirement planning that uses a life planning approach, rather than purely financial planning, can help employees make the right decisions. With a life planning approach, coupled with good financial planning, employees are less likely to feel like they're being forced out. And their decisions about retirement are more likely to be based on the reality of their own personal situations, rather than the latest news article that heralds how much it costs the "generic" individual to live in retirement. Factors such as overall health, retirement aspirations, geographic variations in cost of living, and many other factors can have a tremendous impact on financial needs.

A life planning approach also helps employees realize that "retirement" from one position doesn't necessarily mean the end of their careers. Pursuing a longtime entrepreneurial dream, becoming part of a non-profit organization, or becoming an active volunteer in the community can satisfy many employees' needs to stay active, produce income, or feel needed. The point is, without carefully evaluating the whole picture of what life going forward ought to be, employees may cling to the status quo longer than is in the best interests of the company and the individual. Change is hard as individuals get older, but good planning can make it a lot less scary!

Staging Retirement

Remember how we were starting to worry about boomer retirements causing a shortage of workers before the economic downturn?  Much of the concern was expressed in terms of the size of the boomer generation compared to the smaller size ones to follow. That could still be something to consider, depending on how the economy pans out in the next couple of years. However, what might be a greater concern is the departure of boomers from the specific positions they currently hold.

How far does your succession planning reach? Many companies focus only on top tier executives. However, middle management positions at many companies are occupied by boomers who have learned from experience how to keep operations running smoothly. They have developed  the expertise needed to detect and address issues before they become serious. If an assessment of your middle management ranks indicates a number of impending departures, you may want to design a retirement planning program that helps the company stage the retirements by creating conditions that are a win for both the company and for the affected employees.

A plan for phasing out retiring middle managers by placing them in roles where they mentor younger leaders, while working fewer days or hours, could make everyone's transition easier. It's an approach that can help you avoid any negative impact on operational performance. The harder-to-measure benefits, of course, are 1) the long-term goodwill from the retirees and 2) new leaders who feel good about having successfully assumed the reins. (If a new leader abandons ship out of frustration while trying to assume a new role, how much will it cost you to find and train another new leader, especially if you have to look outside the company? How might operations suffer in the short-term?)

Wellness as a Core Component of Retirement and Life Planning

Steve Cummings from Personal Best, a provider of wellness in the workplace solutions, says, "The importance of having a plan for wellness, not just finances, is often overlooked. People should be taking stock of and making conscious daily choices on wellness - everything from physical and psychological health to their diets and other lifestyle habits. If these things are not planned for, then many people will not be able to enjoy the things they had hoped to experience in their mature years. And, by the way, it is a lot cheaper to keep yourself well than to make yourself well when problems arise."

This concern for overall employee wellness was a theme in CPI's recent winning proposal to help an international company extend Financial and Retirement Planning services to its employees scattered across more than forty states in the U.S. The company is not short-sighted in its thinking - it noted the merits of making offerings available to employees of all ages when it approached CPI about providing these services.

While preparing for retirement could be considered primarily a financial planning issue for younger employees, CPI understands the merits of providing a wellness and life planning approach to those in the 20-50 age range as well. When considered as part of an overall benefit package, it could also help to strategically control the runaway costs of medical benefits if employees take advantage of the online educational materials being made available to them. And a short-term benefit of such a program is how it can complement employee retention efforts - sending a message to younger employees that the company is willing to invest in them and their future well-being. This message can help create loyalty and stave off the tendency of younger generations to move to other pastures for relatively small financial gains.

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