The Costs of Not Preparing for Retirement

I was browsing through this week’s issue of EBRief (#93) and saw a mention of a November, 2013 article by Bill Gulliver, Christine Tozzi & Kevin Wagner, titled The Risks of a Workforce Ill Prepared to Retire.  The article focuses on the implications to employers when employees don’t save enough to retire:

But there are significant financial and operational consequences for companies whose older workers can’t afford to retire. Because people generally don’t save enough to cover their retirement needs, especially taking into account increased longevity, many, if not most, will have to work longer than they’d planned. This will exact a considerable toll on their employers. From a financial perspective, there will be higher salaries to pay to longer-tenured workers who, in general, incur greater health care costs. In addition, employees who continue to work primarily because they can’t afford to retire are likely to be less engaged and productive than other workers. They can also contribute to blocked career paths, increasing the risk of losing critical talent or new skill sets.

The authors suggest that the solution lies in the hands of the employee and the employer.   The authors offer the following solutions for employers: understanding their employees “retirement readiness”, revisiting the company’s retirement program to be sure they promote retirement readiness, giving employees a reality check about retirement readiness through educational campaigns and tracking their success, and providing information that is specific to the “life stage” of the employees. A pdf of the story is available here.