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Employers pay when boomers stay

By Jennie L. Phipps ·
Thursday, March 27, 2014
Posted: 1 pm ET

People are living longer and planning to work longer, and for employers that's a good news/bad news paradigm that may ultimately encourage them to upgrade retirement benefits, says global human resources consultant Towers Watson.

Towers Watson surveyed more than 5,000 full-time employees and found that about 58 percent are worried about their current finances, but only 8 percent believe they have enough retirement savings to live comfortably for 25 years. Some 83 percent believe that Social Security will be less valuable in the future, and 88 percent hold similar attitudes about Medicare.

The retirement planning antidote to their fears is working longer. According to Towers Watson's 2013 survey, 50 percent expect to retire after 65. Of that 50 percent, one-third don’t expect to retire until after age 70 or they don’t intend to retire at all.

That puts employers between a rock and a hard place. Shane Bartling, senior retirement consultant in Towers Watson's San Francisco office, says over the past couple of decades, employers have stopped spending as much on retirement benefits. As a result, employers are seeing more older employees reluctant to retire because they can't afford it.

"Working longer can be a good thing if the people who are staying are highly engaged and highly productive," Bartling says, "But in our surveys, we see a disproportionate number of people who are less engaged and less healthy inclined to work longer. That's bad news for employers because it suggests that they will have higher costs and be less competitive down the road."

Bartling says that some employers are already watching their workforce age and realizing that they need to find a solution that will make way for younger workers. "It is expensive to help people retire, but insightful employers are making progress in understanding that there are solutions available -- although they do require allocating a higher percentage of labor costs to retirement benefits."

Read more about managing money in retirement: Five ways to cut taxes in retirement.

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Joe Fischer
April 01, 2014 at 7:56 am

Employers pay when younger workers are trained and move on to the next job. A key issue is ensuring all employees are included, feel included and can compete and contribute regardless of their age. It's pitiful we see the age number on faces, young and old, instead of the value.

Linda Thompson
March 28, 2014 at 2:40 pm

Older workers are dependable. They are willing to "ride the storm" in business, and are less likely to "jump ship" if the business takes a down-turn.

Terry Lear
March 28, 2014 at 10:46 am

Older employees are more reliable. They value the job more.

Private Oneonly
March 28, 2014 at 9:13 am

Keep the older ones happy. They provide the best service for customers. They tend to be more accurate and honest both to their employer and the customer. Keep them as long as you can.
Otherwise businesses will suffer.