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.