It should not be a surprise that our workforce is aging; in fact, 10 thousand Baby Boomers are turning 65 every day.1 This has been happening since 2011 and will continue until 2030.1 The surprising part to the Baby Boomer population is that in households with members age 55 or older, nearly 30% of them have neither retirement savings nor a traditional pension plan.2 These boomers are not in a position to retire, whether it is from a lack or of retirement savings, or the skyrocketing healthcare costs. Many will stay on company payrolls just to keep their health insurance. This will beg the question, what impact does this have on business and why should we care about it?
The aging workforce brings many benefits, and the main benefit of an aging workforce is their institutional knowledge and the need for transference of knowledge to the younger, up-and-coming employees. In order for this to be effective, Baby Boomers will need to take on mentoring or coaching roles that will transfer knowledge to younger less experienced employees. To make this work, HR groups will need to establish phased retirement programs that allow Baby Boomers to transition from full time to a diminished schedule that allows them to train and mentor their replacements. This can lead to reduced turnover and increased job satisfaction for both the Baby Boomer and the younger employee.
In contrast, as a workforce ages, employees tend to become more expensive, and having a workforce that is not financially secure can have unintended consequences on the business’s bottom line. These consequences come in the form of greater payroll costs, higher insurance premiums, and larger “soft costs” that may include reduced productivity. To put real numbers to this, according to a recent study by Principal Financial, each employee who cannot retire costs an extra $50,000 per year on average.
Is there a relatively simple way to figure out your company’s current situation and determine how to address it? If you follow the four steps below, you can help simplify the complexities an aging workforce has on your business.
- Complete a viability study. This will show, in real numbers, the liability created by employees not retiring at their normal retirement age.
- Create a phase-out program to allow older employees to transition to reduced schedules in order to mentor and coach younger employees.
- Implement a financial wellness program to create a culture that is more financially secure by providing employees tools and resources to help get out of debt, plan for large expenditures, and save enough for retirement.
- Integrate Health and Wealth by bringing advanced planning to your employees by combining health care planning and retirement planning in one easy to understand conversation.
By taking these steps, you will help improve job satisfaction and employee financial security, while reducing the impact an aging workforce has on your company’s bottom line. We can help. Contact us to get the conversation started.
1 Hirsch, A. S. (2018, April 10). 4 Ways for HR to Overcome Aging Workforce Issues. Retrieved from https://www.shrm.org/resourcesandtools/hr-topics/behavioral-competencies/global-and-cultural-effectiveness/pages/4-ways-for-hr-to-overcome-aging-workforce-issues.aspx
2 Miller, M. (2018, June 23). Why Businesses Need to Plan for Aging Workforce. Retrieved from https://www.insurancejournal.com/news/national/2018/06/21/492950.htm