Retirement Planning Revisited - How Employers Can Benefit

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?)

Torchiana's retirement planning program, New Horizons, is conducted by certified coaches who help participants replace traditional views of retirement with a focus on life-planning and well-being, as well as finances. For more information on New Horizons and e-learning services that support employee well-being and life planning, contact Mike Freccero at 925-973-3155.