ACLI ReFocus 2018

Retirement Security In The Emerging Era of Longevity

Welcome to the new world of aging

by Catherine Collinson

Ms. Collinson serves as CEO and president of Transamerica Institute® and Transamerica Center for Retirement Studies®, and is a retirement and market trends expert. Visit

Editor’s Note: As the American Council of Life Insurers and the Society of Actuaries convene for four days in Las Vegas (Mar 4- 7, 2018), we offer supporting content on the over-arching theme being discussed there: Longevity. How is an aging world population affecting insurers’ business models; what solutions can be offered to address this issue; what new technologies can help and what opportunities will arise? Find the answers at ACLI Refocus 2018.

People are living longer than ever, a precious gift of life but one that also disrupts how we approach aging, work, and retirement. The prospect of living to 100 years or older pops up more and more in popular culture and around office water coolers across the country.

How can people save enough over a working career of just 40 years to live comfortably for three decades or more in retirement? How will people spend this extended period of time in retirement? Won’t they need a sense of purpose and something to do?

Employers are a critical component in the work/retirement equation in that they provide jobs and health and welfare benefits, including retirement benefits. Behind the scenes, HR and benefits advisors play an equally important role assisting their employer clients.

All About Retirement: An Employer Survey by nonprofit Transamerica Center for Retirement Studies® (TCRS), a survey of more than 1,800 employers, explores the role that employers play in helping their employees save and invest for retirement, as well as how they help their pre-retirees transition into retirement. In doing so, it reveals opportunities for HR and benefits advisors to help employers address concerns associated with living longer.

How Employers Can Enhance Their Benefit Offerings

Many employers are aware of the savings-related challenges their employees face. Sixty-nine percent of those surveyed say most employees at their company could work until age 65 and still not save enough to meet their retirement needs.

Most employers surveyed (69 percent) believe offering a 401(k) or similar plan is important to attract and retain talent – and even more (75 percent) believe their employees view a 401(k) or similar plan as an important benefit. Two-thirds of employers say they offer a 401(k) or similar employee-funded plan, including 90 percent of companies with 500 or more employees, 88 percent of companies with 100 to 499 employees, and 60 percent of companies with 5 to 99 employees.
Among employers currently offering a 401(k) or similar plan, the survey findings yield opportunities for them to enhance their plans. Fewer than half (47 percent) extend eligibility for plans to their part-time employees and 52 percent offer the Roth 401(k) option. Only one in five plan sponsors (21 percent) have adopted automatic enrollment.

Despite their emphasis on helping their employees save for retirement, strikingly few plan sponsors offer pre-retirees assistance in managing their savings in retirement. Thirty-three percent offer educational resources, while 32 percent say they provide information about distribution options available in the retirement plan, and only 29 percent distribute retirement planning materials.

Employers also see that employees value non-retirement employee benefits that support their financial security (e.g., health disability, long-term care and life insurance, employee assistance programs, workplace and financial wellness programs and others). However, the survey finds the level of perceived importance exceeds employers’ actual offering of such benefits.

Benefits advisors can assist employers in setting up a 401(k) plan as well as analyze whether they are taking full advantage of available features in an existing plan. They can also offer recommendations for enhancing their plans and for soliciting employee input on their retirement benefits. TCRS, for example, has developed a survey questionnaire that employers can use to gain feedback from employees about their benefits.

In addition, benefits advisors can work with their clients to periodically re-assess other health and welfare benefit offerings that can meet their employees’ needs.

Why Employers Should Consider Offering Phased Retirement

Seven in 10 employers surveyed (72 percent) believe that many employees at their company expect to work past age 65 or do not plan to retire. In recognizing the need among workers to work longer and fully retire at an older age, are employers willing to employ them? Four out of five employers (81 percent) say they are supportive of their employees working past 65. However, Bureau of Labor Statistics projections suggest otherwise. While the Bureau of Labor Statistics has projected an increase in the labor force participation of Americans age 65 and older, its projections show that in 2024 still only 21.7 percent of people age 65-plus will be in the workforce, up from 18.6 percent in 2014.

Today’s workers want and need the ability to transition into retirement and have the flexibility to continue earning income until they are ready to fully retire. Phased retirement programs can help employers optimize workforce management and succession planning – while also generating good will among employees. The survey finds that relatively few employers have programs in place for employees seeking to transition into retirement. Just 39 percent of employers offer pre-retirees flexible work schedules. Even fewer enable pre-retirees to shift from full-time to part-time (31 percent) or to take on positions that are less stressful or demanding (24 percent). Only 27 percent encourage pre-retirees to participate in succession planning, training, and mentoring.

Flexible retirement can be a win-win solution for workers and employers. HR and benefits advisors can provide expertise on how to structure phased retirement programs, taking into account an employer’s unique workforce needs, employee benefits, and retirement plan design, in a way that best suits their needs.

Ways Employers Can Become Aging-Friendly

With Generation Z’s coming of age, we will soon have five generations in the workforce, an exciting and extraordinary opportunity to foster innovation through inter-generational collaborations with exchanges of knowledge, experience, and ideas.

Most employers (71 percent) consider themselves to be “aging-friendly” by offering opportunities, work arrangements, training and tools for employees of all ages to be successful. However, the survey findings show that some employers may not be as aging-friendly as they think they are.

The survey examined employers’ perceptions of the most common reasons why employees recently retired. It’s not surprising that employers’ most frequently cited reasons include age, financial ability, health issues and family responsibilities. However, a noteworthy 27 percent of employers say their employees retired as a result of one or more employment-related reasons, including organizational changes (15 percent), were laid off or terminated (12 percent), and/or took a retirement buyout/incentive (11 percent). In other words, the survey findings suggest that a substantial minority of older workers may have been forced out.

How can an employer be more aging-friendly? The Global Coalition on Aging and World Economic Forum has developed Guiding Principles for Age-Friendly Businesses. These principles include an age-neutral workplace, supportive working environment, inclusive culture, life-long learning and participation, financial planning for longer working lives, healthy aging, and supportive caregiving.

Aging-friendly business practices can lead to higher productivity, reduced risks of workers’ skills becoming outdated, lower turnover and associated recruiting costs, and workers who are better prepared for retirement

Employers can also affirm their aging-friendliness by adopting Diversity and Inclusion (D&I) business practices and a DI Policy Statement that recognizes age among other commonly referenced demographic factors (e.g., gender, race, religion, sexual orientation).

The benefits of being aging-friendly may be obvious to some but not all employers. Aging-friendly business practices can lead to higher productivity, reduced risks of workers’ skills becoming outdated, lower turnover and associated recruiting costs, and workers who are better prepared for retirement. HR and benefits advisors can provide invaluable expertise, seeking legal counsel if needed, to help employers become more aging-friendly.


Employers’ vital role in our economy includes offering products and services – and providing jobs for workers. Increases in longevity are already beginning to disrupt the composition of the labor force and work arrangements, not to mention creating markets for new products yet to be invented. These disruptions bring opportunities for innovation and gaining competitive advantages. Many employers will need help in navigating these opportunities and exploring the possibilities of what can be accomplished. Their HR and benefits advisors can play a valuable role in guiding them through these opportunities. ◊