Need to Know: The High Cost of Employees Not Retiring on Time

Why does Retirement Age Matter?

In retirement planning, we often focus on the “end goal” — making plans related to the age we want to be when we retire, and what our spending level needs are after we don’t have a steady income coming in from our jobs.

Retirement Book On Laptop Showing Pension Plans And Elderly Advices

But do you know the effect of what happens when we aren’t ready to retire on time? And do you know what that means for your company if an employee can’t retire on schedule?

At a recent session of “Plan Sponsor University,” Tom Foster of MassMutual, outlined some key risks to a company (and its employees) when someone can’t retire on schedule and has to work well beyond the standard retirement age. They include:

Lower productivity: Workers who have to stay on longer than the typical retirement age may become less and less productive the older they get. This affects the bottom line of your company in significant ways.

Higher healthcare and workers compensation costs: On average, older workers have higher healthcare costs and premiums as well as higher worker’s compensation rates that must be paid by employers. These costs can also be passed on to other employees.

Higher salary costs: Seasoned employees are typically compensated at a higher rate than entry-level employees.

Unexpected turnover: Older employees often hold up the advancement of younger, entry-level employees, who cannot be promoted because their more experienced colleagues occupy senior-level positions. Without growth opportunities, younger employees will seek out new positions where they have more chance to advance their own careers.

Financial wellness: Studies show that employees who are financially stressed — and we can assume that someone working well beyond retirement age will be financially stressed —are prone to working more slowly and may take more sick days.

What’s the solution?

A company-sponsored defined contribution plan, such as a 401(k), is a key way to ensure the viability of your company. Not only can it help your employees reach their retirement goals, it will also set your company up to succeed, by ensuring that your employees are retiring on time and not holding up the growth of your company.

Want to evaluate your retirement plan or need assistance setting up a company sponsored retirement plan? Contact the Robin S. Weingast & Associates team today to help!

Resource of the Month: Traditional Defined Benefit Plans

Robin Weingast Defined Benefit PlanDid you know that with a Traditional Defined Benefits Plan (DBP) you can accrue substantial benefits, even within a short period of time or if you retire early, and that your benefits are not dependent upon asset returns?

These are just a few of the many positive features of a DBP. Before you decide if a plan is right for you, your company, your employees, and your long-term business goals, we think it’s important that you have all the facts. That’s why our July Resource of the Month will give you a comprehensive overview of traditional Defined Benefit Plans, how they work, and their advantages.

As our Resource explains, the most basic explanation of a Defined Benefit Plan is that an “employer contributes an actuarially determined amount sufficient to pay each participant a fixed or defined benefit at his or her retirement.”

In truth, there’s much more to Defined Benefit Plans. Our July Resource of the Month will walk you through how they work, how benefits are defined, additional considerations, maximum benefits, and the advantages of DBP for both you and your employees.

Download the full guide today.

A Defined Benefit Plan may be a great fit for your business and may also help you meet your financial goals. Download our resource today and when you’re ready to talk more about a plan that’s right for you, contact the Robin S. Weingast & Associates, Inc. team. We’re happy to put our combined experience and expertise to work….for you.