Is Delayed Retirement Impacting Your Bottom Line?

October 5, 2021

Americans are living longer than ever before — about 30 years longer, on average, than a century ago1 — so the risk of running out of money in retirement is very real.

Employers are coming to grips with this problem and are starting to understand that the financial wellness of their workforce — or the lack thereof — has a direct impact on productivity in the workplace and on the organization’s bottom-line results.

Research shows that Americans are struggling with their personal finances:

51%-graph.png
feel “very” or “somewhat” anxious about their financial situation2

27%-graph.png
are on track to retire3

62%-graph.png
plan to continue working in retirement3

When Workers Are Financially Stressed, Everyone Pays the Price

EMPLOYEES EMPLOYERS
78% 
live PAYCHECK TO PAYCHECK4
43%  of workers SPEND TIME ON THEIR PERSONAL
FINANCES 
while at work5

22% 

have DIPPED INTO THEIR EMERGENCY SAVINGS5
55% of HUMAN RESOURCE PROFESSIONALS 
surveyed saw an increase in 401(k) withdrawals8

69% 

have LESS THAN $1,000 IN A SAVINGS ACCOUNT6
47% 
INCREASE IN ABSENTEEISM

49% believe they'll need to TAP INTO THEIR
RETIREMENT7
plans prior to retirement

20¢ FOR EVERY DOLLAR saved for retirement, at least 20 CENTS is WITHDRAWN TOO EARLY9

Retirement Readiness: Not Just an Employee Issue, But a Business Issue

A workforce that is financially unprepared to retire can impact a business in a wide variety of ways. It is estimated that employers spend over $50,000 per employee each year the employee delays retirement.10 These costs include: 

highercosts-icon.png increasedhealth-icon.png lowerprod-icon.png

Potentially higher
labor costs

Increased healthcare
premiums

Lower productivity due to
financial stress

 

The long-term financial impact to your organization of delayed retirement can be significant.

Potential Long-Term Cost of Delayed Retirement to Employers

  1 YEAR 3 YEARS 5 YEARS
100 person company with 3 employees delaying retirement $150K $450K $750K

1,000 person company with 30 employees delaying retirement

$1.5M $4.5M $7.5M

10,000 person company with 300 employees delaying retirement

$15M $45M $75M

Given the implications, employers feel an even greater responsibility for their employee’s retirement readiness: 80% feel extremely or very responsible for helping employees prepare for retirement, compared with 22% in 2012. And 83% of employers now believe that employee financial wellness programs and tools help create a more productive, satisfied and engaged workforce.11

Sources:

1 In 1900, the average life expectancy was 50 years old. According to the Centers for Disease Control and Prevention, the average life expectancy in the U.S. is 76.4 years old.
2 NextAdvisor study, June 2020.
3 Schroders U.S. Retirement Survey 2021.
4 Payroll.org, Increase in Americans Living Paycheck to Paycheck in Just One Year, 2023.
5 John Hancock Financial Stress Survey, 2020.
6 GOBankingRates’ Sixth Annual Savings Survey, 2019.
7 PwC, Employee Financial Wellness Survey, 2021.
8 Purchasing Power® survey of HR professionals and benefit brokers, December 2020.
9 For Every Dollar Saved For Retirement, At Least 20 Cents Is Withdrawn Too Early, Forbes, February 2020.
10 Prudential, Why Employers Should Care About the Costs of Delayed Retirements, 2019.
11 Bank of America, Workplace Benefits Report, 2020.

This information is provided solely for educational purposes and is not to be construed as investment, legal or tax advice. Prior to acting on this information, we recommend that you seek independent advice specific to your situation from a qualified investment/legal/tax professional. | 1021.S0824.99137a