For decades now the typical career has consisted of approximately 40 years spent working, an “on time” retirement at age 65, and perhaps a decade spent enjoying the so-called golden years. But with better health leading to longer life spans, retirement now may last much longer — and require much more money. Today, employers and employees alike recognize that four decades of saving for a retirement that may last four more decades is, to say the least, challenging.
That’s the reason many people plan to work more years than they would like to before they finally retire completely. When asked recently, 54% of workers report they plan to work either full time (14%) or part time (40%) in retirement, and their employers often (76%) acknowledge that expectation. In fact, 85% of employers agree with the statement, “My company is supportive of its employees working past age 65.” Fewer workers, 77%, see it the same way.
For 43% of workers, the transition into retirement would involve working fewer hours or in a different, less demanding, capacity. In fact, only 22% of workers say they plan to immediately stop working and retire fully.
Opportunity lacking for flexible and part-time schedules
While employers theoretically support workers taking a transitional approach into retirement (69% of them say many of their employees expect to work past 65 or do not plan to retire), just 38% offer flexible work schedules that could facilitate the transition. Fewer still (30%) allow employees to take a part-time schedule, downshifting from full time, or to take on jobs that are less demanding and stressful (21%).
What’s more, 75% of employers do not have a formal program that helps employees phase into retirement. Often, the reason given for the lack of a phased retirement program is that it’s easier to handle retirement transition requests on a case-by-case basis (39%). Thirty-seven percent say their employees aren’t interested in this kind of program, and 27% say operational and administrative complexities keep them from offering one.
More and better education could help improve retirement planning
Employers have opportunities through their retirement plans to assist workers with their transition into retirement, according to the cited study, the 19th Annual Transamerica Retirement Survey, “Employers: The Retirement Security Challenge,” released in October 2019 by the Transamerica Center for Retirement Studies. Simply sponsoring a 401(k) plan encourages employees to save more for retirement, according to the study. When their employer does not offer a 401(k) or similar plan, only about 50% of employees save for retirement. By providing more educational resources, including information about distribution options and retirement planning materials, they could use their retirement plan platform to help workers make better decisions for their retirement lives.
You can read study highlights online at https://tinyurl.com/TransamericaSurvey2019
Securities offered through LPL Financial. Member FINRA/SIPC. Investment advisory services offered through LMC Financial Advisors, a registered investment advisor. LMC Financial Advisors and LPL Financial are separate non-affiliated entities.
This information is not intended as authoritative guidance or tax or legal advice. You should consult with your attorney or tax advisor for guidance on your specific situation.
Kmotion, Inc., 412 Beavercreek Road, Suite 611, Oregon City, OR 97045; www.kmotion.com
©2020 Kmotion, Inc. This newsletter is a publication of Kmotion, Inc., whose role is solely that of publisher. The articles and opinions in this publication are for general information only and are not intended to provide tax or legal advice or recommendations for any particular situation or type of retirement plan. Nothing in this publication should be construed as legal or tax guidance; nor as the sole authority on any regulation, law or ruling as it applies to a specific plan or situation. Plan sponsors should consult the plan’s legal counsel or tax advisor for advice regarding plan-specific issues.