PensionReforms' summary and comments

PensionReforms has already commented on a report of when baby boomers themselves say they intend to retire - see here. This US report asks their employers what they think - are the boomers' realistic in their wish to retire later?  Seemingly yes.

The survey covered a representative sample of 400 employers and asked the employers how many of their employees "will not have the resources needed to retire at the same age as similar workers in the past." 

"If the survey results prove accurate, half of all Boomers who are currently in their 50s will lack the resources needed to retire at the same age as similar workers have in the past. This is bad news and confirms concerns about their retirement prospects. However, an estimated 60 percent of these unprepared workers will want to remain on the job at least two years longer. This is good news, as continued employment would make a significant contribution to retirement income security. If they are able to extend their working careers, many Boomers could enter retirement reasonably well prepared either by having sufficient resources at the traditional retirement age or by working longer.

"These employer estimates are subject to substantial uncertainty, so the survey results must be viewed with caution. This uncertainty about how many workers will be unprepared and want to remain on the job could also make the retirement process quite messy. Employers might respond by limiting employment opportunities for older workers. If so, it could seriously undercut an important way for workers to improve their retirement income security.

PensionReforms wonders how much employers might actually know about their employees' financial lives.  The report itself suggested that employers probably know less about their employees' expected financial position at retirement than in the past.  Apparently, employers' views in the survey were informed by participation in workplace saving schemes (and the size of savings balances), whether workers were white-collar or "rank-and-file", whether there was a Defined Benefit plan, and the employer's 'normal retirement age' (the earlier the "less prepared".  PensionReforms thinks these might provide starting points but without looking at the asset/liability position, aspirations, other financial preparations for retirement of each employee's household, it's not easy to see how the employer might really know what's going on.  Employers thought, however, that 60% of the 'unprepared' might want to retire at least two years later than similar workers in the past.

However, with more diversity in employment patterns and in preparation for retirement (including less certain 401(k) workplace saving plans), PensionReforms agrees that the work/retirement transition could become messier than in the past.  Employers should start thinking about this now. (file size 537KB)   110