Creating tailored retirement plans for the workforce

As life expectancy continues to rise worldwide and everyone ages at a different pace, companies are looking to create tailored retirement plans that address both the preferences of employees and the needs of the company.

Globally, in 1990-1995, 65-year-old women could expect to live an additional 16 years and 65-year-old men an additional 13 years, according to the UN World Population Prospects 2019 (opens a new window) report. By 2045-2050, the expectation of life at age 65 is projected to increase by 4 years for women and by 5 years. 

In addition to the increasing life expectancy, the catch phrase that “40 is the new 30” or “50 is the new 40” can be continued further. If a 65-year-old employee can be as fit as a 55-year-old, keeping them longer in the workforce may be a smart move for the employer, too. The traditional approach of automatically terminating all employment contracts when the individuals reach a predetermined age (often around 65 years) seems increasingly out of touch. 

As our bodies age, we can expect gradual changes, at our body's own pace. How our bodies age depends in part on family genetics. Stanford scientists have identified (opens a new window) four “ageotypes”, specific biological pathways, along which individuals age over time: metabolic, immune, hepatic (liver) and nephrotic (kidney). People who are metabolic agers are at a higher risk for diabetes or show signs of elevated hemoglobin A1c, a measure of blood-sugar levels, as they grow older, according to the research. People with an immune ageotype, on the other hand, might generate higher levels of inflammatory markers or be more prone to immune-related diseases as they age. Complicating matters is the fact that ageotypes are not mutually exclusive, and a metabolic ager could also be an immune ager, scientists note.

In addition to our genetic material, lifestyle choices can have a powerful impact (opens a new window) on how well our bodies age. Healthy habits such as eating a balanced diet, engaging in regular physical activity, refraining from tobacco use or alcohol consumption all contribute to reducing the risk of non-communicable diseases while improving physical and mental capacity.

Some 80 year-olds have physical and mental capacities similar to many 20 year-olds. Other people experience significant declines in physical and mental capacities at much younger ages. As a result, expectation to retire at 60/65 is increasingly fragmenting. While some are seeking early retirement, others are deciding to work into their 70s or even 80s.

Workers may decide to work longer also to avoid an accelerated decline of their brain function, one of the side effects of retirement, according to a study (opens a new window) carried out by researchers at University College London, King's College London and Queen Mary University. The study found a link between retirement and a decline in "verbal memory function", the ability to recall words, names and other spoken information.

Considerations around the right time to retire do not only involve the employee’s own condition but also the viability to do the current job past 65. Further, there may be additional challenges such as caring for parents or dependants. Savings may therefore not only have to finance a certain lifestyle for perhaps 30 years of retirement, but potentially also dependants and cover additional care cost.  

Employees need to prepare for every scenario: Employment conditions, lifestyle plan, retirement plan, potential illnesses, workplace injuries, corporate restructuring and redundancies. Mature employees usually have quite a good idea of what they want and their expectations. They generally like to plan their future.

In addition to the employees’ considerations, employers may want to assess how hard it will be to replace them, as well as how to retain or transfer the skills and capabilities to their replacement. There might be simple solutions helping the employee to stay longer in the job or perhaps in another job where their capabilities can be useful. In case of manual jobs, support can come in form of ergonomic workstations (opens a new window), for example. While the latter has cost a large car manufacture hundreds of thousands of dollars to implement, it has reduced injuries significantly as well as increased motivation among staff. 

Giving mature-age workers more control over when or how to do their work and eliminating or reassigning some physical components of a job can make a big difference.

Around 25 per cent of retirees return to work (opens a new window), about half of these within five years of retirement, according to research in Ageing & Society (opens a new window). Among the drivers are intellectual stimulation but also financial compensation. Work gives individuals not only financial security but also routine, purpose and social contact.

Recommendations for employers:

  • Avoid the rush and facilitate retention.

  • Enable flexible work arrangements (reduced hours, late or early starts).

  • Redesign tasks or work environment.

  • Facilitate further education.

  • Consider offering a new job within the organisation (e.g. community care, needs of employees and clients).

  • Enable a transition to retirement for example through reduced working days.

  • Consider shifting patterns, rotating to different tasks, reducing physical loads. 

  • Engage with people who may help financial planning and/or small business associations. 

  • Think outside the box and find a holistic view. 

  • Plan the process together and frame the information in a very personal way. 

  • Agree on both the individual and corporate roles. 

  • Creating cohorts may facilitate the creation of the appropriate strategy. 

The manner of engagement is essential to avoid discrimination or giving individuals the impression that they are being singled out. There is often a lot of fear to talk about the future. In addition, there may be a lack of trust, lack of understanding of alternatives, as well as many hidden assumptions or thoughts and motivations.