March 25 2008 - A survey by the National Association of Professional Employer Organizations (NAPEO) found that almost a third of small-business owners are creating 'knowledge transfer' plans - transferring key knowledge from older to younger workers - as a means of coping with the retirement of millions of baby boomers.
11% of the 400+ U.S. small business owners in the survey said they had fully established plans with a further 17% developing them.
Gene C. Wilson, president of PANTHEOS, a professional employer organization, commented:
"Small-business owners value their older workers and want to make sure the knowledge they've gained over the years is conveyed to younger workers now. In fact, small businesses are outpacing larger firms in planning."
The survey also found that more businesses are reporting that older employees are delaying retirement - 37% compared to 18% in 2007. The main reason is that they enjoy working but financial reasons also play a part.
According to Gene Wilson:
"An aging workforce is creating major changes across the nation, yet small businesses show they are ready. The NAPEO survey shows their great flexibility in the midst of these changes.
"The good news for small-business owners is a growing number of baby boomers are willing and able to continue working," Wilson added, pointing out that businesses with plans for older workers will have a strategic advantage over competitors caught unaware and unprepared.
"Business owners will want to hold onto good people, no matter what their age," said Wilson. "That's why such a large percentage of them are formulating plans to proactively retain these older workers for their valued skills, knowledge and experience."
Accommodating Older Workers
More than one-third (34 per cent) of all American employers - and nearly half (46 per cent) with 25 000 or more workers - agree that the aging workforce will have a significant impact on their company. However, more than three-quarters (79 per cent) have not taken any steps to accommodate older workers, according to the MetLife Employee Benefits Trend Study conducted in 2006.
The study, based on separate surveys of employees and HR/benefits executives, found that 33 per cent of baby boomers (aged 41-60) have not yet decided when they plan to retire. More than half (58 per cent) of young baby boomers (aged 41-50) are worried that they will have to continue to work either full- or part-time to live comfortably during retirement and 61 per cent say that 'outliving retirement money' is their number one retirement-related fear. Fuelling these concerns is the fact that 27 per cent of baby boomers admit to being 'significantly behind' in their savings, and one in ten hasn't even started saving.
The MetLife study found that older workers are generally more satisfied with their jobs and more loyal to employers; 67 per cent of pre-retirees (aged 61-69) reported high levels of job satisfaction and 75 per cent indicated that they were very loyal to their employers. Comparative figures for all employees were 44 per cent and 46 per cent respectively. Pre-retirees are also more likely to report that benefits are an important reason they remain with their employer.
The study argues that companies must grapple with a host of benefits-related issues specific to aging employees. Senior management ranked 'health-care costs' as their top benefits-related concern (81 per cent). The impact of the aging workforce is especially significant for the largest companies. Roughly one-third of employers with 25 000 or more workers cited 'long-term care issues' (35 per cent) and 'benefits for retired employees' (44 per cent) as a key concern in 2006. Companies with fewer than 50 employees rated these as key concerns in only 14 per cent and 18 per cent of cases.
The study found that, in addition to protection products such as disability and long-term care insurance, older employees are increasingly turning to the workplace for financial planning advice. Currently over half (56 per cent) of pre-retirees are interested in having access to financial planners to help them make decisions about 401(k) money. In order to help employees address the needs of guaranteed income in retirement, nearly half (46 per cent) of the largest companies - and 31 per cent of companies with 500 or more employees - currently offer annuities through the workplace as an employee benefit.
Other key survey findings include:
- Longevity is a significant, but overlooked retirement risk. Many people will live up to 40 years in retirement, so ensuring a steady stream of income is crucial. While most (72 per cent) pre-retirees have tried to calculate how long their savings will need to last, only half (50 per cent) of baby boomers have taken steps to factor longevity into their retirement plans.
- The oldest baby boomers will reach traditional retirement age in five years time. Approximately one-quarter (26%) of all baby boomers do not allocate any of their monthly household income to retirement savings vehicles. As a result, 38 per cent expect to remain behind in their retirement savings five years from now. Equally concerning is the fact that employees aged 51-60, who only have a few years left to accumulate savings, are allocating, on average, only 10 per cent of their monthly household income to retirement savings products.
- Nearly half of all employees are worried about providing for their own (47 per cent) and their spouses' (49 per cent) long-term care needs. Long-term care insurance was ranked as their most valued benefit by 16 per cent of employees, doubling from 8 per cent in 2004. Long-term care insurance is offered by nearly half (46 per cent) of all companies and 81 per cent of companies with 25 000 or more employees.
Maria R. Morris, executive vice president, Institutional Business said:
"Over the next decade, the aging workforce will transform the way that both employers and employees think about work and retirement. With increases in longevity, many workers recognize that they may need to stay in the workforce longer to fund their retirement, which could last 30 years or more.
"Employers that make a long-term commitment to accommodate their older workers - not just through the physical environment or flexible work schedules, but by providing access to critical employee benefits that can protect an individual throughout their lifetime - will reap the benefits. Many older workers feel a strong sense of loyalty to their companies and expect the same in return. At a time when baby boomers are nearing retirement - and increased longevity is enabling many of them to work productively well into their 70s and 80s - older workers may prove to be the solution to the impending talent shortage. It's crucial for companies to identify a strategy for retaining trained, experienced workers and keeping them satisfied and engaged."
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