Quick Look: The Great Retirement is shining a spotlight on retirement benefits. Today’s employees value retirement plan options, but many lack the resources and education to adequately save. As a broker, you can assist SMB employers by helping them compare plans, educate employees, or facilitate a partnership with a PEO company.
A wave of retiring workers has swept the nation since the onset of the COVID-19 pandemic. As of October 2021, 3.3 million more people had retired (representing a 7% uptick) compared to January 2020.
There are many reasons behind the surge known as “The Great Retirement.” Involuntary retirement (terminations), the need to care for sick family members, and newly restructured family living situations are some of the reasons employees are leaving the workforce and not looking back. Another reason for the retirement spike is the increasing value of assets like real estate, stocks, and other investments. The appreciation of these assets alleviated financial pressures, allowing some Americans to stop working earlier than anticipated.
A drop in “un-retirement”
The job market is also seeing fewer retirement-age people returning to the workforce after “officially” retiring. Before 2020, many older workers returned to work due to financial necessity, the chance to earn more for less time spent, or simply boredom.
However, COVID-19 shifted this trend. Seniors are not returning to the workforce as often as before. Health concerns and a re-calibration of personal priorities are keeping retirement-age workers from returning to the job market, despite employers’ best efforts to lure them back.
This shift indicates American workers are taking retirement seriously—and it’s not just older workers. Younger workers are paying more attention to retirement plan benefits than in previous years, causing employers to renew their focus on this valuable benefit.
Employers are concerned about retirement readiness
According to the Principal® Retirement Security survey conducted in June of 2021, employers recognize the value of promoting employee readiness for retirement. Over 75% of employers surveyed said they are providing employees with education and resources to adequately plan for retirement. However, around 50% of employers also expressed concern over employee preparation.
The top five reasons employers cite for offering retirement plans include:
- Encouraging employees to save (83%)
- To help provide financial security to employees in retirement (65%)
- To help retain current employees (65%)
- To provide employees with a product that helps them save for retirement (58%)
- To attract new employees (58%)
Employers recognize the importance of looking out for employees after they leave the workforce. They also see the impact on their existing employees and the important role retirement benefits play when competing for today’s top talent.
How brokers can help
As older workers cycle out of the workforce and competition for top talent remains tight, brokers should support SMB clients and prospects by adjusting benefit plans to align with the needs and desires of a younger workforce.
Though still many years away, younger employees have their eyes on retirement, too. According to Principal’s survey, more than 75% of employees said COVID-19 has increased their focus on saving for retirement.
Workers are looking to employers to take an active role in retirement planning, saving, and contributions. Here are the most important retirement plan features cited by workers when evaluating a new job opportunity:
91% – Employer matching
80% – Eligibility
74% – Vesting requirements for company matches
73% – Investments options offered
70% – Withdrawal options at job change or retirement
According to a recent Charles Schwab Corp. study, millennial workers started saving for retirement nine years earlier than baby boomers did. In short, younger workers are paying close attention to how their retirement benefits are structured—well before they reach retirement age.
Provide education and support to SMBs
In this tight labor market, brokers can help SMB clients gain an advantage by offering services and support to assist employers in choosing the most appropriate retirement plan for their workforce. Brokers can also play a stronger role in educating staff on the retirement benefits available to them.
Retirement plan sponsors, too, recognize the need for more education. Principal’s survey found 67% of sponsors plan to direct more attention to retirement planning in 2022—a jump from just under half during 2021. This indicates retirement plan sponsors recognize the value workers place on retirement plans but see the gap in utilization.
Brokers can assist SMB leaders and HR departments by conducting training sessions, webinars, and Q&A sessions, releasing helpful information materials, and facilitating lunch-and-learns with plan providers. These resources inform employees about the importance of retirement planning and provide education on how their existing plan is structured.
Another way brokers can help is to connect SMB employers with a qualified PEO company. A PEO partnership provides instant access to Fortune-500-level benefits and group pricing advantages smaller businesses would be shut out of otherwise. Additionally, the HR experts at a PEO company can help SMB leaders ensure their current benefits align with what employees want.
Retirement benefits are top-of-mind for many SMB employers as older workers cycle out of the workforce and younger workers increase their focus on saving for the future. Reach out to your SMB clients to see how you can help them create robust retirement benefit offerings to attract top talent and retain quality employees longer.
Let our HR experts will help you find the best retirement plans for your clients. Contact ExtensisHR today to get started.