The baby boom generation began influencing the country at the end of World War II. As boomers aged, schools were built to accommodate the unprecedented number of children, social mores changed, products were designed and ad campaigns launched with boomers in mind.
Now, as baby boomers move toward and into retirement, employers are confronted with challenges to overcome as they manage an aging workforce. Health and safety issues can accompany age‐related health changes. At the same time, medical and prescription drug costs may increase, along with requests for workplace accommodations through the federal Americans with Disabilities Act (ADA) and requests for time off under the Family and Medical Leave Act (FMLA). These issues highlight the importance of offering employees a well‐designed retirement plan.
However, most employers are not eager to nudge older workers out the door. In many instances, baby boomers have skills and institutional knowledge built over long careers that are extremely valuable to employers. “Many employers are struggling to find critical skills within the workforce, such as the ability to read blueprints or operate a lathe, so older workers who have those skills are extremely valuable,” says David Manke, VP, Loss Control Engineer, Johnson Insurance.
Still, health often declines with age, and employees in poor health may pose safety risks in the workplace. Deteriorating memory, strength, flexibility, balance, reaction time, concentration, eyesight or hearing can increase the risk of injury for aging workers and their co‐workers.
Fortunately, thanks to new tools and equipment, companies have many opportunities to mitigate worker's compensation claims and help their aging workforces continue to work safely. “For instance, lifting devices can help workers with declining abilities, while at the same time opening up jobs to people who never had the physical capacity to perform them without the equipment,” Manke notes.
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An aging workforce often means an increase in health insurance claims as more serious health conditions typically affect older workers. “The average health costs of a 64‐year‐old may be two to three times those of a 40‐year‐old,” comments Tom Hitchcock, VP, Employee Benefits, Johnson Insurance.
And as retiree health benefits have been reduced or eliminated, some workers may stay on the job longer primarily for access to the health plan. Those who put off retirement increase the time that their employers have to bear some of the burden of their high health care costs.
Some companies find that providing employees with access to financial and health insurance counselors can help workers plan for their health coverage and associated costs.
“In addition, older workers have a higher likelihood of becoming disabled and require accommodations under the ADA, and to request time off under the FMLA because of illness or to care for aging parents or spouses,” Hitchcock says.
After a lifetime as part of a generation that was a force to be reckoned with, baby boomers are accustomed to doing things on their own terms, and that includes retiring. “Three elements are critical to helping employees save enough so they can have the retirement they want,” says Kevin Tydrick, VP, Retirement Plan Services Advisor, Johnson Bank.
“First, retirement plan design (i.e., pension, profit sharing, 401(k)) can take advantage of employee inertia,” Tydrick continues. Automatic enrollment puts employees in the plan unless they take action to opt out and automatic escalation increases the amount of their contributions every year unless they opt out. “Both features work extremely well, in my experience. But although they're common in plans of large employers, fewer small and mid‐size companies incorporate these features.
“Second, target date funds remove the stumbling block of having to choose a balanced portfolio of investments, which many workers find intimidating,” he says. “They're an all‐in‐one investment solution.”
“Third, an effective communications strategy is especially important for plans that don't have automatic enrollment and automatic escalation. With targeted messaging, you can help workers understand how important their retirement plan is to their financial security, and how they can best take advantage of it.”
When facing an aging workforce it's important to identify and address the issues that could affect your business and your employees. At Johnson Financial Group, we have the Risk Management & Loss Prevention, Employee Benefits and Retirement Plan Services professionals to help you make sense of it all. For more information, contact your Johnson Financial Group advisor.