Since the Great Recession hit, more employees have delayed their retirement, which can cost employers on multiple levels. Older employees are at greater risk of disability along with other health care costs, which has led to an increase in disability claims, but the economy has forced many of these older employees to put off retirement until they are more financially stable, says Alex Dumont, associate vice president of product marketing at The Standard. A study from the Employee Benefit Research Institute also finds that many employees have failed to save properly for retirement, which also contributes to the delay.
“It is putting a more significant burden on employers’ health care costs and their disability costs,” Dumont says. “Employers need to be able to manage employee populations that are more readily impacted by health issues and disability incidents.”
With an aging work force, more employers are turning to wellness programs to help manage health care and disability costs, Dumont says. For this age group, intervention programs are especially helpful because they can control chronic diseases that typically result in higher costs.
“Helping people manage diabetes, arthritis and other chronic health care conditions can really impact someone’s ability to engage in the work force as well as mitigate their health care costs and their disability costs over time,” Dumont says.
As older workers are delaying retirement, it also impacts younger workers, which can cost an organization, Dumont says. With older workers are staying in their positions longer, it limits younger workers’ career opportunities and adds to their financial burden. For many younger employees, they are already in a tough position financially because of their personal responsibilities.
“You have much of the working population that is in the ‘sandwich generation’ today,” Dumont says. “Employees from Generation X and Generation Y sometimes have the financial responsibility of caring for elderly parents and also have young children at home. That can make even working a challenge because you have a lot of needs being compressed on that population at one time.”
When these younger employees are struggling on a personal and financial level, their stress can negatively affect their productivity, Dumont says. Presenteeism plagues their performance, and they often have to leave the workplace to care for other family members.
To manage this, Dumont recommends that employers offer flexible work arrangements. These younger employees especially value benefits that accommodate a flexible work-life balance. Depending on the situation, remote working arrangements, flexible hours and job sharing can all greatly improve an employee’s circumstance. This is especially important from a retention level when upward career trajectory isn’t available.
“An employer may not have the promotion opportunities available to younger workers that were there five or 10 years ago, but the employer can keep their younger workers engaged in a way that makes them loyal,” Dumont says.
With the economy remaining uncertain, older employees may not rush to retirement, but better managing health care costs and providing a flexible work environment can improve an employer’s financial situation in the meantime.