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About 13 million Americans will reach retirement age by 2024, but that doesn't mean these people will decide to leave their work and actually retire.

This new reality is something employers — 83% of whom have a significant number of employees approaching retirement age, according to a recent Willis Tower Watson survey — are struggling with, as a growing number of their older workers are staying on the job long past 65.

According to the same survey, 80% of employers see older workers as integral to the success of the company, but only 53% are aware of when their employees are planning to retire and only 25% have a plan to manage the timing of employee retirement.

The challenges here are supporting these older workers as they find themselves in a time of transition. Perhaps some older workers are truly focused on continuing their careers and not interested in retirement, while others may find themselves in a place of financial pressure to continue saving. The good news is that your benefits client employers have an opportunity to assist both of these groups of employees, and ultimately demonstrate the importance of talent to their organizations.

The method in this case is helping employees to understand their options by providing them with valuable decision support tools. How does an employer begin this process? Here are three steps:

1. Evaluate company demographics.

Having data on how many workers are at or nearing retirement age will lay the foundation for creating an effective retirement plan for your whole organization.

2. Provide a wider selection of benefits.

Allowing employees to choose the benefits that meet their own needs can lower employer benefits costs and provide individualized coverage. Employers should understand that as employees age, their benefits' needs change. A benefits plan that evolves with employees can help smooth the transition to retirement. One example of this is beginning education about the value of Medicare with the help of specialized assistance. For some employees, Medicare may be a better alternative at age 65, and provide them with savings to invest in their retirement, rather than coverage through their employer plan.

3. Educate employees.

Employers should strive to actively improve every employee's financial literacy and help them make smart financial decisions regarding their personal income and investments, as well as their healthcare plan decisions. Informing employees about their retirement savings and health plan options can give them a roadmap on how to plan for their future and assess their current financial situation.

Unfortunately, Medicare is often overlooked, as many employers and HR professionals blindly assume that employer plans offer the best and least expensive coverage. However, in many cases, Medicare is the more affordable, higher-quality choice. Medicare Part B premiums start at $135.50 and deductibles are competitively low — most under $200 — or cost nothing at all. With employer plans, 66% of workers are charged a copay for primary care visits, but under Medicare, out-of-pocket costs are significantly reduced or nonexistent, according to the Kaiser Family Foundation. Medicare also has multiple plan parts that employees can pick and choose from — 80% of employers have just one — and covers 93% of primary care doctors.

This approach also benefits employers whose older workers voluntarily leave employer health insurance. Health care plans are one of the most expensive costs for older workers and their employers — employers spend nearly $7,000 on single-coverage healthcare premiums, with many of them sharing those costs with employees via high deductibles.

In following these three steps, employers can not only be better prepared for when their employees eventually retire, they can also experience substantial savings. Prudential Financial has found that the annual health costs of a 65-year-old are twice as high as the costs for an employee between the ages of 45 to 54-years-old, which explains why Willis' survey found that 49% of businesses are worried that delayed retirement will significantly increase workforce costs over the next five years. Helping employees who choose that option to voluntarily shift to Medicare lessens the impact and allows employer costs to move in the opposite direction.

Delayed retirement does complicate employers' health plans, but it doesn't have to compromise their bottom line. They can easily evaluate company demographics, educate employees, and provide them with multiple benefits options — especially when HR seeks the support of a Medicare expert who can help older workers find the most affordable plan that suits their needs. By lowering insurance costs and improving care, Medicare benefits employers and employees.

Tricia Blazier is director of health care insurance services at Allsup.

Instant Insights /

3 steps to help employers prepare for employees' delayed retirement

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