Optimize your experience by leveraging a modern browser
Our new website has recently launched with features that may not be fully supported by your current browser. Please use one of the browsers below or contact your IT department regarding approved options.
Jul 02, 2019workplace based plans,benefits planning,retirement benefitsSA-Articles
Working longer can benefit both the employer and employee – if done for the right reasons.
57% of finance execs believe retirements are delayed due to inadequate retirement savings.
A one-year increase in average retirement age can increase workforce costs about 1-1.5% annually.
Having employees able to retire “on time” is a win/win scenario for both employees and employers. But these days many employees are expected to delay their retirements beyond their desired retirement ages because they don’t have adequate savings to sustain them throughout their retirement. To quantify the impact of delayed retirements on employers’ costs, Prudential conducted research1 using workforce composition and cost assumptions based on national averages for private sector workers.
According to research, a one-year increase in average retirement age results in:
Incremental annual workforce costs of about 1.0%–1.5% for an entire workforce2. For an employer with 3,000 employees and workforce costs of $200 million, a one-year delay in retirement age may cost $2-3 million.
An incremental cost of over $50,000 for an individual whose retirement is delayed3. This represents the cost differential between the retiring employee and a newly hired employee.
How much can delayed retirement cost employers?
Compared to other types of workforce costs, on an aggregate national basis, a delay in retirement may cost employers about as much as:*
A Delay in Retirement of…
May Cost Employers About as Much as….
Paid sick and personal leave combined, or
Two times life and disability insurance combined
DC retirement plans, or
DB retirement plans, or
Paid holiday leave
Paid vacation leave, or
More than one-third of health insurance
Here are some best practices for employers to help their employees be financially secure so they may retire on time:
Consider adopting retirement programs with features that help employees retire on time.
Provide education to help employees proactively make informed financial decisions.
Adopt a holistic approach to improving employees’ financial wellness.
Consider using data analytics to customize the cost of delayed retirement analysis for your organization.
1With supporting research and analysis from the University of Connecticut’s Goldenson Center for Actuarial Research.
2Represents the incremental annual cost of a one-year delay in retirement averaged over a five-year period.
3Represents the difference between the workforce costs of a retiree vs. an entry-level employee. It is assumed that when an employee retires, an advancement opportunity is created such that all employees progress through the workforce (i.e., “move up a notch”), and an entry-level employee is hired.
*Based on national aggregate workforce costs, which are spread out over all private sector employees, even though not all employees have access to every benefit.
The Prudential Insurance Company of America, Newark, NJ
Assurance IQ, LLC a wholly-owned subsidiary of Prudential Financial, Inc. ("Prudential") matches buyers with products such as life and health insurance and auto insurance, enabling them to make purchases online or through an agent. Neither Prudential Financial, Inc. nor Assurance IQ issues, underwrites, or administers health plans or health insurance policies.
Life Insurance and Annuities are issued by The Prudential Insurance Company of America, Pruco Life Insurance Company (in New York, by Pruco Life Insurance Company of New Jersey), located in Newark, NJ (main office). Variable annuities are distributed by Prudential Annuities Distributors, Inc. (PAD), Shelton, CT. All are Prudential Financial Inc. (PFI) companies, and each is solely responsible for its own financial condition and contractual obligations. Prudential Retirement Strategies is a business of Prudential Financial, Inc.
Prudential Annuities Life Assurance Corporation (to be renamed Fortitude Life Insurance & Annuity Company) (“PALAC”), Shelton, CT (main office) was acquired on April 1, 2022 by Fortitude Group Holdings, LLC, the parent company of Bermuda’s largest multi-line reinsurer (“Fortitude Re”). As a result of the acquisition by Fortitude Re, PALAC is not affiliated with PFI or any of its subsidiaries. A Prudential entity will continue to service and administer all PALAC contracts. PALAC variable annuities are distributed by PAD, Shelton, CT. PAD is wholly owned by PFI; PALAC is wholly owned by Fortitude Re; each is solely responsible for its own financial condition and contractual obligations.
PALAC is not licensed to do business in New York, effective December 31, 2015. This will have no impact on existing annuity contracts sold through PALAC.
Group Insurance coverages are issued by The Prudential Insurance Company of America, a Prudential Financial company, Newark, NJ
LINK by Prudential is an umbrella marketing name for various subsidiaries of The Prudential Insurance Company of America. Investment advisory products and services of LINK by Prudential are made available through Pruco Securities, LLC, (sometimes referred to as “Pruco”) doing business as Prudential Financial Planning Services, pursuant to separate agreement. Prudential LINK and LINK by Prudential occasionally may be referred to as LINK.
Where LINK by Prudential is made available in connection with certain Financial Wellness products, access is made available through Prudential Workplace Solutions Group Services (“PWSGS”). PWSGS provides access to a number of Financial Wellness products, services, seminars and tools offered by PWSGS, its affiliates or third parties. PWSGS is a subsidiary of Prudential PWSGS is not a licensed insurance company, does not provide insurance products or services and does not provide financial, investment or other advice. Individuals should consult appropriate professionals when making financial, investment and tax decisions.
Prudential LINK financial representatives currently offer a more limited range of insurance and annuity products (“insurance products”) compared to the range of insurance products offered through other Prudential distribution channels.
For additional important information about the products, services and companies that make them available, please click here.* Opens in new window
Virtual Advisors may provide investment advisory services that are limited in scope and do not constitute comprehensive financial planning.
This web page is being provided for informational or educational purposes only and does not take into account the investment objectives or financial situation of any client or prospective clients. The information is not intended as investment advice and is not a recommendation about managing or investing your retirement savings. Clients seeking information regarding their particular investment needs should contact a financial professional. Prudential Financial, its affiliates, and their financial professionals do not render tax or legal advice. Please consult with your tax and legal advisors regarding your personal circumstances. In providing this information, neither Prudential nor any of its affiliates or financial professionals is acting as your ERISA fiduciary.
This website is for U.S. persons Opens in new window only and may not be approved in all states. Information contained on this site does not and is not intended to constitute an advertisement, solicitation, or offer for sale in any jurisdiction outside the United States, where such use would be prohibited or otherwise regulated.
Investing in securities involves risk, and there is always the potential of losing money. Asset allocation and rebalancing do not ensure a profit or guarantee against loss.
You should consider the features of the contract and/or the underlying portfolios’ investment objectives, policies, management, risks, charges and expenses carefully before investing. This and other important information are contained in the prospectus. Please read the prospectus carefully before investing or sending money.
Not Insured by FDIC or any Federal Government Agency | May Lose Value | Not a Deposit of or Guaranteed by the Bank or any Bank Affiliate.
All references to income certainty and guarantees, including optional benefits, are backed by the claims-paying ability of the issuing company and do not apply to the underlying investment options.
Projections generated regarding likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results and are not guarantees of future results. Results derived from various “what if” scenarios for your financial life may not reflect the actual costs or amounts ultimately needed to fund specific life events. Prudential and its affiliates are not liable for use of the LINK by Prudential experience. Learn more about our Methodology Opens in a new window.
"Prudential Advisors" is a brand name of The Prudential Insurance Company of America and its subsidiaries.
Prudential Financial is not affiliated in any manner with Prudential plc, an international group incorporated in the United Kingdom or the Prudential Assurance Company, a subsidiary of M&G plc, a company incorporated in the United Kingdom.