Retirement is a hard-earned privilege that many of us look forward to—a reward for decades of hard work. But for many companies, the sudden loss of a valued employee with many years of knowledge leaves them unprepared for meeting crucial business needs they might have taken for granted. Anticipating when key employees might be retiring can help your organization prepare for that inevitable day…even if it’s many years in the future.
Predicting Retirement is Difficult
Employers have two choices when it comes to retirement: they can be passive or proactive. The former involves waiting for employees to retire, while the latter means planning for retirements in advance…whether they’re six months or ten years away.
Unfortunately, it isn’t always possible to predict when an employee will retire. The traditional retirement age (65-67) is one benchmark, but keep in mind that workers aren’t bound to these rules and can actually retire anytime they want. This often occurs with little or no notice. When that happens, many employers find themselves struggling to deal with the sudden loss of crucial skills and talent many long-term employees possess.
A 2018 survey illustrates these pitfalls:
- Just 53 percent of employers who responded believed they had a solid understanding of when employees will retire.
- Only 25 percent of respondents had processes in place to manage the pace and timing of employee retirements.
Asking employees about their retirement plans is fraught with peril. This could be perceived as encouraging older workers to retire and open you up to discrimination charges. A better approach involves workforce planning. Study data from your workforce to learn about potential workforce trajectories should older employees retire at a specific age and what impact that will have on your business operations. Equally important is identifying departments where staff aren’t retiring when expected, which can limit promotional opportunities for younger employees.
Another step you can take to gauge possible employee retirement plans is to take a look at benefits data. Health benefits usage can give some indication as to a person’s retirement plans; those considering retirement in the near future might scale back to a less-expensive health plan in order to accumulate more discretionary income, for instance. And employees who roll over funds from their health savings accounts (HSAs) might be banking the money for future health expenses once they no longer have coverage. Again, you’ll need to proceed with caution, as there are potential legal implications—not to mention the possibility of making erroneous assumptions about a person’s plans.
To better prepare yourself, make it a priority to have older employees share their knowledge and skills with younger staff members and encourage an open dialogue about long-term career plans long before you suspect an employee might be nearing retirement.