28.08.2024

10 tips for employers to prepare their workforce for a better retirement

By Steve Butler, CEO, Pension Potential

Those working in facilities management dreaming of early retirement may find themselves unsettled by a recent study by Legal and General which showed that one in 10[i] people over 50 in the UK have returned to work after retiring, often due to inadequate retirement savings.

With research indicating record numbers of facility managers are opting for retirement [ii] many may have to re-think their plans.

A study by Scottish Widows[iii] found the amount of people not on track for even a minimum retirement lifestyle has worsened, and while most people would like retire age 62, 54% think they will have to work longer than they want, on average by seven years, and 27% don’t feel they will ever be able to retire.

The situation is particularly concerning for the "lost generation"— employees in their 40s and 50s that were too young to benefit from the golden age of defined benefit pensions but have not yet built sufficient savings under auto-enrolment. This generation is at a critical stage, and without proper guidance, they may face financial hardship in retirement.

As the population ages, state pension declines, and retirement savings fall short, the future may look uncertain for many. To address these challenges, employers are increasingly stepping in to bridge the gap and support their employees in securing a more financially secure retirement.

Here are 10 ways employers could help:

Set realistic retirement goals

Encourage employees to visualise their retirement lifestyle and assess their current financial situation. Provide tools or workshops that help them set specific, measurable goals, and emphasise the importance of regularly reviewing and adjusting their plans.

Debunk retirement planning myths

Many employees are misinformed about what it takes to retire comfortably. Host financial seminars to dispel common myths, such as the belief that state pensions will cover all expenses or that retirement planning can be postponed. Early, informed planning is key to a secure retirement.

Introduce budgeting basics

Organise workshops that teach employees how to manage their finances effectively. The 50/30/20 rule (allocating 50% of income to needs, 30% to wants, and 20% to savings and debt repayment) can provide a clear framework for employees to follow. Highlight the importance of building an emergency fund as a safety net.

Encourage downsizing for simplicity and savings

Promote the benefits of downsizing, both in terms of physical belongings and financial commitments. Simplifying one's lifestyle can lead to significant savings, allowing employees to stretch their retirement funds further and reduce stress.

Build a retirement bucket List

Suggest employees create a retirement bucket list filled with experiences and goals they've always wanted to pursue. Whether it's travelling, learning new skills, or giving back to the community, having a list of aspirations can make retirement a time of excitement and personal growth. It can also inspire more pension saving to achieve these goals.

Plan for longevity risk

Educate employees about the importance of planning for a longer retirement. Encourage them to diversify their investments, consider annuities for a regular income, and plan for potential healthcare costs. Regularly reviewing and updating retirement plans can help mitigate the risk of outliving their savings.

Promote flexible working

For those nearing retirement, flexible working arrangements can provide a balance between earning income and enjoying leisure time. This approach can help employees gradually transition into retirement, reducing the financial shock.

Offer mid-career reviews

Introduce mid-career reviews for employees in their forties to help them analyse where they would like their career to go and make plans. It provides an opportunity to focus on retirement and identify the right course of action to meet their needs and aspirations. Mid-career gives people time to adjust pension saving if necessary.

Implement phased retirement options

Allowing employees to reduce their hours gradually rather than stopping work abruptly can ease the financial burden and provide a smoother transition into retirement.

Invest in technology

Digital retirement planning solutions can help employees visualise their retirement savings and make necessary adjustments in real-time. These tools can provide personalised advice and projections based on an individual's specific circumstances.

Employers need to remind employees that planning for a longer retirement is not just about saving money; it's about creating a sustainable and secure financial future. By taking proactive steps today, employees can enjoy peace of mind and a fulfilling retirement tomorrow.

Pension Potential is a digital solution to help businesses prepare their employees for retirement, taking the complexity out of retirement planning and providing personalised financial guidance and advice to individuals. For more information visit: www.pensionpotential.co.uk

[i] https://group.legalandgeneral.com/media/x0ve43oi/press-release-nearly-3-million-ex-retirees-return-to-work.pdf

[ii] https://www.jllt.com/blog/facilities-management-trends-to-watch-in-2024/

[iii] https://www.scottishwidows.co.uk/about-us/media-centre/press-releases/delayed-retirement.html

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