The majority of Americans now expect to retire after the age of 65, according to a Gallup poll, which is representative of a large shift in the way people view retirement. In the mid ’90s, nearly 50 percent of the U.S. population anticipated retiring before age 65, but economic uncertainty and other factors have altered expectations.
Employers are partially responsible for the change, and have enacted changes that make it easier than ever for people to work late in life. That has the potential to keep people in the workforce even longer. As a result, insurance producers need to re-evaluate the advice they give clients. Regular policy reviews are more important than ever now, because consumers may need to adjust their retirement plans substantially as they approach retirement age.
The retirement landscape is shifting rapidly, but financial professionals can help their clients remain prepared despite the changes.
What prompted the shift
Several factors have contributed toward people delaying retirement, including increased average life expectancy and the financial concerns brought on by the great recession. But there’s also another element at work: employers don’t want skilled employees to leave. LIMRA examined the trend toward delayed retirement and discovered that employers are hesitant to let their most tenured and knowledgeable workers go.
As a result, many businesses have enacted policies that make life easier for aging workers. More than 90 percent of the businesses LIMRA spoke with have changed workplace policies so that older workers can either continue working or slowly ease into retirement rather than suddenly drop out of the workforce.
Policy changes include more flexibility surrounding working hours and retraining programs that allow older workers to learn about new systems and updated workflows. This allows older workers to apply their experience and remain relevant to the company’s goals.
These new policies and workers’ desire to remain employed past the age of 65 will contribute to a demographic sea change. In 2012, 27 percent of people between the ages 65 and 74 participated in the labor force. That number is expected to rise to 32 percent by 2022.
Financial professionals who are working with aging clients need to discuss retirement plans regularly, as many workers may be reconsidering their strategy in light of new employer policies. Clients will expect insurance providers to be aware of these trends, and will look for advice on how to maximize retirement savings while staying in the workforce longer.