Delayed Retirement Merits a Voluntary Response

The July wrangling between Democrats and Republicans over the debt ceiling, accompanied by predictions of a financial Armageddon, reminded me of the catchphrase of the long-ago Saturday Night Live character Roseanne Roseannadanna (played to perfection by the late Gilda Radner): “It’s always something. If it’s not one thing, it’s another.”

In this case, if it’s not the Great Recession altering the retirement plans of many workers, it’s a showdown over the debt ceiling to highlight the vulnerability of Social Security and Medicare — further drilling into people that the retirement they envision may no longer be within reach.

At the same time these negotiations over the debt limit and possible spending cuts were taking place, SunAmerica Financial Group released its “Retirement Re-Set Study” that reiterated the challenges facing many workers. According to the study, which was a follow-up to a 2001 study of retirement attitudes among those age 55 or older, the average pre-retiree now expects to delay retirement to age 69. (The expected retirement age in the 2001 study was 64.)

This insight is not new, of course. We all probably know someone firsthand who has had to put their retirement plans on hold because the economic challenges of the past few years have cut sharply into the value of their 401k (or their spouse’s 401k), or because they had to dip into their retirement savings because of job loss or reduced hours.

The new product lineup

The effect this changing mindset has on employers can’t be understated. Employees in their 60s who delay retirement have very different benefit needs than 20-something workers.

Fortunately, there are several products that can be packaged together to provide a strong safety net tailored for the unique needs of older workers.

Brokers who want to help address this need should consider working with carriers to develop packaged offerings for their clients targeted at the needs of older workers. For example, combining life, disability and a critical illness plans in one enrollment could help older workers address their financial exposure, since older workers are at greater risk of critical illness that can lead to a short- or long-term disability.

If the workforce is more diverse and also includes younger workers, the offering could also include another voluntary product such as accident insurance, which can cover workers (or their spouses or children) who may be at greater risk of injuries from sports or other activities.