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October 31, 2018 at 05:05 PM
Large employers who want to save on their budgets should expend more effort on helping their employees better prepare for retirement.
That’s according to new research from Financial Finesse’s Financial Wellness Think Tank, which finds that for a 50,000-employee company, an employer could save as much as $97 million annually.
Quantifying such savings—achieved by improvements to employee financial wellness that cut the costs of delayed retirements—lays it out in black and white (and green) for employers.
Financial Finesse’s research cites a 2017 Prudential study, that showed that the cost to the company of a one-year delay in retirement exceeded $50,000 per employee. Retirement-eligible employees cost more in wages and benefits because of their longer tenure, had increased absenteeism and lower productivity.
The study also finds that the more financially well off employees are, the more the average retirement age falls. Repeated engagement with financial wellness programs that bring about an increase in financial health from 4.0 to 6.0 boosts employee retirement plan contribution rates by a factor of 38% from original rates.
That in turn causes a drop in the projected average workforce age at which employees can retire and replace 80% of their income—from 68.95 years to 66.96 years.
