Posts Tagged ‘retirement planning’

Broaching the Subject of Retirement with Employees

Thursday, May 12th, 2016

Baby boomers retiringWith more millennials entering the workforce and baby boomers preparing to move out of workforce, the question often comes up “Can we ask Tracy when s/he plans to retire?”    Just to be clear, although social security has a retirement age to qualify for benefits, there is no mandatory retirement age for most employees.  (Some exceptions exist for airline pilots, federal law enforcement officers, firefighters, air traffic controllers, and bona fide executives or high policy makers.)

So can you ask employees about retirement and if so how?  The short answer to this question is a qualified yes, as long as you handle it appropriately.  When done wrong, particularly if you badger the employee, mention “generational words,” or when a supervisor keeps asking, pushing, and treating someone badly for giving a “wrong answer.”  The time and place also matter.  If we never ask the question and all of a sudden start asking all of our employees over 55 when they plan to retire could at the very least cause a morale problem.

Nonetheless, there is nothing inherently wrong with asking any employee about their future plans, and companies need to know that information for many reasons.  The fear of being accused of (or sued because of) age discrimination sometimes makes employers hesitant to ask about retirement.  So in what ways can you broach the subject of an employee’s retirement plans?

  • When an employee has mentioned they are thinking about retirement, you can ask them if they have a date in mind and that you would appreciate if they would give you ample notice to find someone to fill the job and perhaps have them train the person.  If they are not receptive or do not have a date in mind, be sensitive and follow-up in an appropriate way at a later time.
  • For workplace planning purposes, especially in key positions or those that have a longer learning curve/training period in job specific methods.
  • Through a policy that says if you are planning to retire, please give us as much notice as possible so that we can discuss options for training someone to fill the position as well as options for phased retirement (if that is something the Company would consider).
  • Through voluntary early retirement incentive plans that offer a severance to employees who meet a minimum age and number of years of service with a company and elect to take the package.  These should be carefully developed keeping in mind the needs of the business and compliance concerns.  They are generally used when a reduction in force is required and in lieu of an involuntary RIF.  An employment law attorney should be consulted in drawing up such agreements.
  • But what about when you have a great employee you hate to lose but you sense retirement may be in the cards?  In this case, ideally the person having this conversation with the employee has a good relationship with them and ideally that would be the manager.  The idea of retiring is stressful for many employees so we want to be delicate.  The annual review is a good time to venture into this territory particularly when discussing plans for the next year.  You can simply ask, “So Ted, what are your plans for the next year” and see where the conversation takes you.  You are asking merely for planning purposes.  Again, don’t push or badger them for an answer.  You just want to open the door.  It’s ok if they don’t want to walk through that door now.

Options for a smooth transition for the company and employees who plan to retire may include offering phased retirement, where employees gradually reduce their hours as they continue to work part-time until full retirement or while they train and transfer knowledge. Also, upon receipt of the unexpected notice that an employee plans to retire, the company may offer incentives to retain the employee through a training period for a new employee filling their position (be sensitive to the term “replacement” as no exiting employee wants to feel like they can be easily replaced).

Whatever the case, employers should always be prepared for employees leaving, whether through retirement or leaving for another job.  Workforce planning should be an on-going strategy, documenting processes, cross-training where applicable, and maintaining succession plans.  Absent a contract, employment is at-will (either the employee or the company can end employment at any time).  So why should notice of retirement be any different than an employee’s choice to take another job and give notice? The point is, don’t get caught off-guard.  Be prepared whatever the reason.  Let us know if we can help with your workforce management and planning.

Retirement Planning for the Multi-Generational Workforce

Tuesday, October 16th, 2012

The following is a guest post from John McPhail. John serves Bank of Oak Ridge as a Business Relationship Specialist. He has more than 15 years of experience in the financial industry, including direct sales, marketing, and banking. “I guess I kind of learned HR the hard way when I ran my own business, but the experiences were invaluable. If it weren’t for a good HR mentor, I would have ended up a D.O.L. statistic”, said John.

As I sit here reflecting on the 2012 CAI Compensation and Benefit Conference, I can’t help but smile a knowing smile. This smile actually brings to mind a story.

One day Alice came to a fork in the road and saw a Cheshire cat in a tree.

“Which road do I take?” she asked.

“Where do you want to go?” was his response.

“I don’t know,”Alice answered.

“Then,” said the cat, “It doesn’t matter.”

It doesn’t matter…wow…what a tragedy. I submit that it does indeed matter. One might have all the skills and desire, but not be able to harness it or make a decision and act. Is this story about choice or direction? Maybe a little of both. More importantly, I feel, this story illustrates the power of purpose.

Purpose to me is the great “why” of the universe. The “why” of my “Retirement Planning for the Multi-Generational Workforce” presentation was simple. I wanted to engage a thought process that will enable everyone to visualize retirement as an eventuality, not just a possibility. Every employee needs to understand that with discipline, consistent contributions, and proper guidance, retirement can and will come to fruition.

With four generations working side by side, there is a need for specialized retirement planning specifically for your individual situation. Each generation has a unique way of seeing and interacting with the universe. Regardless of their approach, the four generations need different action items and respond differently to environmental changes.

Traditionalists were born between 1900 – 1945 and value saving their income coupled with paying cash for goods and services.

  • They represent 5% of the workforce.
  • Traditionalists perceive retirement as a result of 30 years working to retire and then living off their pension/savings. Their immediate financial needs are to keep what they have accumulated through proper distribution strategies. This has never been more evident than in 2008 when personal investments plunged due to the recession.
  • They need income producing investments with a fixed rate of return. Traditionalists will also benefit from having an actual retirement road map that is orchestrated and tracked by a proven financial professional. Healthcare is an important aspect of retirement to consider. Traditionalists need to understand Social Security planning and Medicare implementation.

Baby Boomers were born between 1946 – 1964 and adhered to the buy now pay later mentality.

  • They represent 45% of the workforce. Their biggest obstacle in retirement is the mentality of, “If I retire, who am I?”
  • Most of Boomers identity is from their career, and retirement can seem counter-intuitive to their sense of well-being and worth. With their “buy now pay later” mentality, they need help with debt resolution first and foremost. If you are a Boomer with a mortgage, you might have to continue to work or work part-time in retirement.
  • Baby Boomers need asset protection strategies as well as distribution strategies that will enable them to enjoy an inflation-adjusted income for life. Equity exposure should be at a minimum and they need income generating investments that don’t experience such volatility. Baby Boomers need a proven financial partner to team up and implement and track their financial plan. Social Security and especially Medicare education is a must for Baby Boomers.

Generation X’s were born between 1965 – 1980 and are the first generation not to do as well as their parents.

  • They represent 40% of the workforce and are conservative and cautious with their money. They also save more than the previous two generations.
  • They believe that since they have saved their money, they might retire early to try different experiences and may even change careers in the end. Generation X’s need a portable retirement plan with target date funds, auto-enroll, and automatic increases available. They need strategies in place to mitigate market volatility and education from a trusted financial partner.
  • Equities can be utilized, but they need to be monitored and coupled with some defensive strategies as well. Generation X’s have a better saving rate and could deal with some fixed investment choices to alleviate worry. A proven financial professional is key in keeping Gen X’s on track and motivated. Not surprisingly, Generation X’s need debt management and they need to avoid seeking the bigger, better deal.

Generation Y’s were born between 1981 – 1999 and value individuality.

  • They represent 10% of the workforce and earn to spend.
  • Their financial needs revolve around a need for consistent contributions to their employer-sponsored retirement plan. Active guidance is key to a Gen Y and they require routine feedback. Their financial needs are much like Generation X’s with a portable retirement plan. They would benefit from target date funds, auto-enroll, automatic increases, and a stable rate of return.
  • They are a bit more skeptical of Wall Street and seek a balance between steady growth and explosive returns in their retirement plan. They require flexibility in their financial plan and need active guidance and a regular report on the status of their account. They are very open to education as a tool for achieving their retirement goals.

My knowing smile in the opening of this article emanates from a belief that everyone, regardless of age, can be fiscally responsible. Don’t blame government or the lack of government. Don’t blame your income. Your attitude towards saving is a choice. You choose whether to be wasteful or frugal. Only you can control your spending and saving. If you can’t save for retirement, you don’t have an earning problem, you have a spending problem.

Find a financial partner, live within your means, have an attitude of gratitude and you will be on the road to financial freedom.

 John McPhail was a speaker at CAI’s 2012 Compensation and Benefits Conference. You can contact him at jmcphail@bankofoakridge.com.