The aging population is growing faster all over the world.^[1] The Canadian working-age population (ages 15–64) has never been as old as it was in 2021. A wave of retirements is on the horizon as more than 1 in 5 people ages 55–64 (21.8%) is nearing the end of their career.^[2] And yet, this milestone seems to be getting further and further away for employees close to retirement. A mere 48%^[3] feel that they’ll be able to afford the lifestyle they want, whether it’s travelling, enjoying time with their family or fully pursuing their passions. The uncertain economic climate is thwarting their plans, and a growing number are postponing their retirement,^[4] even considering continuing to work part-time. Predictably, they’re most concerned about inflation and their finances.^[5]

Saving is difficult when the cost of living continues to rise, but there are ways to make the best of it. The challenge lies in knowing how to anticipate and prepare for retirement while coping with a turbulent market. 

Mission impossible? Certainly not!

Employers have a proactive role to play in preparing for retirement. More often than not, employees don’t think about it until it’s too late, either because they don’t have enough time or because they’re poorly informed.

So how can employers help their staff to better understand and plan for retirement?

Firstly,

1. Provide a framework for retirement readiness, including:

• Solutions for generating retirement income

Before making a sound retirement financial plan, it’s important to set up a withdrawal strategy. This is when employees will have to use the money they’ve saved while continuing to grow their wealth for as long as possible.

Employers can better help their employees by offering payout products such as registered retirement income funds (RRIF), life income funds (LIF) and variable benefits (VB) through their employee benefits program. According to 65% of people ages 50–64, having access to these products through their group retirement savings plan has a positive impact on their overall wellness.^[6] This allows them to benefit from management fees that are generally lower than other options on the market, which is one of the major advantages of making withdrawals directly from the plan. It also gives them peace of mind, as they feel supported by their employer.

However, if an employer opts only for accumulation solutions, their employees can rely on plan providers. Most providers offer the possibility of generating income at retirement via decumulation products that they administer themselves. It’s therefore essential that employers familiarize their employees with the different options offered through their group retirement savings plan, to help them prepare as best they can for retirement.

• Flexibility to ensure a smooth transition

For workers who aren’t quite ready to retire, employers should consider flexible working arrangements. For example, working part-time or the possibility of working from home, which 39% of pre-retirees appreciate.^[7] This ensures experienced staff is available to train the next generation, and also contributes to a smoother transition to retirement. It should be noted that many employees nearing retirement (60%) would like to continue working to some extent. And those retirees who are still working admit to doing so simply to keep busy (46%) or to give themselves a sense of purpose (38%).^[8]

• Financial planning services

Did you know that the majority (77%) of people close to retirement don’t have a written financial plan? However, those who do feel much better prepared financially (84% vs. 43%), emotionally (83% vs. 60%), socially (82% vs. 62%) and physically (86% vs. 66%).^[7] Your group retirement savings partner offers financial planning services so employees can meet with retirement savings experts to get a clear picture of all possible scenarios and take action.

Having access to a financial planner can also help reduce financial stress, and this can be extremely helpful, as we now know what a negative impact this kind of stress can have on both individuals and organizations.^[9]

Next,

2. Inform and raise awareness as early as possible

As an employer, it’s important to educate employees nearing retirement about the issues they should be thinking about as early as possible, and in ways that go well beyond the financial aspect. This could involve setting up discussion groups within the company, communication campaigns in conjunction with the group retirement savings partner, or even workshops. The idea is to encourage employees to imagine early on what kind of retirement they want. Alone, as a couple, as a family? In Canada, in the South or elsewhere? What would their daily lives look like? Their activities? What type of home would they like to live in? These considerations will also help them save based on what they want, and not the other way around.

Last but not least,

3. The employer’s social role

A happy retirement must be looked at from all angles. Social wellness is one aspect of our overall wellness.10 So it’s important to encourage employees to keep the social aspect in mind by helping them adapt to this change, during which they’ll lose their social bearings. Employers are well advised to implement initiatives to help ease this transition, like setting up groups or social clubs for retirees. The whole social aspect needs to be considered. This can include the person’s role within the company, relationships with coworkers and clients, daily water cooler chat habits and how they interact with others. It’s absolutely imperative to prepare for this change. 

Retiring means having to reinvent yourself in a world that’s constantly changing—some people look forward to it, others dread it. One thing is certain: employers have a role to play in helping employees prepare for this transition. This is particularly true in these difficult economic times.

^{[1] World population prospects 2022}

^{[2] Statistics Canada, Census of Population, 2021}

^{[3] [7] [8] Fidelity retirement report 2022}

^{[4] Abacus Data survey of 2,000 Canadians commissioned by the Healthcare of Ontario Pension Plan (HOOPP)}

^{[5] [6] [10] Desjardins Insurance, Quantitative Study of Overall Wellness by Ad Hoc Research for Desjardins, December 2022. Survey of 2,000 respondents ages 18 and up, living in Canada, including both members and non-members of Desjardins.}

^{[9] Financial stress and its impacts – Canada.ca}