How to Help Employees Ease into Retirement

​Selwyn Gerber, chairman and chief strategist of RVW Wealth in Los Angeles, may be past retirement age after more than 40 years on the job, but he's still working—and he doesn't plan to stop anytime soon.

"When you love what you do, it's not work," he said. "Retirement is a foreign concept to people who are fully alive and love what they do."

Gerber, who said working is easier now that he's working from home, isn't alone in his decision to keep clocking in at this stage in life. According to the Pew Research Center, approximately 9 million Americans ages 65 and older were still working prior to the pandemic, up from 4 million in that age range 20 years ago. Another study from United Income showed that 20 percent of adults ages 65 and older were still working in 2019, compared to just 10 percent in 1985.

One reason, financial advisors say, is that retirement can feel more daunting and not as practical for older workers compared to years past. Many are afraid of the unstable economy and are unable to rely on a steady pension or Social Security to cover their bills. They're also living longer and are physically able to work, and they're heeding advice to continue to add to their 401(k)s while they still can. Plus, some say they don't want to give up the mental and social benefits of staying busy and collaborating with colleagues each day.

"The majority of U.S. employees in high- and mid-level jobs are not prepared to retire, mentally or financially," said Lauren Blair, an HR consultant in Chicago. "It can be challenging for older workers to see themselves retiring, since working tends to be tied into people's identities, in addition to providing a daily purpose and monetary resources to maintain their lifestyles."

While employers should never push employees into retirement before they're ready, HR can serve as a helpful resource if workers want to learn more about making the transition. Here are some ways in which HR departments can support older workers who are ready to consider retirement.

Keep an Open Mind

Everyone is going to approach retirement differently, which is why employees need the freedom to choose their own retirement timetable, said Jeff Moore, vice president of delivery and HR at DevelopIntelligence in Littleton, Colo.

"Some will choose to work full time until they are no longer able to do so physically, while others identify the age when they plan to retire and want to start tapering their hours a year or two beforehand," he said. "Still others want to switch to part time to allow space for volunteering and other activities but want to keep some income stream. Because there are many possibilities for how retirement 'looks,' HR departments benefit from keeping an open mind."

Seek Help with Succession Planning

When employees retire, they want to know they've made their mark in the workplace. To help achieve that goal, HR can ask retiring employees to assist with succession planning and teaching their replacements the necessary skills for the job.

"I advocate a proper succession planning process that is regular and mandatory, as it helps in streamlining the turnover through a more reliable transfer of skills," said Michael Hammelburger, head of HR at The Bottom Line Group in Baltimore.

Moore agreed that retirement policies and knowledge management strategy should go hand in hand. "If an employee phases into retirement, there's an opportunity to orchestrate a comprehensive transfer of institutional knowledge to others," he said. "Workers who have been with your organization for a long time know why certain decisions were made, the rationale behind various business processes and even very specific technical knowledge of how things work. You don't want to lose this knowledge and these insights."

Provide Crucial Retirement Information

When Karen Condor worked in HR for a community savings bank in Seattle, she handled retirement conversations fairly frequently. The bank would offer guidance to retiring employees about finances and health care to ensure they were well-prepared.

"For financial planning, employees had the option of receiving guidance from a certified financial planner who was in-house, although his products and services were not affiliated with the bank," Condor said. "We also offered comprehensive retirement planning consultations through our human resources department with our health care provider, as well as with any member of the bank's upper management, depending on their expertise."

Allow Contributions on Their Own Terms

Older employees at Condor's community bank were able to ease into retirement, if they preferred, by moving to part-time hours, consulting and working seasonally. If they were in upper management, they sometimes had the option of joining the board of directors.

Moore said that with the right retirement policies in place, retiring employees can still be part of the company while HR ensures it is fulfilling its staffing needs.

"In some fields, such as software development and IT, employers are having a hard time finding people to fill open roles," he said. "It can be advantageous to create flexible work arrangements that allow older employees to continue to contribute on terms that work for them and you."

Encourage 401(k) Deposits

To ensure that employees are financially ready to retire, Hammelburger advised that HR should "encourage them to continue to contribute to their retirement fund even if there's no match available. Until such time, the tax advantages of their 401(k) can be higher compared to stocks or mutual funds, for example, in a brokerage account. If they stop contributing to your 401(k) plan, they'll regret the time value of money compounding that would have benefited them," he said.

At Moore's company, employees are encouraged to start saving for retirement as soon as they enter the workforce. Offering a company match can be a great incentive to get them to join your 401(k) plan.

"The right communication will help employees realize they are leaving money on the table if they don't enroll in the 401(k) program," Moore said. "Some organizations offer financial planning resources to employees—retirement calculators, Q&A sessions, brown bag lunches and so forth. Employees benefit from hearing regular messages about saving and knowing where to go with retirement planning questions."

Investigate Consultant Opportunities

Retirement could be easier on employees if they know there's an exciting new chapter ahead. Paul A. Dillon, an adjunct instructor at Sanford School of Public Policy at Duke University in Durham, N.C., said HR could encourage retiring employees to consider becoming entrepreneurs. 

"They could easily create a 'bridge job' to a possible opportunity for full-time employment," he said. "For those who are over 50 and have an expertise, becoming a consultant is a tried-and-true bridge career. Becoming a consultant on your own, a sole proprietorship, in your field of endeavor, offers a chance to set your own hours and work at your own pace" at the end of a long career, Dillon said.

Provide Financial Support

Many older workers have a hard time retiring because they are worried about their financial future. If a company can help provide financial stability, then workers may feel much more comfortable retiring and look forward to this stage of their life, Blair said.

"The most successful tool to help employees ease into retirement is a generous retirement package," she said. "The thought of ending one's primary, if not exclusive, stream of income is daunting for many prospective retirees, so providing a sense of financial security helps many older workers exit a company without fear or regret."

 Kylie Ora Lobell is a freelance writer based in Los Angeles.