Employees Unable to Retire Could Be a Financial Nightmare for HR

The good news is that we’re living longer, but the bad news is that many are unprepared for the financial burden they face with longevity. This is raising concerns in several areas.

Increased Life Expectancy

The US age pyramid chart depicts the increasing life expectancy since 1900. At that time, we had a healthy young population, with few adults living into their 80s (dark red). As time progressed, the number of adults living into their 80s and 90s has increased significantly.

Employees working longer than previously

Today, a 65-year-old has a 50% change of living beyond age 85, which has changed the way we view retirement.


65 year-old man

65 year-old woman

1 of a 65 year-old couple
87 years 90 years 94 years
93 years 96 years 98 years

Previously, workers hoped to retire at age 55, with a hard stop at age 65. But many in these age ranges outlive their retirement incomes. Retirement 2.0 has people working well beyond ages 55-65, with some working into their 80s.

This is creating a bottleneck of older employees that are not ready to retire.

Impact of working beyond retirement

Increased life expectancy is causing ominous consequences:

  • Draining Social Security
  • Increasing long-term care spending
  • Impacting the health and productivity of adult children who are taking care of their own children and aging parents, both financially and responsibly
  • Increasing employer healthcare and overall risk.

Are your employees ready to retire?

HR needs to balance the need to retain the knowledge of older workers with the costs associated with an older workforce. You need a holistic view of human resources and risk management, including:

  • Financial analytics
  • Medical and prescription drug costs
  • Workers’ compensation and disability spend
  • Safety analytics.

This holistic view of retirement readiness—employees who are financially prepared to retire—requires integrating data across all your benefits programs. By quantifying the financial liability of retaining older workers, you can measure these previously hidden costs, and get the hard evidence to address the growing concern of an aging workforce.

Brandon Conroy

Brandon Conroy

Brandon Conroy, ASA, FCA, MAAA, is a leader in developing and implementing new tools and strategies that reduce client risk. He’s developed and implemented an interactive healthcare cost projection model, underwriting templates, renewal presentations, IBNR tools, a health plan chooser tool, and financial wellness education models. Brandon left Innovu in February 2019 to pursue other interests.

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