Along with the cost difference between older, more experienced workers and their younger counterparts, employers gain other financial benefits with a retirement-ready workforce.

For instance, health care and disability claims go up as employees get older, not only affecting their productivity, but the cost of group health plans as well. There are tax incentives and employee loyalty to consider, too.

How organizations can improve retirement readiness among employees

Here’s how you can help ensure that employee retirement plans are set up to benefit both participants and employers.

1. Follow a risk-based approach.

Use a risk-based approach when you’re considering retirement plans for employees, based on these 3 aspects:

• Workforce management risk – If employees delay their retirement, employers could face issues with succession and workforce planning as well as employee health and engagement. Helping them with retirement planning ensures they can leave the workforce when they want and when employers need them to.

• Operational risk – To avoid compliance and accuracy issues, retirement plans for employees need to be administered efficiently. It’s essential to combine effective processes for plan governance and vendor management with proper strategies for employee education and communication.

• Financial risk – Take fund management into consideration while setting up employee retirement plans. You also need to consider the plan fees, investment risks, and possible severance costs that may be involved in case of delayed retirement, and ensure that workers are aware of these as well.

2. Align plans with the organization’s goals

Every plan design needs to be customized to meet the employer’s objectives and employee’s retirement readiness. Plan sponsors and brokers/HR managers need to agree that a certain plan is the right choice to help participants save for retirement. The entire organization needs to be aligned around the concept, and specific data helps.

Financial studies can help brokers or HR managers illustrate the impact of delayed employee retirement to employers. For instance, older employees can cost more than younger ones, so it helps to compare the cost differences with timely retirement.

3. Approach employee retirement differently

If employers want to prevent delayed retirement among their workforce, they need to become more actively involved in the governance of retirement plans offered to employees.

Most employers tend to focus more on risk management and compliance than benefits for participants. Changing this approach is key, e.g. by looking into new 401k plans that offer different benefits for those earning under $50,000 or over $150,000. This will help workers retire on time, or stay on as productive employees if they choose.

4. Communication is the key

Proper communication also makes a huge difference. Many employers continue to rely on outdated forms of communication, such as group meetings, newsletters and account statements, etc. That’s no longer enough.

Employees need to understand how a certain plan helps them, as well as how to manage retirement savings more effectively. Along with ensuring that HR managers are fully aware of the plan being offered, consider hiring a financial advisor or retirement planning expert that employees can approach with questions and concerns.

When you’re helping a company design retirement plans for employees, there’s no way to guarantee that each worker will see the same benefits. However, a structured approach to retirement plan design combined with proper communication with plan participants can help maximize the impact on workers’ retirement savings.