No delayed retirement, please! 3 ways employers can help workers retire at 65

Americans are living longer than they ever have before. For a 65-year-old couple, there’s a 45% chance that at least one partner will live to see 95, according to Insured Retirement Institute. And that’s great news: Longer lives can mean more time spent with loved ones or pursuing passions.

Surprisingly though, for many, living longer doesn’t necessarily equate to longer careers. According to Corebridge Financial research, while 54% of respondents say their goal is to live to 100, a plurality (40%) still plan to retire between the ages of 65-69, according to a 2023 Corebridge Financial Survey on Longevity. That could potentially mean spending 30-plus years in retirement; but are workers prepared to fund those extended golden years?

Americans seem unsure about that prospect, with just 24% of respondents in the same survey saying their current retirement investments could provide them with retirement income that lasts more than 30 years, or as long as they need.

It will take combined effort and deliberate action to make sure society is prepared to not just live longer lives, but also enjoy them. Employers, collaborating with their retirement plan provider, have a unique opportunity to take an active role in helping employees prepare for the future so they can retire on time, as planned—without needing to “unretire,” or explore a Second Act.

Here are three actions that employers can take to help employees lay the foundation for a long and fulfilling retirement.

#1: Prepare for and take advantage of SECURE 2.0 enhancements

Legislation passed in recent years in the form of the SECURE Acts can help plan sponsors further support employees’ ability to save for a long retirement.

For example, Section 110 of the SECURE 2.0 Act allows employers to treat an employee’s qualified student loan payment as a retirement plan contribution and provide a corresponding matching contribution to the employee’s retirement plan account. Section 115 enables individuals to take up to $1,000 per year in penalty-free withdrawals from their retirement savings for emergency expenses. Both of these are optional provisions that can help individuals balance near-term financial priorities with long-term retirement savings goals, which can be like walking a tightrope for many.

For those later in their career, catch-up contributions can be a helpful lever in getting an employee’s retirement savings back on track, or even ahead.

Beginning January 1, 2025, catch-up limits for participants ages 60-63 will increase to the greater of $10,000 or 50% more than the regular limit for 2025. While that change can help employees supercharge their savings or compensate for contribution opportunities lost earlier, additional updates to catch-up contributions in 2026 will require thoughtful planning and preparation by employers. In 2026, Section 603 of the SECURE 2.0 Act will require that all catch-up contributions for higher-income participants be made as after-tax Roth contributions. This potentially brings a number of administrative and system considerations that may need to be addressed by employers, including updating payroll systems and feeds, as well as identifying impacted employees based on prior year FICA wages. Additionally, extensive employee education and communication will be needed.

With updates related to the portability of lifetime income options, fiduciary safe harbors and lifetime income disclosures, the SECURE Acts are also creating new opportunities for plan sponsors and participants to realize the benefits of lifetime income solutions. Faced with the prospect of spending 20-30 years in retirement or longer, more and more individuals are recognizing the importance of having both an accumulation and decumulation retirement strategy. Corebridge research found that just 36% of respondents were extremely or very confident in their ability to manage their retirement money to provide income for as long as they live. Further, 92% of survey respondents say that securing lifetime income is a priority.

For these and the many other enhancements of the SECURE Acts, plan sponsors can lean into their provider to better understand the required and optional provisions, make informed decisions and thoughtfully educate employees to help them make the most of implemented provisions.

#2: Provide access to financial professionals

If employees are going to live to 100, they’ve got a lot to plan for, but often don’t know where to start or how to proceed beyond a certain point. The Corebridge study found that just 37% are extremely or very confident in their ability to plan for a successful financial future.

As part of the financial wellness support offered to employees, plan sponsors may want to consider working with providers who include personalized, one-on-one access to financial professionals. Americans who work with financial professionals are almost twice as likely to feel confident in their retirement savings than those who don’t, with 40% of survey respondents who receive professional advice saying their retirement readiness has improved over the past three years compared to just 22% of those who do not, according to the Corebridge Financial Survey on Longevity.

Financial professionals can help employees assess their current financial situation and long-term outlook, identify potential financial challenges and opportunities on the road leading to and through retirement, and develop financial strategies that help individuals live the retirement they envision, regardless of how long it lasts.

#3: Leverage retirement plan data to better educate and drive personalized employee journeys and action

Employers can also work with their provider to take advantage of plan data reporting and metrics to better understand and optimize plan health, gain clear insight into participant trends, drive plan utilization and engage employees based on their specific needs, including tailored and targeted education and communications.

Taking a data-driven approach to guide engagement efforts and target communication to employees can help ensure the right message gets to the right person, at the right time, to encourage the right action. For example, someone just starting can receive tailored and targeted messages about enrollment and contribution levels, whereas those closer to retirement may benefit from information about catch-up contributions or Social Security.  In turn, it’s important for employers to increase awareness and utilization of the resources and planning tools available through their workplace retirement plan, whether that’s webinars and workshops, access to financial professionals or online tools and calculators.

Ultimately, setting up employees to successfully plan for a long retirement is not only in the best interest of a society that is preparing for a new age of longevity, but also in the best interest of employers.

Related: Retirement delay? 4 out of 10 workers hitting a snag due to inflation

Financially healthy and secure individuals are more productive in their jobs: A 2023 PricewaterhouseCoopers study found that financially stressed employees are nearly five times as likely to admit personal finance issues have been a distraction at work. The same study indicates 73% of financially stressed employees would be attracted to another employer that cares more about their financial well-being compared to just 54% of non-financially stressed employees, according to PwC’s 2023 Employee Financial Wellness Survey. By investing in the long-term future of their workers, employers can potentially help employees perform better and earn their long-term loyalty, while setting them up to enjoy the enrichment of a longer retirement.

Terri Fiedler is the President of Retirement Services at Corebridge Financial, one of the largest providers of retirement solutions and insurance products in the United States.