Helping Employees Decide Whether Early Retirement Is the Right Choice
2020 has changed all the rules, and a growing number of workers 55+ are debating whether it's the right time to retire early. As the year starts to wind down, now is the time for HR departments to step up and help as these employees consider whether they have enough retirement savings and how they will cover healthcare expenses. To that end, the following are some things your company can do to assist employees in considering early retirement.
Early Retirement Packages
A solid package that helps employees boost retirement savings and land on their feet is the first thing employees will want to see. The law doesn't mandate how much severance pay you have to offer; however, the norm is one or two weeks of severance for each year working at the company. You can adjust this based on your financial situation and any special duties or titles the individual may hold, such as manager, executive, etc.
Alternatively, rather than offering severance, you can consider salary continuation. Essentially, your company will pay the individual's salary until they reach retirement age.
Many companies that offer pension plans also add years of service. This is a considerable benefit that can help cushion the blow on their retirement savings and long-term financial needs.
Including insurance is something employees will greatly appreciate when you are putting together an early retirement package. There are many ways to do this. COBRA provisions allow you to provide a temporary continuation under the company plan for up to 18 months. Your company can choose to pay for these premiums for the entirety or a portion of this period as part of the package. Alternatively, you may be able to provide coverage until the individual reaches age 65 at which point they become Medicare eligible.
Finally, give your employees new wings as they fly away. Offering outplacement services and access to business coaches can help them find new careers or start their own businesses. Many employees in the 55-65 demographic aren't ready to hit the golf course and play shuffleboard. Many are eager to pursue new opportunities and learn new skills. The more assistance you offer in this regard, the more attractive your early retirement package will be for these individuals.
Presentation Is Key
Employees presented with an early retirement package may feel as if they are being pushed out of the door. The first thing you need to do is decide who will receive your early retirement offer. This process requires you to thoroughly examine your business's financial position, future needs, and desired direction. When presenting your packages, share this information with your employees.
When offering your package, make financial advisors readily available. Advisors can back up what their personal financial advisors are saying and help employees determine the true impact of early retirement on their retirement savings, healthcare expenses, etc.
Finally, be prepared for a raft of questions. Before offering your package, meet with your legal counsel, health insurance provider, pension manager, etc. Compile the most common questions into a clear and easy to read list of FAQ's. The more you anticipate your employee's needs and proactively answer their questions, the more comfortable they will be as they deliberate whether to stay on or accept the early retirement offer.
Contact Greenlink Payroll at (480) 385-2525 for more information about the things your company can do to help employees protect their retirement savings. Our team of HR professionals can help your company put together attractive early retirement packages that help your employees land on their feet.