Companies Helping Workers Plan Retirement

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Companies Helping Workers Plan Retirement

Kansas City Star

August 7, 2003

NEW YORK - More companies are looking at ways to help employees plan for retirement. Many of these planning programs consist of seminars, online modeling tools and counseling sessions that are specifically designed to help workers close to retirement figure out when they would like to retire, how much money they'll need to maintain their standard of living, and how much more they need to save to fill gaps between their savings and future needs.

Although companies often offer advice to help workers plan for the intricacies and social issues of retirement, firms are expressing more interest in helping workers decide how much they'll need in retirement.

Traditionally, companies have offered retirement planning as a way to encourage older workers to retire early, boost turnover and make room for younger people and new ideas. "Today, it's almost completely the opposite," said Bill Arnone, a personal financial counseling partner at Ernst & Young. "The concern is how do we make sure people don't retire too early."

Companies' interest in offering these programs stems, in part, from the fact that many workers have lost much of their savings during the bear market.

"It's not in any enterprise's interest from a broader business perspective to have people leave the labor force before they can really do so," said Dallas Salisbury, president of the Employee Benefit Research Institute.

For their part, financial-services firms are launching online tools and calculators that help individuals calculate how to spend their assets. Last month, MetLife Retirement & Savings, a unit of MetLife Inc., launched an online tool that helps individuals calculate the monthly income their savings will provide in retirement.

In May, Dow Chemical Co. rolled out an online pension modeling tool which allows employees to use their personal data to figure out what their expenses will be in retirement.

Marriott International Inc. has a task force that distributes a newsletter covering mature workers' concerns.

Manufacturing firms or companies that have workers with specialized skills and knowledge are likely to be hurt the most by a wave of retiring baby boomers.

As a result, an employer will increasingly turn to the retiree base as a resource since that group "has the collective institutional memory of that organization," said William Rothwell, a professor of work force education and development at Pennsylvania State University.

Companies will start thinking about creative, flexible ways to tap that group, hiring them on a part-time basis or as executive coaches, he said.

With an estimated 77 million baby boomers set to retire, productivity in many organizations is likely to suffer unless companies find ways to retain their skills and experience, according to a report released earlier this year by the New York-based Conference Board, a research organization.

"Companies are waking up to the fact that they may lose a lot of people soon," said Howard Muson, who wrote the report based on a poll of human resource executives at 150 large manufacturing and service companies worldwide. "Companies will have to motivate people to stay longer, otherwise they'll find they're short of talent."

To be sure, workers have more of an incentive to stay in the work force longer.

The prolonged bear market and the gradual shift to defined contribution plans from traditional pensions have forced workers to rely on their own savings.

People are also living longer, increasing the risk they will outlive their savings.

At Ernst & Young, requests for proposals to design and run retirement planning programs for companies are about 20 percent higher this year, compared with typical annual increases of 2 percent to 3 percent over the past decade.

Although the biggest hurdle that prevents more companies from offering formal programs is cost, "we're starting to see companies thinking more about spending more discretionary dollars," said Rich Koski, a principal at Buck Consultants.