Retirement trends keep changing. Not only are people living longer, which carries implications for outliving savings and long-term affordable health care but doing it in a faster-paced world that is more complex, demanding, and stressful. Employers globally are responding by shaping their company’s retirement plans to address the comprehensive retirement needs of every employee at every stage of their career.
There are several factors that influence emerging trends in the retirement industry. These range from the encouragement of workers to save more for retirement or boosting employees’ overall financial wellness, companies try to do more with their retirement plans. Below are emerging trends in retirement plans that you should be capitalize on:
Promoting the Benefits of HSAs
Health savings accounts (HSAs) have increased in popularity in the workplace. HSAs are emerging as a savings tool.
Those who stay healthy or use non-HSA funds to pay out-of-pocket medical costs can allow savings to generate in their accounts on a tax-deferred basis. The account owner reaching the age of 65 then means distributions can be taken for any reason without a tax penalty.
Enhanced Financial Education for Participants
More than two-fifths of employees have little to no savings. This means the value of packaging in financial wellness resources when offering a retirement plan to employees should be considered. Educational resources and sound financial advice can empower employees when they are assessing their retirement readiness so they can save appropriately.
Socially Responsible Investing
Investors are always keen on ensuring their retirement savings not only provide a healthy return but are invested in companies that have socially responsible or ethical practices. Socially responsible investing means choosing investments based on the ROI, environmental responsibility — as well as weeding out companies viewed as socially and environmentally irresponsible.
A Less ‘Traditional’ Retirement
Longer lifespans coupled with flattened wages and greater overall costs of living are changing how older workers and employment retirement trends are evolving. People today are expecting to retire at far later ages than they used to. Fears of not having any savings or not having some kind of retirement fund set up make it increasingly common to find older workers who are moving into retirement shifting to other forms of part-time work such as consulting or a less time-intensive job.
The pandemic has however skewed that pattern as older workers became unemployed due to the pandemic being the primary driver for an earlier retirement.
Retirement is not about stopping work.
One of the biggest future trends in retirement is that you will see more people working in retirement. The difference is that people will work doing more of what they love and not what they have to do. There are retirees who have retired from large organizations only to go back and continue to do part time consulting projects working on their terms instead of someone else’s. There are others who have turned their lifetime hobbies into businesses enjoying a little extra income at what they love to do with their time.
Phased retirement
Traditionally, retirement happened on a specified date. Some organizations have felt the challenge of not having enough people underneath to replace all the boomers that have and want to retire. As a result, we have seen more phased retirements where instead of retirement being a point in time, they will phase it over a period. For example, you might see someone going from full time, five days a week, to 3 days per week, to 1 day per week, to full retirement.
Lifestyle retirement planning
Retirement planning is usually money centric and usually focuses on the risk of lacking it. Although money is important, retirement isn’t just about money. I know people who have enough money for retirement, but they still aren’t happy. Today, retirement is about being happy. In many cases, more money can mean more happiness but not always. Today, people planning for retirement need to approach the planning process differently. They need to think about what life means to them in retirement. It’s about soul searching and determining what is most important to you.
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Conclusion
Retirement can be full of choices. A successful retirement depends on you and the choices you make. Studies have shown that the more you plan and think ahead, the more likely you are to enjoy a happy retirement.