Companies can significantly decrease the cost of delayed employee retirements by boosting the retirement readiness of their employees, a new report from Financial Finesse, a financial wellness program provider, stated.
Companies with 50,000 employees can save between $33 million to $49 million annually if they increase the average workforce financial wellness score to 5 from 4 on a 10-point scale, the report said. If the score is raised to 6, the projected annual savings range from $65 million to $97 million.
Improvements in financial wellness reduces the average projected retirement age for employees across all career stages, according to Financial Finesse estimates. Employees between the ages of 35 and 44, for example, reduce their retirement age by two years and three months if they increase their financial score to 6 from 4, while those older than 65 are able to shave off one full year from their projected retirement age.
The costs of delayed retirement can be substantial. A one-year delay in retirement costs companies more than $50,000 per employee, according to a 2017 Prudential study Financial Finesse cited.
“Enhanced retirement plan design by itself is not enough to address the issue of delayed retirement,” the Financial Finesse report said. The company also touted the benefits of “repeat engagement” in financial wellness programs, saying repeat users improved their score by more than one point between their first and last financial assessment.
The report is based on the analysis of 18,148 employees who participated in employer-sponsored financial wellness programs from 2011 to 2016.