The Value of Retirement Planning

Career Management

According to economists, workers aged 55 and older are steadily exiting the Canadian workforce and showing no signs of slowing. Often, employees who are contemplating retirement are senior leaders and/or highly knowledgeable employees with decades of experience. When employees of this calibre leave the organization—especially if the decision leaves little opportunity for succession planning—its impact on an organization can be profound and lasting.

Having a conversation with employees about retirement plans should be a  part of career conversations, no matter the age or stage in an individual’s career. Some people plan for retirement as early as 45, while others may want to work much longer and beyond what one might typically expect.

Retirement today

The average ages for retirement in Canada (according to Statistics Canada – May 2022) are between 63 (public sector) and 67 (self-employed). Combine this statistic with what we know is the average lifespan (for women this is now 91 years of age and for men, 89) it means planning a retirement today can mean planning for the next 25-30 years.

Research shows:

  • 90% of people say retirement is not what they thought it would be
  • 70% of people are not prepared for the emotional side of retirement or some of the challenges people face with respect to making a mental transition to retirement
  • There is 30% satisfaction in retirement for those people without a lifestyle plan and this is increased to 67% satisfaction if people have a plan

While these statistics suggest that it is essential for individuals to have a well-planned path to retirement, it also demonstrates how employers can support employees as they prepare to make the decision to retire.

Transition to retirement support benefits employees and employers

Setting the stage to talk about retirement and offering support, differentiates organizations as progressive employers committed to their employees now and into the future from those who do not. These conversations also give business leaders the opportunity to plan strategically and consider the changes—and opportunities—that can come with an individual’s decision to retire.

The impact of a short notice exit from the organization can come at a cost: the loss of historical company knowledge, the gaps left behind from the depth of experience and skill a well-seasoned employee possesses, disruption to service, productivity and morale, to name just a few.

More and more, we are seeing retirement-aged employees continuing to work in a part-time or consultant capacity, with mutual benefits for both employee and employer, when the opportunity for a semi-retired approach is identified.

With so much of personal identity and self-concept being linked to work, a semi-retired or gradual approach to leaving work can be good for emotional health and life satisfaction as individuals prepare to leave the career that has helped define their identity. Likewise, a gradual departure from the organization ensures essential knowledge transfer and can also be a great opportunity to mentor existing employees and poise them as successors of an organization’s soon-to-be retirees.

It’s not uncommon for those approaching the decision to retire to feel unsure of where to start, and unsure about what a fulfilling retirement will look like for them. With transition to retirement support, employees will create a well-planned path to retirement which leaves the leader well-informed and prepared for the departure.

“By failing to prepare, you are preparing to fail” – Benjamin Franklin

By opening the door to retirement planning, your business leaders may have months or even years to ensure as little disruption to the business as possible by considering these key steps:

  • Assess the skills required for the position. This involves evaluating the current and future needs of the organization. With the pool of senior-level candidates continuing to shrink and many organizations struggling to find the talent and skillsets needed to fill open roles, job parameters and qualifications can be closely examined.
  • Create a robust job description. Once the skills and qualifications are assessed and outlined, a job description can be created that has the impact to attract the talent needed to fill the gaps left by those who are retiring.
  • Cultivate a strong pool of potential successors. The steps above also pave the way to identifying internal individuals who may possess the right qualifications to succeed in the role. Additionally, leaders can provide opportunities for high-potential employees to gain diverse experiences and skills through talent development programs, learning and development, and mentorship initiatives. It is also important to consider if the internal candidates with the right skills sets may or may not be interested in the role. This is where performance management is important for both the organization as well as the employees’ goals of future growth with the organization.
  • Ensure the transfer of critical knowledge. Whether it’s with direct training, formal documentation, shadowing opportunities, or gradual handover of responsibilities, this knowledge transfer plays a huge role in ensuring uninterrupted service and productivity.
  • Seek external candidates to ensure the best talent is being recruited. Employees on a gradual transition to retirement can give external candidates joining the organization the opportunity to receive hands on mentoring and direct transfer of historical knowledge. This mentorship can be invaluable, given how crucial an employee’s onboarding and training experience is to their workplace longevity and engagement.

The above steps can only take place if an employer receives sufficient notice of an employee’s impending retirement through conversations and proactive strategies. When employees have the opportunity to consider every possible path toward retirement, both the employee and employer are able to develop a well-considered plan for a fulfilled and successful future.