Financial Education in the Workplace: What a Difference a Few Years Make
January 04, 2011I recently spent a few cold, snowy days meeting with employees in the Midwest counseling each of them regarding their retirement goals. I was surprised to hear quite a few employees were planning on early retirement, especially since we hear the trend is just the opposite because of our current economy.
However, this group was quite fortunate to have a solid pension and many of them had been employed there almost their entire working career. When I think of early retirement, what comes to mind is age 55. But a few of these employees had an even more ambitious target, age 50! After running the numbers, these super savers did have enough in their 401(k) to make that target a reality. However, what they weren’t factoring in was their health insurance coverage.
Like most employers that still even offer retiree health coverage at all, the minimum age was 55 to be eligible. Since there was a significant subsidy provided based on years of service, this benefit alone was equal to walking away from several hundred dollars of benefit each month. On top of that, their pension formula had a higher formula for those that worked to age 55, compared to leaving at 50.
After an intense discussion comparing their current goals and what they would be walking away from, we came to an understanding that 5 more years of driving to work, even when it was snowing, would be well worth the wait for a much more secure retirement. So make sure your employees have a firm idea on the important dates and milestones they need to reach to fully maximize any retirement benefits available. Incorporate all these important milestones into a Retirement Reality Check workshop, or offer one-on-one individual retirement planning counseling sessions on-site for your pre-retirees.