Securing Retirement Futures: Strategies to Address Delayed Retirement

Does your 401(k) plan design support an "on-time" retirement?

Delayed retirement is an increasingly common trend among the American workforce, directly affecting employers’ financial health, talent cycles, and overall productivity. Recent 2025 data reveals that nearly two-thirds of Americans feel that retiring between the typical ages of 65 and 70 is currently unattainable.¹ This is part of a significant long-term shift; while the average retirement age was just 57 in 1991, it has risen steadily to approximately 62 as of 2024.²

The Impact of Delayed Retirement on Employers

While retaining experienced employees with deep institutional knowledge is valuable, delayed retirement introduces specific costs and operational challenges for organizations:

• Financial Costs: Research indicates that each year an employee delays retirement can cost an employer between $26,000 and $50,000 per person.³ This reflects higher salary and benefit expenses compared to hiring a new entry-level employee.

• Workforce Management: A one-year increase in the average retirement age across a company can result in an incremental cost of 1% to 1.5% of total annual workforce expenses.³

• Stalled Advancement: When senior roles remain filled longer than anticipated, it creates a "bottleneck" that limits promotion opportunities for younger, mid-career talent, which can lead to higher turnover among high-performing employees.

• Healthcare and Productivity: Older employees often have higher healthcare utilization, and those working longer purely out of financial necessity may experience higher stress and lower engagement.

Strategic Plan Design to Support On-Time Retirement

Forward-thinking employers are using specific retirement plan features to help employees reach their financial goals on schedule. According to 2025 industry research, workers with access to workplace retirement plans are nearly twice as likely to be on track for retirement compared to those without.⁴

Key strategies include:

• Automatic Enrollment: Setting a meaningful default contribution rate (such as 3% to 6%) makes sure employees begin saving immediately.

• Automatic Escalation: Automatically increasing contribution rates annually (up to 10% or 15%) can dramatically improve projected income replacement for retirees.⁵

• Enhanced Employer Matching: Providing a clear and competitive matching structure incentivizes higher personal savings rates.

• Financial Wellness Programs: Addressing broader financial stress helps employees focus on long-term retirement planning rather than immediate crises.

By modernizing 401(k) plan designs with these automated features, employers can reduce the financial strain of delayed retirements while helping their workforce step into their next chapter with confidence. We are here to help you optimize your retirement plan strategies to promote on-time retirement and maintain a healthy, productive workforce.

Sources:

1 “Nearly Two-Thirds of Americans Feel Retiring ‘On-Time’ is Unattainable, According to New TIAA Survey.” TIAA, 6 Oct. 2025, www.tiaa.org/public/about-tiaa/news-press/press-releases/2025/10-06. Accessed 17 Mar. 2026.

2 Anderson, Brian. “Retiring (Much) Later: Average Age up Big Since 1991.” 401k Specialist, 18 Aug. 2025, 401kspecialistmag.com/retiring-much-later-average-age-up-big-since-1991.

3 Adams, Nevin E., JD. Report Cites Big Employer Price Tag for Delayed Retirements. 11 Feb. 2019, www.napa-net.org/news/2019/2/report-cites-big-employer-price-tag-delayed-retirements.

4 “Improving participant outcomes.” Charles Schwab Corporation, 29 Sept. 2025, www.schwabworkplaceservices.com/resource/improving-participant-outcomes.

5 New Research Study Finds Auto-Enrollment, Auto-Escalation, Auto-Portability Can Substantially Reduce Likelihood That Today’s Workers Will Run Short of Money in Retirement. www.ebri.org/content/new-research-study-finds-auto-enrollment--auto-escalation--auto-portability-can-substantially-reduce-likelihood-that-today-s-workers-will-run-short-of-money-in-retirement.

The Alliance Team

(860) 777-4015

(860) RPS-401K

info@alliancerps.com

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