Companies that are going to come through the Covid-19 shutdown successfully need to rethink their employees’ retirement plans, according to Chip Munn, CEO of Signature Wealth Strategies, a wealth management firm with offices in North and South Carolina.
The pandemic is accelerating trends that were already in the works, and one of those is a shift to a phased-in retirement, Munn said. Companies that want to reduce their risks will accommodate this new desire among employees, since phased retirements also mean companies can keep tapping their seasoned employees’ knowledge, he said.
“Most people’s goals have changed,” said Munn, author of the book The Retirement Remix: A Modern Solution to an Old School Problem. “People have lived an alternative lifestyle for four months, and what they want now and what they wanted in January is not the same. Even if financial circumstances have not changed, their goals have changed.”
There is a large contingent of people who would be open to gradually leaving work at retirement, rather than stopping work abruptly, Munn said, and business owners would be better off being ahead of that curve rather than reacting to it.
Financial advisors who have business owners as clients can help them work through this change, he added.
“The core of any company is the wisdom that its employees possess,” he said. In the financial advice industry, there is a gap between the large contingent of older advisors who are near retirement and the younger group that wants to come in. The knowledge the near-retirees have needs to be passed on to those taking over.
Employers should develop plans for employees to have a three- to five-year retirement plan during which they can reduce work and transmit their knowledge to those coming up in the industry, Munn advised. “Companies need to assess what is really valuable to the business, [and] part of that is the knowledge their employees have.”
Covid-19 has prompted a new acceptance of technology by employees as well. Some advisors were reluctant to adopt virtual communications before, but they have been forced to during the pandemic and they are getting used to it, Munn explained. Employees are not going to want to go back to communicating the old way; they may not be anxious to go back to the office.
Business owners can undermine themselves by not being willing to accept employees’ new desires, he added. Instead, they need to find ways to accommodate the desires among current employees and near-retirees for more flexibility.
This includes a “remixed retirement.”
"Most employees don’t necessarily get tired of their work; they get tired of how and when they work," Munn said. "A remixed retirement lets employees continue to do the parts of their job that they enjoy while eliminating some of their headaches. A longer working life allows for continued contribution. A transitional retirement program would give these employees the satisfaction of remaining involved in new innovations.”
At the same time, “by remixing their retirement, veteran team members would have a longer working life that allows for both increased income and the ability to wait to draw down on the assets that they’ve set aside.”
“By creating a path toward retirement, a company can be proactive in a transition that’s natural and inevitable,” Munn added.