Some 80 million baby-boomers are poised to retire across America over the next few years – and the vast majority are completely unprepared for the transition.
A study by HR consultancy Aon has suggested that in as many as six out of 10 organisations, the majority of employees are not financially prepared for retirement.
The poll of more than 2,000 companies adds to growing evidence that, for many, retirement comes as a rude shock – with the cost of living much higher than they had anticipated, even if they have made provision for their twilight years.
A total of 62 per cent of the organisations polled expected that fewer than half of their workforce would have enough income to retire between the ages of 62 and 65 as they had hoped.
As the majority of employers shift away from offering lucrative final salary occupational pension plans, more responsibility for managing retirement savings was now resting with individual employees.
Eight out of 10 employers now offered personalised online retirement planning tools as a result, the survey found.
Nevertheless, some eight out of 10 employers also believed their employees still did not fully understand how to invest their defined contribution plan assets.
There was also a gap between the importance employers placed on employee education regarding saving for retirement and the number of employers that provided this information.
The vast majority – 98 per cent – of employers said it was important for employees to know how much they would need at retirement so they could save accordingly.
Yet a third expected their employees to find this information on their own.
"Personalised retirement planning tools and education are essential to help employees understand how much income they will need at retirement," said Susan Alford, executive vice-president and defined contribution national practice leader at Aon Consulting.
"Personalised communication incorporates both employer-sponsored retirement benefits and outside savings and investments," she added.
"This type of communication helps the employee convert the percentage saved to a replacement income and addresses the adequacy and any shortfall in their personal situation," she continued.
Providing an automatic enrolment feature for employees had proved successful at ensuring more employees had at least a basic level of retirement savings, yet the survey reported just 44 per cent of employers currently offered or planned to offer this feature in the next 12 months.
When it came to talent management, the survey found four out of five organisations now considered recruiting and selecting talent a top to be their critical issue for 2007.
Nearly two thirds believed their organisation's need to recruit and select the best talent would increase or substantially increase in the next three to five years.
Virtually all – 98 per cent – expected that recruiting high-performing employees would continue to be difficult or increase in difficulty.
One way to recruit high-performing employees was by better communicating the total compensation package (dollar value of benefits plus salary) to job candidates, but the study found this was not commonly practised among employers.
In fact, 77 per cent provided a general overview of benefits with no dollar figure, it found.