So, what does
it mean to retire? We used to think we knew. When we reached 65
years of age, we stopped working, we collected a pension and we
moved to Florida. For some of us, there was a mandatory age to
retire.
Later, the idea
of waiting six decades to retire began to give way in the face of
changing demographics and soaring investment returns to the
fashionable idea of early retirement. Why wait until I am 65? Why
dont I retire at 55 or 62? I can work part time while collecting my
pension. I can open a new small business. I can spend hours per day
on the golf course, traveling, playing the clarinet or working in
support of community charities.
Now, however,
we seem to be rethinking these concepts in the face of investment
losses, the massive costs of health care and prescription drugs as
we age, and an additional, even more important consideration. That
is, the false idea that we can simply and suddenly stop working
without radically changing the way we live, behave and think. Its
not healthy for mind, body or spirit. It is true that many people
dream of not spending any more precious time at a job they may not
really enjoy.
For those who
have no hobby and who live to work, retirement can actually be
harmful to their health and behavior. The job for such people is a
synonym for their personal identity and psychological anchor of
well-being. Leaving work without a personal strategic plan for the
future is a big mistake.
Every business
and government leader extols the virtue of strategic planning and
contingency planning for the future. This is true even if our deeds,
in terms of support for strategic and proactive administration,
dont match the rhetoric. So, why dont we learn a lesson about the
value of strategic planning for personal life as well?
The HR Doctor
was recently approached by a 35-year veteran employee who came into
the office to fill out papers for retirement which was occurring a
month later. In the course of congratulating him and looking back at
what life was like in the agency three and a half decades ago, he
was asked if he had any questions. He said he had only one, Is
there any way I can defer payment of income taxes and save money for
my retirement?
Despite all the
education and information shared with agency employees multiple
times during the year about 457 plans, about flexible spending
accounts for health care, about credit union savings programs, etc.,
etc., the sad reality is that some people smell the fertilizer
instead of smelling the roses. When a wake-up call such as a
decision to retire is made without advance planning, the result is
very likely to be a shattering of the hopes and dreams that led to
the decision to retire in the first place.
The HR Doctor
has recommendations for both employees and public agencies on the
question of the redefined world of retirement.
First, for the
employee, the time to begin active and committed retirement planning
is the first day on the job, not one month before retirement. More
than ever before, a successful and secure retirement from a city or
county should not rely entirely upon a government pension plan alone
or even of its combination with Social Security.
It should also
include the result of years of thoughtful and diversified
investments, especially deferred compensation. Begin immediately.
Wait, I heard
that! What do you mean you cannot afford to put money into deferred
comp? You are wrong, you cannot afford not to! Dont make a gigantic
mistake. Start immediately and keep going, adding to the money you
invest automatically through payroll deduction and by sharing some
of your profits with your own savings account every time you receive
a pay increase or a promotion.
However, dear
colleague, retirement is far, far more than a financial transaction.
Look out for your personal health. Take to heart, literally, five
bits of the HR Doctors advice, offered sincerely and based upon
years of experience with public health care and the following of
health trends.
First, stop
smoking! Better yet, dont even start. Its destructive, its dirty
and it smells. Second, never enter a vehicle without wearing your
seat belt. Make it a family rule. No exceptions. Make it automatic.
Three, eat well
and enjoy meals but mix the foods you eat so that the vegetables and
the fruits have at least as great a role in your life as the meat
and the grease!
Be moderate in
how much you eat so that you can be on the lean side of the
statistic that 50 percent of the American population is obese. The
one exception, of course, involves chocolate, which should be
ingested regularly and thoroughly enjoyed!
Next comes
making your doctor your friend. Regular check ups and a personal
commitment to learn about medicine and health are important
components to success in retirement living and in living period. The
HR Doctor has seen the impact on a local government budget, not to
mention on human health, resulting from the lack of preventive care
and basic health information.
Also important:
practice what my colleague Mark Gorkin, aka The Stress Doc, calls
safe stress. Apply a sense of humor to your life. Enjoy diverse,
outside interests and get involved in community affairs and
continuous personal learning. Altogether, this package of financial
and personal health, humor and involvement is the best advice the HR
Doctor can offer you. I even waived any co-pays or deductibles!
What about the
employer? The role here is extremely important and its significance
is growing. Create benefit policies and processes which allow the
employees to take full advantage of tax-deferred savings
opportunities. Continually and repeatedly educate employees and
share information about the power and value of a 457 deferred
compensation program. Some public agencies use a defined
contribution savings programs, called the 401(a), some others, such
as some public hospitals and schools, may have another form of
tax-deferred savings called a 403(b) program. Whatever programs you
have for tax-deferred saving, make sure every employee is thoroughly
educated about them.
There are
currently two other powerful tools available on a tax-deferred
basis. The employer should help ensure that these two programs are
also the subjects of brain implants into the knowledge base of every
employee.
First is a
Section 125 flexible spending program for health care reimbursement
or dependent care cost reimbursement. And the second is
post-employment health savings programs. In one such program,
offered by Nationwide Retirement, a partner of NACo, tax-deferred
savings accounts may be used for health care costs after employment.
However, the employer pays for the program.
Another similar
program is also emerging in which the employee can make the
deposits. In either case, thinking about life after retirement and
preparing for it is something every employer should facilitate
through learning and encouraging. Start the process immediately upon
hire. Include it in new employment orientations. Consider
automatically opening a new deferred compensation account for the
new employee with a small deposit in her name, perhaps to take
effect when the employee successfully completes probation. Not only
will this help make the probationary period more meaningful, but it
will also be a jump-start provided by and encouraged by the employer
for career-long savings through deferred compensation.
Employers
should be champions for health maintenance introduce health risks
assessment and disease management programs to help employees with
chronic illnesses such as asthma and diabetes. Have a strong and
accessible employee assistance program available to employees and
their family, and to former employees who leave the organization for
a reasonable period after departure, such as 18 months. The cost of
this enhancement is relatively small compared to the return in terms
of healthier employees and a reduction in time paid for not working,
such as sick leave or disability payment.
Make sure there
is an active safety and loss prevention program at work, with an
ergonomics component to attack problems such as carpel tunnel
syndrome and disabled accessibility before they become liabilities.
Also consider a life stage flexible cafeteria benefit model in which
the employee configures a personal benefit plan based on the choices
made available by the employer, and an allowance determined by the
organization or, if appropriate, through collective bargaining.
Having an array
of benefits in the cafeteria plan, such as long-term care insurance
and disability insurance, allows employees with different family
circumstances and different ages to create a more effective program
to meet their needs.
All employers
interests are served by retaining strong performing employees who
have a sense of organizational history. Among the ways to accomplish
this goal will be an increasing focus on ways to help star employees
balance their personal goals with continuing contributions to the
agency.
Developing a
phased retirement program is one such way. In this approach, the
employee works part time and collects a partial pension. Key
benefits, such as health insurance or long-term care coverage
continue, often at employer expense. This phased model can be for a
limited time, such as one year. During this time, the employee can
be a mentor to a successor and can convert institutional memory from
the floppy disk of personal memory to the hard drive of written
policy.
Every agency
has very key personnel, well respected and a go-to person for
problems. Imagine what would happen if this person suddenly chose to
retire. Is succession planning a reality in your agency or only a
dream? Smooth conduct of the publics business demands that
responsible employers take steps to make smooth transitions
possible.
So, whats the
bottom line? Retirement has taken on new meanings for employees and
for the public agency. Neither are as well prepared for these
changes as they should be. Your assignment? Plan and act now for
your own retirement to be bright and for your legacy in the agency
to be a positive one!
The HR Doctor
wishes you the best in your planning and in your
living!
