For almost half the country, retirement might not be all golf games and trips to see grandkids, as many will be partially working in or through their golden years.
But a better-organized retirement savings plan which includes the use of an HSA to help build on the savings possible through a 401(k) might be a way benefit managers can help future retirees avoid a much longer working life. And the experience of current retirees might be a useful motivational tool to provide some perspective for employees who have reservations about saving more of their current pay.
Nearly half (47%) of todays retirees say they either have worked or plan to work during their retirement, according to research from Merrill Lynch. But an even greater percentage (72%) of pre-retirees age 50+ say they want to keep working after they retire, and in the near future it will become increasingly unusual for retirees not to work.
The decision isn't necessarily tied to wealth, as the yearning to return to the labor market was consistent across various levels of income. Maintaining mental activity was a response heard twice as much over money when asked why it was important to work. For a quarter of those asked, work also included volunteering.
This new phenomenon is driven by four forces:
- Increasing life expectancy, which has produced a retirement that can last 20 years or more.
- Elimination of pensions for most workers, shifting the burden for funding retirement from employers to retirees.
- Recent economic uncertainty, which has been a wake-up call for many people that it is not financially sustainable to retire without some employment income.
- Re-visioning of later life, as new generations seek greater purpose, stimulation, social engagement and fulfillment in retirement
A recent Financial Finesse report on overall retirement preparedness has shown small improvements since 2011. However, the report also shows most participants have not taken the time to review the retirement income they will need to retire. Has the market improvement been leading to employees doing less to prepare, or are they really starting to take the time to plan?
Some industry experts have pointed toward the use of health savings accounts as a means to help retirees leaving the workforce, noting the HSA is a product that many companies have used to help employees deal with their share of health care expenses under high-deductible health plans or consumer-directed health care plans.
The Employee Benefit Research Institute reports there was approximately $23.8 billion in HSAs and HRAs in 2013, a 282% increase from 2007.
[HSA use] is growing and I think maybe it didnt grow as fast as it was expected over the last 10 years but, there seems to be a renewed interest in employers [considering] adopting these plans, says Paul Fronstin, director of the Employee Benefit Research Institutes health research and education program.
