With people living longer and fewer younger workers coming on the scene to take available jobs, economic and market growth rates are expected to decline in the next few years.

And against that backdrop, employers have a role to play in helping educate workers about longevity risk and the need to accumulate enough retirement savings. Retirement used to mean quitting your job and living out the rest of your life doing all of the fun things you couldn’t do while you worked full-time. Now, with people living more active lives and living longer, many people need to rethink their traditional views about retirement, according to a recent report from Wells Fargo.

Many studies predict that the average person will live about 30 years in retirement, but most people don’t plan for things like healthcare costs when saving for retirement.

Health savings accounts are a great vehicle for savings, particularly for younger workers, says Tracie McMillion, head of global asset allocation strategy for Wells Fargo Investment Institute and one of the authors of the institute’s Living Longer, Living Better study. Many people opt for a higher dividend plan paired with an HSA so they pay less in premiums but at the same time are putting money away tax-free into a savings account that can be used to pay health-related expenses into the future.

“It is a great vehicle for saving for healthcare. That’s one of the things that people don’t plan for when they think about living 20 or 30 years in retirement. Probably a lot expect Medicare to cover most of that cost when in actuality, there is still a significant cost that many people still pay,” she says.

“The average 85-year-old person spends nearly $35,000 per year on healthcare.”

The average 85-year-old person spends nearly $35,000 per year on healthcare, while those aged 65 to 84 spend about $15,000 a year.

By using a workplace HSA, especially at an early age, workers can compound their healthcare savings over time. Once they save enough, they can begin to invest those dollars, which has the potential to give them investment returns on that account as well, she says McMillion.

Health savings accounts are portable, which means that you can take them with you when you leave a job.

McMillion says she believes that along with financial education, more employers should consider finding ways to make room for and attract older workers to the workforce.

“I think that would solve, probably, or help to solve, a lot of concurrent issues that are happening. The first is that younger people seem to be coming into the workforce later, so they are getting more education. At the same time, we have the highest level of job openings or near the highest level of job openings — five million,” she says.

That number is extremely high, so how do employers go about finding people to fill those jobs? By attracting older workers back to the workforce or by encouraging them to remain in the workforce, she says.

“We are calling it the longevity dividend. That helps employees because it can help them make it through retirement with adequate income. It also helps them from a physical and mental perspective,” says McMillion. “Having engaging work on a day-to-day basis or a part-time basis; it helps companies because it has jobs to fill and an experienced pool of workers from which to draw. It helps the economy because with all those openings and very low labor participation, we have an output gap that could be filled by older workers.”

To attract older workers, companies need to offer more flexible schedules or allow them to work part-time.

Many companies steer away from older workers because they are concerned that these workers will want higher pay or that they won’t stay with the job very long because they will retire soon.

McMillion says that attitude is very short-sighted.

“A lot of times, older workers aren’t necessarily coming back to work to earn the same amount they earned when they were working full-time.”

“A lot of times, older workers aren’t necessarily coming back to work to earn the same amount they earned when they were working full-time. They may need lesser amounts in exchange for more flexibility,” she says.

Numerous surveys have shown that older workers are loyal to their employers. “So if someone gives them a chance, gives them a flexible schedule, they are willing to contribute way past typical retirement ages,” McMillion says.

Women, in particular, want or need to stay in the workforce longer. Bureau of Labor Statistics data show that workforce participation for older women, those over the age of 55, has steadily increased while workforce participation for men of the same age has leveled out.

“We also noticed in [looking at] retirement ages that men back in 1960 were retiring at age 65 and today it is back up to age 65, but dipped to 62 for a while in the late ‘80s and ’90s,” she says.

Women have continued their progression to a higher average retirement age, from the low 50s in the early 1960s to 63 years old today.

“I think also that more women have higher levels of education today and when you look at participation rates by education level, college graduates have significantly higher participation rates than high school graduates do,” she says.

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