Planning for retirement can be effective in promoting satisfactory adjustment. The Cornell study concludes that good retirement adjustment is related not only to having favorable attitudes, but also an accurate preconception about it (Thompson, 1958; Streib and Thompson, 1958). Realistic planning should thus help develop reasonable expectations about retirement living, which could properly be the goal of these programs.
Recognizing the importance of this planning function, most authorities recommend that preparation for retirement should begin 15 to 20 years ahead (Ash, 1966; Mitchell, 1969; Monk, 1970; McCarthy, 1973). Monk (1970) proposes that planning be focused separately on the age ranges of 50-54, 55-59 and 60-64. The range makes sense according to Johnson's and Strother's (1962) finding that financial planning decreases with increasing age but activity planning increases. Different age groups have different planning needs. Yet, effective financial planning, development of non-work activity patterns and adoption of proper health care habits can all be most effectively initiated during the middle years when there is time to conserve or even expand resources for the later years.
The retirement literature consistently documents that good adjustment in retirement relates most strongly to adequate health and income (Thompson, 1958; Thompson and Streib, 1958; Simpson, et al., 1966; Greene, et al., 1969; Shanas, 1970), yet the level of planning- even of the most basic financial sort-is severely retarded among middle-aged and older employees.
Many Delay Planning
According to Johnson and Strother (1962), most hourly workers do not compute their benefits until they are between 60 to 65; salaried workers check their benefits only five years earlier on the average, somewhere between 56 to 60. McEwan and Sheldon (1969) report that the middle-income group worries most about retirement finances. Greene, et al. (1969) and Ash (1966) discovered that retirement planning relates to satisfaction with present and projected income and to not viewing it as a potential problem.
Numerous studies confirm that upper-income employees are more likely to plan for retirement (Burgess, et al., 1958; Davidson and Kunze, 1965; Charles, 1971; Fillenbaum, 1971c), but other studies question the adequacy of such preparations (Hall, 1954; Prasad, 1964; Eaton, 1969; Monk, 1971; Rowe, 1972 and 1973). The over-all conclusion seems to be that those for whom retirement is likely to pose problems (because of low income, poor health, etc.) are least likely to plan for it and those who do attempt some planning accomplish it in desultory fashion. The majority arrive at the date of retirement without concrete, realistic plans.
Realistic Approach Best
Planning programs, therefore, should focus on helping employees achieve realistic expectations. The need is clearly demonstrated for assistance in how to anticipate and cope with the inevitable income loss. Budget planning that begins only a year or two prior to actual retirement and confrontation with reduced income realities is no solution. It takes time to bolster financial resources; most experts agree that planning should begin in the mid-forties when major financial commitments of the middle years have stabilized.
That long-term financial planning does ease the adjustment to income loss is unconfirmed, but the logic of the assertion is inescapable. At the very least, an early projection of retirement income would give the employee realistic expectations (already shown to be an important ingredient for adjustment) and, more importantly, he possibly would still have time to bolster his resources.
Employees Themselves Recognize the Need for Early Planning. But, too often, they do not know how to project their retirement income levels or how to build financial reserves if there are deficiencies. So the situation that Fillenbaum (1971) describes is not uncommon: 97 per cent of her sample of workers, aged 35-64, believed in planning for retirement, but only 28 per cent had actually done so. Unfortunately, those who perceive the need to plan (but do not know how to proceed) generally spend their time worrying about money rather than establishing ameliorative actions. The bleaker the retirement picture, the more time the individual is likely to spend worrying and the less embarking on any real course of action. Helping employees to project retirement income levels' by providing specific information on long-term financial planning to expand meager resources is of great value.
Employees Are More and More Requesting Company Assistance in Many Areas of Retirement Planning. Fillenbaum (1971) found nearly unanimous agreement that an employer-sponsored retirement preparation program would be highly desirable. More than 47 percent said they would participate; an additional 32 percent said they might. Of the 24 percent who would not, most were aged 25-44 years. Such employee response is typical. Pyron and Manion (1970) reported that 84 percent of their sample wanted company assistance in planning retirement, but less than 40 percent said they received it. When Pyron (1969) studied several company retirement programs in which participation was completely voluntary, he found that attendance rates varied from 30 to 100 percent. And the U. S. Civil Service Commission Study (1961) observed there were few dropouts among existing programs.
So the need and desire of employees for retirement preparation programs with a planning focus has been documented.
What Has Been the Employer Response? Superficially, Mitchell (1969) found most employers of 1,000 or more believe preretirement programs are desirable; not having a program generally is due to personnel and budget constraints or overriding work priorities. Pyron (1969), in a study of 100 West Coast firms, found that most had some minimal kind of program, if only to provide the employee with benefit information.
The growth and current status of retirement preparation programs offered by employers are difficult to evaluate; the definition of formal and informal programs varies widely from one study to the next. Early surveys hailed the increase of pre-retirement programs from 13 per cent in 1950 (Equitable Life Assurance survey), to 45 per cent in 1952 (Hewitt and Associates survey) and 65 per cent in 1955 (National Industrial Conference Board). But many "programs" consisted of little more than informing the employee about his benefits.
Few Programs Are Intensive
Wermel and Beideman (1961) tried to refine the distinction between informal and formal retirement planning programs, concluding that only 25 percent consisted of more than benefit information. Pyron (1969), in an even more rigorous definition of "formal" programs as "intensive" and "comprehensive," found that only 12 percent of his sample of employer-sponsored programs qualified. This figure is consistent with several other reputable studies (Riley, et al., 1968; Management Survey, 1971). Also, Pyron (1969) discovered that most of the programs he examined had been in existence less than three years, underscoring the apparent new interest of employers in these programs.
What Benefits Accrue to Employers Who Offer Retirement Planning Programs to Their Employees? Wermel and Beideman (1961) and Pyron (1969) suggest several benefits: Encouraging older workers to retire; raising older workers' morale and increasing their productivity; easing acceptance of mandatory retirement provisions; augmenting effectiveness of company pension plans. Surprisingly little data has been gathered to confirm such assertions.
Thus, a company's decision to get involved in retirement planning remains a function of either management's perception that a serious adjustment problem exists for its retirees or its commitment to a philosophy of assistance deriving from some basic notion of corporate social responsibility (U. S. Civil Service Commission, 1961). Tuckman and Lorge (1952) provided data indicating that employers do not perceive aging workers as persons with serious anxieties over approaching retirement problems; most do not make any special provision for older workers. This position is hardly surprising, given the inability of social science to document conclusively the existence of any adjustment crisis.
Most companies must be motivated by some attitude of corporate responsibility to institute such programs. Indirect evidence to this effect comes from Pyron's (1969) study showing that companies with retirement preparation programs tend to have other "humane" employee benefits such as good pensions, insurance policies, etc. As might be expected, these are the larger firms able to afford the program costs (National Industrial Conference Board, 1955); Mitchell (1969) points out the costs can range from only a few hundred to several thousand dollars.
