Jeff is the CEO of October Three, an actuarial and consulting firm specializing in modern retirement plan design and administration.
America is experiencing a retirement crisis, impacting both employees and employers.
In response, I believe businesses have a growing opportunity and responsibility to help address this issue, supporting both their employees and their own financial well-being.
A Shifting Burden
Over time, many companies have moved from traditional pension plans that provided secure retirement income to 401(k) type programs, which transfer much of the burden for retirement to the employee.
The ability of Americans to fund their retirement has also been considerably hampered by the rising cost of goods, astronomical home prices and increasing debt. According to the Employee Benefit Research Institute (EBRI) 2025 Retirement Confidence Survey, “eight in 10 workers are concerned that the cost of living will make it harder to save” for retirement.
This problem doesn’t only afflict Gen-Z and Millennials; it’s impacting many workers of retirement age right now. Many retirement-age employees just don’t have enough saved for a comfortable retirement for a host of reasons. Data from the Bureau of Labor Statistics (BLS) shows a dramatic increase in employees over 65 remaining in the workforce. Those aged 65 to 74 increased from 3.8 million in 2003 to 9.2 million in 2023, while those 75 and older increased from 93,000 to 1.98 million in the same period.
This trend suggests that if something isn’t done to fix the broken retirement system in America, the ability of the next generations to secure their retirement will continue to erode, and American businesses will bear much of the financial consequences.
The Decline Of Retirement Equity
Prior to the advent of 401(k)s, many American workers had access to pension plans that tended to be more secure since retirement income was clearly defined, predictable and guaranteed for life. They also provided incentives for employees to remain with their employer throughout a greater number of their working years.
At the time, many businesses sponsoring traditional pension plans perceived them as complex, difficult to manage and highly volatile. Many employers found them too difficult to maintain and began shutting them down and transitioning to 401(k)s. While there are other systemic economic factors contributing to the retirement crisis, I see the shift to 401(k)s as a major contributor to greater retirement inequity for a few reasons.
First, the employee, as the primary contributor, may not be able to contribute or take advantage of an employer match due to high costs of living and other economic factors. Undoubtedly, this unfairly impacts lower-paid employees. Second, the employee assumes the market risk, so the employee’s retirement nest egg is less predictable. Moreover, the employee is responsible for making investment decisions, generally without investing experience. Finally, employees are left to manage their retirement savings on their own, often with little guidance—hoping their funds will last. This has resulted in many retirees living on less income than they could have.
Workforce Stagnation And Managing The Cost Of Attrition
When employees don’t feel prepared to retire (whether actual or perceived), business results can be negatively impacted. Therefore, I think it’s in the best interest of both the employee and the employer to ensure the workforce is able to retire.
Employees may choose to work beyond the typical retirement age for many reasons. But many stay in the workforce because they haven’t accumulated the resources to retire comfortably. This can make workforce management unpredictable for businesses, and it can create barriers to opportunity for others in the organization.
Businesses should maintain a forward-looking strategy, considering what opportunities and incentives they provide for their workforce, up to and including a secure retirement. If not, early- and mid-career employees might seek those opportunities elsewhere.
Overall, replacing retiring employees at the end of their careers is a predictable expense. Replacing employees who leave unexpectedly is much more costly and disruptive.
The Society for Human Resource Management (SHRM) estimates that the cost of recruiting one employee averages $4,700, though some companies estimate that the cost can be three to four times higher.
Training new employees can also decrease overall productivity. In some cases, a new hire doesn’t reach the productivity break-even point until the 12-week mark. During that ramp-up period, productivity can lag—slowing projects, placing extra demands on team members and ultimately affecting the business’s bottom line.
Companies can mitigate these costs by providing the right incentives to improve employee retention. When employees have the confidence to retire, that predictability can help your business mitigate unexpected attrition, recruiting costs and business disruptions. This provides clearer visibility into upcoming retirements, enabling you to plan transitions and succession more effectively and in a more structured and less disruptive manner.
Finding A Better Solution
The two widely used employer-sponsored methods of accumulating retirement income, 401(k)s and traditional pension plans, both have advantages and disadvantages for employers and workers alike.
But today, I don’t think 401(k)s are overall meeting the needs of American workers. Conversely, businesses have made the shift away from traditional pensions to avoid perceived funding liability and to minimize the complexity of managing those plans.
Providing attractive incentives for recruiting and retaining talent is more important than ever before, and businesses need to find retirement solutions that work for both them and their employees. There’s no one-size-fits-all solution for retirement income. Everyone has different requirements, so ideally, retirement income solutions should be personalized accordingly.
Therefore, I think the solution to the retirement crisis will need to be somewhere between a traditional pension and a 401(k). It will require more modern plan designs that mitigate and balance risk for employers and employees. It will need to minimize funding and accounting challenges for employers while providing incentives for attracting and retaining talent.
And most importantly, it will need to provide retirees with a greater amount of predictable lifetime income. Now is the time to rethink retirement plans for the next generation.
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