Because many employers are unaware of the cost of having older workers unable to retire, or think they cannot calculate it, Prudential Financial has done the analysis and published its findings in the report, “Why Employers Should Care About the Cost of Delayed Retirements.”
For each individual who cannot retire, the cost averages an extra $50,000 a year, representing the difference between the salary of an older worker and hiring a younger person, according to Prudential. The annual cost across a workforce is an additional 1.0% to 1.5% a year.
For example, consider a company with 3,000 employees and workforce costs of $200 million. A one-year delay in the average retirement age would cost the firm between $2 million and $3 million. A two-year delay would average an additional 2.2% in workforce costs, and a three-year delay, 3%. In addition, health care costs for a 65-year-old are twice that of a worker between the ages of 45 and 54, Prudential says.