HR AND BENEFIT- CASE STUDY
Introduction
The case study focuses on promoting financial security for employees, especially after retirement. Because of the increased cases of people going broke after retirement, better financial planning is needed to enhance financial stability throughout an employee’s life. Financial stability can only be achieved if employees and employers, together with labour unions, work hand in hand.
Question One
According to the website results, I am likely to live until the age of 85 years. I will work and retire at the age of 65 years. My expected social security benefit ranges from 100,597 dollars to 200,167 dollars per annum. The benefit increases annually at a 5% rate, which is the same rate as my income. To achieve my expected social benefit income, I will have to increase my savings to 20.7 % of my income, which is 10,558.51 dollars annually, which will increase as income increases.
Question Two
The results from the website show that I will live up to the age of 85 years. I prefer to retire at the age of 65, which means I will only live for 20 years after retirement. I don’t feel good about these statistics because it is not fair to spend the better part of my life at work. I do not think work should occupy so much time in our lives, but I also do not feel I choose because we must work to make a living.
Question Three
To maintain my standard of living, I will need to save 20.7% of my income every year. It is a considerable portion of my income, considering I have other living expenses. If I implement this savings plan, I will be working to pay for the savings plan and pay bills. I don’t think it is right that I have to work for the better part of my life.
The website results recommend various steps I can take to meet my goal. The first requirement is to increase the amount of money I save, which I have already described above as ridiculous. Secondly, I will have to increase my rate of return before retirement to 6.2%. I think this is not something I can do because it is beyond my control. The rate of return depends on many economic factors that are beyond my control. Thirdly, I will have to reduce my required income in retirement to 46% of my final year’s income. The reduction is more than half my income. I do not think it even makes sense because I will still have expenses to cater for even during retirement. The last recommendation is hilarious because it requires me to work until 115 years, which is merely impossible. Very few people get to that age anyway.
Question Four
From the website results, the statistics show that my income from Social Security Fund after retirement will only last me until the age of 73 years, which is only nine years after retirement. It means that if I live up to 85 years old, I will have to look for other sources of income for the next 12 years. The income from Social Security will, therefore, not last half the retirement time. I do not think it is a worthy investment for my money or my employer’s money in this light. It is pointless to save all that money for all those years and still not be guaranteed to have income throughout the retirement period. There are very many investment policies in the economic market that would generate much more income than what I will get from the Social Security Fund. I think social security might still be there when I retire, but I am not sure they will follow up with their payment plan because the institution runs by the government and is therefore prone to legislative law changes. A new government may change the institution’s operations, making it hard for investors to get their money back.
Question five
Below are examples of initiatives I can take to ensure I am financially secure during retirement;
- Start a business- a business is a good source of income. If I open a business now, I can generate more savings for my retirement. The business will continue to generate income even during my retirement period.
- Downsize my lifestyle; spending less money on my living expenses will ensure I have more disposable income available for savings. More savings will go a long way in ensuring that I am financially secure. To save more, I may decide to live in a cheaper house, wear more affordable clothes, etc. More savings will also ensure I have money to invest in business during retirement.
- Applying agrarian ideas can also help me safeguard my financial stability. Investing in farming can help me generate more income. Buying land and leasing it for agriculture is an income-generating activity that can sustain me when I retire.
Question six
Below are examples of ways in which HR can assist employees to understand the need to invest and save;
Training programs; Human resource department should bring investment professionals to teach employees the need to save and invest in securing them during retirement. Most employees fail to save and make investments because they lack knowledge. Professionals will give them ideas of various savings and investment plans that they can implement to secure themselves financially.
Agrarian ideas can also be applied by employers and labour unions to safeguard the financial stability of employees even during retirement. Some of these ideas may include;
Distribution of stocks; employers should let employees buy shares of their companies. This way, they will be more productive as they will be motivated. Additionally, they will continue to receive dividends from the company even after retirement.
Profit-sharing is another agrarian idea that can be applied by employers. By coming up with ways to share the company profits with employees, they boost their morale hence productivity and at the same time increase employees earnings. When employees earn more, they will be able to save sufficiently for when they retire.
Conclusion
As stated earlier, there needs reform on financial planning for employees to safeguard their financial wellness after retirement. However, this can only be achieved if employees, employers and labour unions unite to implement the solutions discussed above.