2026 Human Capital Outlook: 5 Forces to Act on

2026 Human Capital Outlook: 5 Forces to Act on
January 14, 2026 28 mins

2026 Human Capital Outlook: 5 Forces to Act on

2026 Human Capital Outlook: 5 Forces to Act on

As workforce expectations rise and business risks intensify, HR leaders must act on five forces shaping 2026 — from AI and skills to healthcare costs, analytics, pay transparency and retirement readiness. Discover how to build a strategy that balances performance, cost and experience.

Key Takeaways
  1. A skills-based approach, powered by AI and data, helps organizations futureproof talent and drive agility.
  2. Tackling healthcare costs through predictive analytics and a total rewards lens can improve wellbeing and financial sustainability.
  3. Connected intelligence enables smarter workforce decisions, aligning pay transparency and retirement strategies with business goals.

Table of Contents

  1. Introduction

  2. Force #1: The AI Playbook for Managing People and Technology

  3. Force #2: Rising Costs in Healthcare are Unsustainable

  4. Force #3: Confident Decisions Require Connected Intelligence

  5. Force #4: Pay Transparency is no Longer Optional

  6. Force #5: Smart Retirement Solutions to Power People and Performance

  7. Ready to Start a Conversation?

The human capital forces that will shape 2026 will require organizations to seize opportunities to make data-led, forward-looking and more connected people decisions. This is amidst an environment of interconnected people and business risks, rising costs and high workforce expectations for a compelling employee experience.

Drawing on our extensive in-house data and insights from supporting clients on a range of human capital issues, we have gathered a list of five forces we believe will shape the workforce in 2026 and beyond. While these may look like separate issues, they show up as one core question in the C-suite: How do we ensure our workforce strategy is supporting and helping deliver on our business goals?

To respond to this challenge, HR professionals and business leaders need to evaluate how these forces are interconnected and address them holistically. Read on for insights and tips to make better informed workforce decisions.

Force #1: The AI Playbook for Managing People and Technology

How to futureproof capability as roles and technology change

Organizations are accelerating the ways they use artificial intelligence (AI). With job skills and descriptions being overhauled, employers must act now to reimagine jobs around tasks and upskill/reskill their current workforce.

HR has a Major Role to Play in Transformation

HR leaders are uniquely positioned to lead AI adoption and transformation across the workforce given their proximity to large amounts of people data, competencies around training and skill evaluation and tested communication strategies. Their role includes not just harnessing new technology for innovation, but also putting in place clear governance standards, transparency and human oversight. However, some data suggests business executives are undervaluing the unique position of HR leaders to accelerate AI adoption. When asked where AI is being used most to drive decision making and create transformative experiences, only 3% of more than 1,000 C-suite executives said HR, according to the Forbes Research 2025 AI Survey.

“HR needs to be the shepherd and the shaper of what work should look like in the future,” says Marinus van Driel, Partner of Workforce Transformation, Talent Solutions, North America.

Aon research1 finds that across all generations, workers are confident their employers will invest in their skills development for the future of work: 86% of Millennials agree, 83% of Baby Boomers and 78% of Gen X.

HR leaders can seize this moment by utilizing data and analytics to guide workforce transformation decisions in collaboration with other key stakeholders and building a culture of trust with employees.

$255B

The size of the AI market (software, hardware and services that enable the development and use of AI applications) was projected to reach $254.5 billion globally in 2025 and grow at an annual rate of 37%.

Source: Statista Market Insights

Foster AI Adoption with a Culture of Trust

An organization’s culture needs to have certain characteristics that support employee buy-in on AI. These include:

  • Rewarding experimentation with new technology
  • Embracing the redesign of jobs and tasks
  • Supporting continuous transformation
  • Ensuring psychological safety around shifting roles

Building this culture of trust also requires clear guardrails for how AI is selected, tested and used in people decisions.

“Employees need confidence that if they're using technology to engineer themselves out of their current role, they will be rewarded by having another job they can step into,” adds van Driel.

Many companies are in the stage of deploying and encouraging adoption of AI tools. Therefore, metrics to judge success are more reflective of usage rather than efficacy," says John McLaughlin, Partner, Talent Solutions, Europe, the Middle East and Africa. KPIs should evolve from how many times generative AI is being used to how meaningful the tools are to a person’s job.

A New Approach to Skills and Jobs

Traditional approaches to job architecture will be completely outdated within two years, McLaughlin predicts. HR leaders that act now will stay ahead. A hybrid workforce of people and AI means roles will be constructed from an aggregation of tasks, with each task assigned to either a human or AI. This moves away from static job families toward a more dynamic, skill- and task-based structure.

While AI skills are important for certain roles, core competencies remain as relevant as ever. These include agility, curiosity and analytical thinking. “Individuals who demonstrate these traits are emerging as ‘AI Champions’ in the workforce,” says Ernest Paskey, Workforce Transformation Practice Leader, Talent Solutions, North America. Leading organizations are developing processes to foster these core competencies such as readiness academies. Additionally, assessment tools are getting better at hiring and developing employees for skills to thrive alongside AI. To maintain trust, organizations should use these tools to support — not replace — human judgement, and regularly review them for fairness, accuracy and potential bias.”

50%

of employees have completed training as part of a long-term learning strategy in their organization compared to 41% in 2023.

Source: Future of Jobs Report 2025, World Economic Forum

Aon conducted AI sensitivity and job skills adjacency analyses for a telecom company, identifying opportunities to use AI, current workforce skills, potential moves and ease of transition. The project gave the client a future roadmap they could confidently present to the board.

HR professionals have the skillset and experience to drive and shape workforce transformation. The key to successful implementation will be partnering with stakeholders across the business to map the strategy, as well as building the confidence and trust of the workforce.

Four Benefits to Developing a Skills-Based Workforce

  • 01
    Strengthening Culture and Innovation

    Companies that foster a culture of trust around AI will encourage employees to lean into the core competencies of learning, experimentation and growth — which are strong predictors of high performance.

  • 02
    More Agile to Respond to Change

    Talent can quickly be deployed based on business needs, as people won’t be constrained by a job role or title that makes it harder to pivot to a new project. Time-to-hire has also been found to decrease2 when there is a focus on skills versus meeting all a job’s requirements.

  • 03
    Stronger Talent Pipeline

    Skills-based hiring opens doors to non-traditional candidates. This helps support many companies’ goals of expanding their candidate pool and hiring people from an array of backgrounds and experiences.

  • 04
    Reduced Costs and Risks over the Long Term

    Our research finds a strong connection between employee tenure and performance.3 Proactive reskilling can be less expensive than “buying” skills and also helps build emerging skills before there are problematic gaps.

With contributions from:

  • Melissa Champine, Partner, Head of Assessment, Talent Solutions, North America
  • John McLaughlin, Partner and CCO, Talent Solutions, Europe, the Middle East and Africa
  • Ernest Paskey, Head of Workforce Transformation, Talent Solutions, North America
  • Marinus van Driel, Partner, Workforce Transformation, Talent Solutions, North America

Force #2: Rising Costs in Healthcare are Unsustainable

How to rethink health and benefits through a total rewards lens

There has been intense focus over the past decade on how to bring rising healthcare costs under control. Globally, the average medical trend rate is rising at nearly four times the rate of inflation, with some regional variance even higher. Some drivers of increased costs are consistent such as increasingly expensive cancer treatments. High-cost claimants — claimants with acute, recurring or major health issues that contribute significantly to costs — also continue to be an issue. Our research shows that 1% of claimants account for 40% of costs. Employers are also finding hidden costs like AI-upcoding and overbilling can be an issue.

Employers are rightfully concerned; rising costs eat into their total rewards budget and passing cost increases onto employees could impact their ability to afford the healthcare they need and hurt their finances.

In the U.S. where healthcare cost increases are among the highest, two-thirds of employers said controlling costs was their top benefits priority, up from 38% in 2024.4 And nearly 30% said costs are now high enough to require them to take significant action beyond the typical strategies of plan design changes, employee contribution increases and vendor negotiation.

Demand for private insurance caused by a growing proportion of roles in emerging economies, and in countries where public systems are strained by an aging population is another factor driving cost increases.

Understanding the unique needs of employees and acting with purpose to meet those needs can bend the cost curve in the long run, while improving employee and business outcomes.

7.6

million people in the UK had private medical insurance in 2024, up from 6.7 million in 2020.

Source: Financial Conduct Authority, Financial Lives 2024 Survey

Mitigating Cost Increases Strategically

The first step in addressing healthcare increases is leveraging the right data. By analyzing claims data and utilizing predictive analytics like Aon’s Health Risk Analyzer, companies can identify how the health risk of their population is shifting and who is most likely to drive costs in the future. This will better manage the financial risk and target strategies to address the health risks of individuals.

Incentivizing the use of high-quality, cost-effective networks is another way to control costs. High-quality providers tend to provide better outcomes, lessening the need for additional care.

Wellbeing programs are still the most popular mitigation strategy.5 A comprehensive wellbeing program that accounts for physical, emotional, social, financial and work-life wellbeing can obviate the need for more expensive care later. Here are some examples:

  • A financial counseling program that reduces an employee’s stress not only improves their financial and emotional wellbeing, but it can also reduce the risk of stress-related illnesses.
  • Using data and technology, employers can target communication and benefits for people at risk for certain cancers. With the cost of cancer treatments skyrocketing and cancer rates continuing to rise particularly in younger people, treatments are more effective and cheaper when caught early through preventative screenings and tests. Many employers are taking an all-of-the-above approach given the surge in costs. In the U.S., our data finds these actions, combined with higher employee contributions, are expected to reduce the cost to employers from a projected 11.2% increase prior to changes to an 8.7% increase after changes for 2026. Even so, that is up from 7.3% last year.

22%

Total rewards budgets are expected to increase 22% over the next four years, and healthcare costs account for about one-third of that spend.

Source: Aon’s 2025 Total Rewards Strategy Study; IMF World Economic Outlook, April 2025

Learn More
Looking at Healthcare Costs Through a Total Rewards Lens

Employers should review overall total rewards spending to see where they can optimize programs and get maximum return on investment. More than 70% of employers surveyed said cost concerns were the biggest barriers to a successful total rewards strategy. Just over one-third said they wanted to completely redesign total rewards. That number is more than half in Asia Pacific.6

Leveraging data enables employers to tailor benefits offerings to an array of workforce needs, improving engagement and competitiveness without inflating costs. Employers who integrate data-driven decision making into their total rewards strategy will not only control rising healthcare costs but also unlock predictive insights that drive talent outcomes and business performance.

Four Benefits to Addressing Rising Health Costs

  • 01
    A Healthier, More Productive Workforce

    Investments in areas like preventive care, chronic disease management and social and emotional wellbeing are correlated with reduced absenteeism and burnout, lowering health premiums and benefit costs.

  • 03
    More Accurate Budgeting and Planning

    When companies are able to control and better manage medical costs, they stabilize their overall people spend, allowing companies to invest in programs over the long run with confidence. Better cost control also means less disruptive year-to-year benefit changes for employees.

  • 04
    Enhanced Resilience and Employee Trust

    When healthcare costs are better managed, optimizing total rewards programs becomes easier because there is line-of-sight into long-term spend. This better positions organizations to weather economic downturns, regulatory changes or public health crises without making emergency cuts to benefits.

With contributions from:

  • Andrew Cunningham, Chief Commercial Officer, Human Capital, Europe, the Middle East and Africa
  • Stephanie DeLorm, Global Total Rewards Commercial Leader
  • Janet Faircloth, Senior Vice President, Thought Leadership, Health Solutions, North America
  • Alan Oates, Head of Global Benefits, Asia Pacific

Force #3: Confident Decisions Require Connected Intelligence

How to use data and analytics to deliver advanced insights

HR leaders are under pressure to make faster, smarter decisions in an environment where costs are rising, skills are shifting and employee expectations are evolving. At its core, employers face an opportunity cost on human capital spend; investing in one area means sacrificing another. Connected data is critical to make those tradeoffs. Leveraging data and analytics can produce powerful predictive insights, such as forecasting high-cost healthcare claimants, reducing preventable workers compensation claims and achieving better ROI of total rewards. It can also help organizations understand how chronic conditions or burnout affect replacement costs, overtime and productivity.

Here are three examples of ways business leaders can harness data and analytics to maximize the effectiveness of HR programs.

Example #1: Tackling High Healthcare Costs and Claims with Connected Analytics
  • The Problem

    Employers are facing relentless pressure to manage rising healthcare costs, compounded by two headwinds: escalating costs and volatility driven by high-cost claimants. This dynamic has shifted the conversation from a purely HR issue into a broader people risk challenge. A small percentage of employees often drive a disproportionate share of costs. Our research finds 40% of medical spend is driven by just 1% of members.8 Declining physical and mental health, including obesity, high blood pressure and diabetes, is linked to higher rates of injury, longer return-to-work times and more expensive claims. Integrated diagnostics from our Workforce Analyzer/Aon data shows that 60% of employees with workers’ compensation claims also have a chronic health condition, highlighting how underlying health conditions can escalate both medical and workers’ compensation costs.

  • The Solution

    Organizations can use predictive analytics and connected health, absence and claims data, using tools like Aon’s Health Risk Analyzer and Workforce Absence Analyzer, to identify employees at higher risk of costly claims or preventable accidents before issues escalate. By training models on combined datasets. By combining datasets and training models, employers can pinpoint conditions most linked to high-cost claims, such as musculoskeletal issues, metabolic risks and fractures, and target interventions where they will deliver the greatest financial impact.

    “Predicting who is likely to become high cost or have an accident gives organizations the confidence to act early, not after the fact,” says Leanne Metcalfe, PhD, Senior Vice President, Health Solutions, North America.

    With these insights, employers can:

    • Forecast risk and cost to plan preventative measures and set realistic budgets.
    • Design targeted health and wellbeing programs to close care gaps and reduce chronic-condition prevalence.
    • Enhance workplace accommodations and safety practices to lower injury rate and severity.
    • Improve incident response to reduce downtime and speed recovery.
  • What’s Next

    The next step is integration and precision. By linking predictive analytics to cost-efficiency measurement, organizations can direct the right people to interventions proven to work and validate outcomes. Expect greater emphasis on engagement strategies tailored to different workforce segments using behavioral insights to improve engagement.

60%

of individuals with workers compensation claims also suffer from a chronic condition.

Source: Aon Analysis

Example #2: Building a Skills-Based Workforce with AI and Predictive Pay Insights
  • The Problem

    Skills and job requirements are evolving at unprecedented speed, making it difficult for organizations to keep track of what capabilities they have, what they need and how to plan for future gaps. Traditional job-based frameworks are outdated, and many organizations struggle to redeploy talent effectively or invest in the right reskilling initiatives.

  • The Solution

    Organizations are increasingly turning to AI-powered platforms that can create a dynamic “skills DNA” for every role. Extracting in-demand skills from labor market data and mapping them to internal roles enables companies to benchmark against the market and align skills to jobs. This approach helps leaders identify skills gaps and prioritize reskilling and upskilling. Using AI and people analytics requires strong data protection, security and transparency with employees about how their data is used. Solutions like Aon’s SkillsGraph provide a foundation for skills-based workforce planning, with outcomes depending on each organization's data quality, governance and implementation choices.

  • What’s Next

    Move beyond cataloging skills to predicting pay premiums for critical capabilities, not just job titles. By combining market data and internal analytics, organizations can make more informed decisions about where to invest in reskilling and how to reward emerging skills. It's important to note that as organizations adopt these AI-driven insights, they should ensure clear accountability, transparency with employees about how their data is used and alignment with local labor and privacy regulations. 

    “The real opportunity with AI isn’t just cost savings; it’s asking what new things can we do now that the cost of doing them has dropped. Having a clear skills taxonomy gives organizations a roadmap to see where AI can add value and who needs reskilling,” says Muir Macpherson, Leader of Talent Analytics, Talent Solutions, North America.

39%

of workers’ core skills are expected to change by 2030, with AI and big data topping the list of fastest-growing skills.

Source: World Economic Forum, Future of Jobs Report 2025

Example #3: Seeing the Full Picture of Total Rewards
  • The Problem

    Organizations face mounting pressure to attract and retain talent while managing rising medical costs and evolving employee expectations. Many HR professionals struggle with fragmented data across compensation and benefits, making it difficult to understand how their total rewards strategy compares to peers or aligns with workforce needs.

  • The Solution

    A data-driven approach to total rewards, such as Aon's Total Rewards Benchmarking Platform, can help employers move beyond siloed insights. Integrating compensation, benefits and workforce data into a single view enables leaders to make evidence-based decisions that balance costs with programs that are valued, utilized and boost performance.

  • What’s Next

    Expect greater use of dynamic dashboards and real-time analytics to support agile decision making. Organizations will increasingly personalize rewards strategies based on employee preferences and life stages, ensuring benefits suit a multi-generational workforce.

72%

of employers say cost constraints are the top barrier to achieving total rewards success.

Source: Aon 2025 Future of Total Rewards Study

Four Benefits to Using Data and Analytics to Uncover Insights

  • 01
    Better Financial Control

    Predictive analytics can flag employees at higher risk of becoming high cost claimants, filing a workers’ compensation claim, chronic absenteeism and more. Having foresight into these future risks allows a company to avoid or manage that cost.

  • 02
    Protect Employee Health and Safety

    Using data to identify who would benefit from certain types of support (e.g., diabetes care management, expanding access to GLP-1 drugs, mental health access) will help employees stay healthier, more engaged and productive.

  • 03
    Improved Workforce Planning

    Data and analytics makes connections across the workforce that might otherwise be undiscovered, such as understanding how chronic conditions or burnout affect replacement costs, overtime and productivity.

  • 04
    Stronger Governance and Compliance

    Analytics can flag potential issues early such as repeated denials in a claim category or patterns that might suggest compliance or quality problems. This supports more timely corrective actions and stronger documentation for regulators and insurers.

With contributions from:

  • Ben Batho, Data and Analytics Leader, Health Solutions, Europe, the Middle East and Africa
  • Stephanie DeLorm, Global Total Rewards Commercial Leader
  • Muir Macpherson, PhD, Leader of Talent Analytics, Talent Solutions, North America
  • Leanne Metcalfe, PhD, Senior Vice President, Health Solutions, North America

Force #4: Pay Transparency is no Longer Optional

How to sustain trust and fairness under new scrutiny and use it as a competitive advantage

There are few things more important to employees than their pay. Nearly half (47%) of Aon respondents9 said above-average pay and meaningful benefits are the number one factor influencing where they work. This was the highest compared to any other factor. That is what makes the persistent wage gap between men and women such a pressing issue. The effects of the gap are wide-ranging, including limiting certain groups such as women and caregivers to part-time, freelance or gig work, to long-term issues such as a significant retirement savings gap.

Pay transparency regulations aim to close the gap, as well as bring more transparency across all elements of total rewards. The most notable regulation, the EU Directive on Pay Transparency, requires member states to pass and enact legislation around pay transparency by June 2026 (The Netherlands has requested a delay until the start of 2027).

The EU directive may be a model for other countries or U.S. states. Norway announced they will adopt the EU directive, and South Korea said it intends to implement a system of pay transparency. Many U.S. states are also enacting their own transparency requirements. The growing patchwork of laws means that companies with an overarching strategy on pay transparency will have an advantage no matter where they do business.

Aon’s 2025 Global Pay Transparency Study shows that most organizations need to prepare, with nearly a quarter saying they are not ready at all and a third saying their readiness hasn’t improved in the past 12 months.

Determine Compliance Strategy with 3 Core Questions

With time running short until the EU directive kicks in, compliance must come first. There are three dimensions of pay transparency preparedness for HR and business leaders to consider:

  1. Is my organization prepared for pay transparency regulations and the broader movement?
  2. What are my organization’s priorities and top ways to achieve pay transparency?
  3. How developed are my organization’s employee communication strategies and reporting plans for both internal and external stakeholders?

This last question is especially crucial. Employees want to know they are being treated fairly, and if they find out they haven’t been, they are going to need clear and consistent communication about what the company is doing to remediate the issue. They may also want to know why the company only began treating them fairly when they were legally required to do so, which could be a difficult conversation on many levels.

Focus on Job Architecture

Pay transparency presents organizations with an opportunity to reimagine their job architecture. A strong job architecture helps employers align their business goals with their hiring process while providing clarity on roles and responsibilities for employees. Revisiting job architecture not only helps with pay transparency; it also helps organizations move to a skill-based workforce.

Expand Benchmarking Capabilities

The peer group a company competes with for talent is increasingly cross-industry as hiring transferable skills becomes more common. Limiting a peer group can be a missed opportunity to see the competitive landscape for talent. It can also delay the transition to being a skills-based organization that many companies find will be necessary in the coming years.

Beyond widening the peer group, leading employers are also expanding what they benchmark. Instead of looking at base pay alone, they are comparing the full spectrum of total rewards — salary and incentives to health and retirement — in order to understand how their overall package stacks up in a competitive market. By integrating compensation, benefits and employee population data into a single platform, organizations can move past siloed datasets and fragmented insights.

A good place for employers to start is with a pay transparency readiness assessment. This kickstarts the compliance process by determining which regulations apply and sets the tone for action by highlighting the employer’s goals.

Pay Transparency is About More than Pay 

Pay transparency will lead to a culture shift and a mindset shift for many companies. More openness about pay in the workplace and changes to performance and recruitment strategies could run counter to an organization’s culture and the mindset of individuals responsible for executing these policies.

Change management will be important throughout an organization and employers that master these transitions will have an enormous competitive advantage.

Four Benefits to Embracing Pay Transparency as a Competitive Advantage

  • 01
    Employees are Demanding Action, Especially the Most Vulnerable

    Pay is the central aspect of total rewards, and organizations that lead with fair and equitable total rewards have a competitive advantage for top talent.  Low-income earners are significantly less likely to trust that their pay is fair, according to Aon’s 2025 Employee Sentiment Study.

  • 02
    Compliance Won’t Wait

    The wave of regulatory changes driving the pay transparency movement isn’t going away. Indeed, the EU Directive, arguably the biggest pay transparency regulation, has specific 2026 deadlines. There could be real financial and reputational consequences for failing to fully comply.

  • 03
    Get Your House in Order for Transactions

    Companies exploring mergers and acquisitions will want to know that their house is in order, and that they are in a position to integrate (or spin off) employees with rational criteria that determines their pay.

  • 04
    Boost Performance Management and Retention

    Paying employees according to their skills in a way that minimizes or eliminates bias is not only the right thing to do, it’s a best practice that can improve employee morale and loyalty, leading to improved business outcomes.

With contributions from:

  • Kate Evert, Partner, Workforce Transformation, Talent Solutions, North America
  • Sandrine DeCarnin, Head, Aon Communications Advisory Practice Europe, Middle East and Africa
  • Anthony Poole, Partner, Talent Solutions, Europe, the Middle East and Africa
  • Maggie You, Partner, Head of People Advisory, Talent Solutions, Asia Pacific

Force #5: Smart Retirement Solutions to Power People and Performance

How to support retirement readiness and nurture future leaders

As people live longer, traditional retirement savings are inadequate. This is causing people to work longer to build bigger savings. Countries with government-funded pensions are also curtailing benefits to support a larger portion of older citizens. For example, in Italy, the annual pension for a 67-year-old retiring today on a salary of €75,000 is €52,000. The expected pension for 27-year-old retiring in 40 years on a salary of €75,000 is €25,000. With low financial literacy and little company-sponsored pension savings in the country, employees are left vulnerable to not being able to retire at their desired age.

With the share of people aged 65 and older projected to nearly double in 25 years,10 the risk is twofold: Retirement savings will be insufficient to support longer life spans and there may not be enough working adults to support certain government programs for retired individuals.

While government has a policy role, companies can help address this challenge by reviewing how current benefits offered impact retirement readiness, where there are gaps in coverage and what benefits are being under-utilized or should be added to help close that gap.

2050

Hong Kong, South Korea, Taiwan and Japan are expected to have the highest share of older people by 2050.

Source: Statista

“Many benefits that companies offer have an impact on whether people can retire when they want to,” says Melissa Elbert, Partner, Wealth Solutions, North America. Credit card debt, inadequate savings for college or a lack of insurance coverage when natural disasters occur are a few examples where employees have borrowed from their retirement savings. “Employees across all generations in the workforce could use more education around this,” she adds.

Tips for Improving Retirement Outcomes
  • Embed financial wellbeing and advice as a standard benefit.
  • Provide easy access to high quality financial guidance, including digital and robo-advice options, to help employees of all ages make informed decisions on saving, investment, and decumulation strategies.
  • Use plan design to encourage better long term outcomes. This can include auto-enrollment and auto escalation of contributions into defined contribution plans.
  • Consider further action by directing variable or non guaranteed income —such as bonuses or one off awards — into retirement savings by default, while preserving opt out flexibility.

35%

of U.S. employees experience a spike in spending that can’t be covered by income or cash reserves.

Source: EBRI Issue Brief, no. 591, September 2023, Employee Benefit Research Institute

Tailor Retirement Solutions for a Five-Generation Workforce

As people are working longer, a five-generation workforce has become more common. Yet, there continues to be a large gap in the perception of the value of retirement benefits across generations and how effective companies are in getting younger workers to invest fully in retirement benefits.

Retirement benefits consistently rank lower for younger generations, even as they say employers have an important role to play.11 Older employees may be more concerned with stretching savings, managing health costs or transitioning gradually into retirement. Middle-career employees may be focused on health benefits for families or setting up college savings accounts. The bottom line is that benefit strategies that treat all employees the same will miss the mark.

AI technology is making benefit customization easier and less resource intensive, including the ability for employers to recommend and curate benefits by employee profile e.g., approaching retirement, particular health risks or gaps in certain insurance coverages.

45%

of workers across the globe say employers should help employees save for retirement and long-term needs.

Source: Aon’s 2025 Employee Sentiment Study

Rethink Traditional Retirement

As employees stay in the workforce into their 60s and 70s, financial stress over issues like a lack of retirement savings or not being able to afford healthcare (an acute issue in the United States) can increase. This can impact productivity and wellbeing if not addressed.

“There should be a rethink of retirement where people choose a step-down career and not an abrupt career end,” suggested National University of Singapore Professor Andrea Maier on Aon’s Better Being podcast episode, The Longevity Shift: Rethinking Aging in the Modern Workplace.

This type of phasing into retirement can also aid in succession planning and knowledge transfer so there isn’t a sudden departure due to extreme burnout or health issues. Employers that treat retirement not as an end of career event, but as an integrated, multi generational financial wellbeing strategy, will be better positioned to attract, retain, engage and sustain people at every stage of their career.

Four Benefits to Smarter Retirement Planning

  • 01
    Competitive Differentiator

    Retirement benefits that speak to different generations allow employers to communicate benefits at every life stage. It can also help reduce turnover costs, as younger workers see a path to financial security and older workers stay engaged when they feel they can retire on their own terms.

  • 02
    Higher Productivity and Lower Financial Stress

    Employees who feel financially secure spend less time worrying, dealing with money-related crises or taking on extra work. It can also improve other aspects of wellbeing. For example, a growing body of research finds a connection between financial stress and poor mental health.

  • 03
    Better Succession Planning

    Clearer retirement horizons make it easier to identify and develop future leaders, build structured knowledge transfer programs and approach succession planning more holistically throughout the organization.

  • 04
    Closing Benefit Coverage Gaps

    There can be real gaps in retirement readiness across a workforce, often seen more prominently among women, lower income workers and some racial groups. Targeted support helps narrow those gaps. This is especially crucial with certain types of pay transparency and pay equity regulations.

With contributions from:

  • Melissa Elbert, Partner, Wealth Solutions, North America
  • Ashley Palmer, Head of Wealth Solutions, Asia Pacific
  • Oliver Walker, Senior Partner, Wealth Solutions, United Kingdom

Ready to Start a Conversation?

Through our data, advanced analytics and advisory expertise, Aon can help your organization balance performance, cost, risk and experience across the workforce. Contact us to start a conversation.

1 Aon 2025 Employee Sentiment Study
2 The State of Skills-Based Hiring 2023, TestGorilla
3 5 Data-Driven Ways HR Can Optimize Costs, Aon
4 Aon’s 2026 U.S. Health Survey
5 Aon Global Medical Trend Rates Report 2026
6 Aon 2025 Future of Total Rewards Study
7 Aon 2025 Future of Total Rewards Study
8 Health Risk Analyzer | Aon
9 Aon’s 2025 Employee Sentiment Study
10 United Nations Population Division
11 Aon’s 2025 Employee Sentiment Study

General Disclaimer

This document is not intended to address any specific situation or to provide legal, regulatory, financial, or other advice. While care has been taken in the production of this document, Aon does not warrant, represent or guarantee the accuracy, adequacy, completeness or fitness for any purpose of the document or any part of it and can accept no liability for any loss incurred in any way by any person who may rely on it. Any recipient shall be responsible for the use to which it puts this document. This document has been compiled using information available to us up to its date of publication and is subject to any qualifications made in the document.

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Trade, technology, weather and workforce stability are the central forces in today’s risk landscape.

Industry Insights

These industry-specific articles explore the top risks, their underlying drivers and the actions leaders are taking to build resilience.

Human Capital Analytics

Our Human Capital Analytics collection gives you access to the latest insights from Aon's human capital team. Contact us to learn how Aon’s analytics capabilities helps organizations make better workforce decisions.

Human Capital Quarterly Insights Briefs

Read our collection of human capital articles that explore in depth hot topics for HR and risk professionals, including using data and analytics to measure total rewards programs, how HR and finance can better partner and the impact AI will have on the workforce.

Insights for HR

Explore our hand-picked insights for human resources professionals.

Workforce

Our Workforce Collection provides access to the latest insights from Aon’s Human Capital team on topics ranging from health and benefits, retirement and talent practices. You can reach out to our team at any time to learn how we can help address emerging workforce challenges.

Mergers and Acquisitions

Our Mergers and Acquisitions (M&A) collection gives you access to the latest insights from Aon's thought leaders to help dealmakers make better decisions. Explore our latest insights and reach out to the team at any time for assistance with transaction challenges and opportunities.

Natural Resources and Energy Transition

The challenges in adopting renewable energy are changing with technological advancements, increasing market competition and numerous financial support mechanisms. Learn how your organization can benefit from our renewables solutions. 

Navigating Volatility

How do businesses navigate their way through new forms of volatility and make decisions that protect and grow their organizations?

Parametric Insurance

Our Parametric Insurance Collection provides ways your organization can benefit from this simple, straightforward and fast-paying risk transfer solution. Reach out to learn how we can help you make better decisions to manage your catastrophe exposures and near-term volatility.

Pay Transparency and Equity

Our Pay Transparency and Equity collection gives you access to the latest insights from Aon's human capital team on topics ranging from pay equity to diversity, equity and inclusion. Contact us to learn how we can help your organization address these issues.

Property Risk Management

Forecasters are predicting an extremely active 2024 Atlantic hurricane season. Take measures to build resilience to mitigate risk for hurricane-prone properties.

Technology

Our Technology Collection provides access to the latest insights from Aon's thought leaders on navigating the evolving risks and opportunities of technology. Reach out to the team to learn how we can help you use technology to make better decisions for the future.

Trade

Our Trade Collection gives you access to the latest insights from Aon's thought leaders on navigating the evolving risks and opportunities for international business. Reach out to our team to understand how to make better decisions around macro trends and why they matter to businesses.

Transaction Solutions Global Claims Study

Better Decisions Across Interconnected Risk and People Issues.

Weather

With a changing climate, organizations in all sectors will need to protect their people and physical assets, reduce their carbon footprint, and invest in new solutions to thrive. Our Weather Collection provides you with critical insights to be prepared.

Workforce Resilience

Our Workforce Resilience collection gives you access to the latest insights from Aon's Human Capital team. You can reach out to the team at any time for questions about how we can assess gaps and help build a more resilience workforce.

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