Why the Aging Workforce Demands a New Employer Strategy

Why the Aging Workforce Demands a New Employer Strategy
May 12, 2026 8 mins

Why the Aging Workforce Demands a New Employer Strategy

Why the Aging Workforce Demands a New Employer Strategy

As people work longer, employers that connect talent, health and retirement strategies will be best positioned to protect critical skills, manage health costs and avoid unplanned workforce exits.

Key Takeaways
  1. Workforces are aging quickly — often faster than employer strategies are evolving.
  2. Streamlining benefits and retirement programs can reduce complexity, strengthen governance and give leaders clearer cost and workforce insights as careers lengthen.
  3. Flexibility across roles, careers and benefits helps people work longer and remain healthier on their own terms.

Global demographic aging is accelerating: The population aged 65 and over is projected to reach 1.6 billion by 2050, nearly double its size in 2021.1 For employers, the question is no longer whether people will work longer, but whether workforce design, benefits and governance are aligned to that reality.

The implications of an older employee population are vast — from rising health costs to uneven retirement preparedness and rapid shifts in work design. Not to mention, employees are staying on the job out of necessity as much as choice in many regions, adding pressures to productivity, cost and succession.

Adapting to an Older Workforce

As populations age, employers have an opportunity to retain experience, deepen skills and extend productive careers. By 2050, older workers will make up a far larger share of the workforce in the U.S., UK and beyond. This raises the stakes for flexible job design, targeted benefits and smarter retirement strategies.

  • 23%

    U.S. population projected to be 65+ by 2050 (up from 17% in 2022)

    Source: U.S. Census Bureau

  • 25%

    UK population projected to be 65+ by 2050 (up from 19% in 2022)

    Source: UK House of Commons Library; Office for National Statistics

  • 46.4%

    Hong Kong population projected to be 65+ by 2050 (up from 23.7% in 2025)

    Source: United Nations

Improve Financial Wellbeing to Address Retirement Readiness

Retirement readiness depends on financial wellbeing across the full lifecycle — from emergency savings and debt management to contribution levels and decumulation decisions. In the U.S., hardship withdrawals from 401(k)s are rising to cover medical expenses and emergency events where employees may lack sufficient savings. This underscores the need for organizations to provide connected support that reflects how health costs, short-term liquidity and long-term savings interact.

Delayed retirement and fragmented programs cause unpredictable costs and governance exposure. For CFOs and risk leaders, this pressure intensifies as responsibility for retirement outcomes continues to shift from the state to employers and individuals.

“For multinationals, the challenge isn’t just adequacy; it’s complexity,” says Oliver Walker, Senior Partner, Wealth Solutions, United Kingdom. “Managing thousands of pension providers and governance structures simply isn’t sustainable.”

Traditional retirement savings models are breaking down under demographic pressure. In Italy, a 67-year-old retiring today on a €75,000 salary receives a €52,000 annual pension, while a 27-year-old will receive just €25,000 in 40 years on the same salary.2 The shift from defined benefit to defined contribution plans has transferred investment risk and decumulation complexity to individuals, making employer-sponsored guidance more critical.

Making Saving Effortless Through Innovative Plan Design

Defined contribution plans have become the dominant retirement savings vehicle across most markets. This transition has increased variation and volatility in retirement outcomes, driven by differences in contribution behavior, investment choices and access to financial guidance over time. Plan features that make saving simpler and more automatic are becoming critical. Auto-enrollment and auto-escalation significantly improve participation and savings adequacy. In the U.S., a report from Vanguard3 found automatic enrollment has more than tripled from 2007 to 2024 and two-thirds of plans with auto-enrollment also have automatic annual deferral rate increases. Elsewhere,4 Ireland recently introduced mandatory pension auto-enrollment,5 while default-based regimes are established in the UK and Australia.6

Innovative plan design is about making regular saving effortless. While employers increasingly use true-up contributions to ensure employees do not miss matches when contributions are front-loaded, defaulting bonuses or one-time awards into retirement savings is rare across major markets.

16.3%

Workers aged 55+ made up 16.3% of the global labor force in 2020 (up from 10.9% in 1995).

Source: International Labour Organization Department of Statistics

Quote icon

If employees don’t have short-term financial security such as emergency savings and help with healthcare costs, long-term retirement plans break down. Financial wellbeing isn’t separate from retirement strategy anymore; it’s a prerequisite.

Grace Lattyak
Partner, Wealth Solutions, North America

A Skills-Based Approach to Succession Planning and Retirement

An aging workforce means rethinking succession planning and moving from reactive replacement lists to continuous talent pipelines. Leaders must shift their strategy from static charts to dynamic skills and knowledge mapping.

Skills-based approaches can help employers deploy experienced talent to higher-value work, while identifying where targeted upskilling is needed. Practical steps include running talent assessments to inventory capabilities and using AI-enabled insights to prioritize reskilling and internal mobility.

Knowledge transfer programs, including structured mentoring, coaching opportunities and documentation systems, can help capture institutional expertise before employees retire. Yet participation in training among older workers remains low. Across the EU, 35% of workers aged 55-64 participated in job-related formal or non-formal training in the last 12 months, compared to 48% of those aged 35-54. Participation ranges from more than 60% in Sweden to less than 10% in Greece and Türkiye. For employers, this gap can reduce productivity and accelerate the loss of critical know-how as late-career skills become outdated and employees exit the workforce.7

Job design flexibility is also important. This can include phased retirement models, reduced schedules and project-based roles that allow organizations to retain critical talent while supporting gradual transitions into retirement. Such models result in healthier, more sustainable workforce exits and an overall smoother succession planning process, with less financial pressure for late-career employees.

1M+

AXA XL’s skills discovery journey generated more than a million data points, enabling gap analyses and better workforce planning.

Source: How AXA XL Transformed into a Skills-Based Organization

Learn More

Designing Benefits for Longer, Healthier Careers

As workforces age, the challenge is not simply managing cost, but sustaining productivity, wellbeing and workforce continuity. Benefit design should focus on the following key areas to ensure employees remain engaged versus exiting earlier than planned.

Caregiving Needs

Care responsibilities don’t end mid-career. Many older employees are supporting aging parents while holding senior roles and making complex retirement decisions. When caregiving needs are left unsupported, fatigue, reduced hours or unplanned early retirement can follow, creating continuity risk by forcing the loss of experienced employees at a time when replacing their skills is most difficult. Financial strain from caregiving costs or disrupted income can also accelerate drawdowns from retirement savings.

Specific Health Risks

Older workers also bring distinct health needs that require more precise benefit design and easier access to the right support. Leading employers increasingly rely on data-driven insight to segment need, identify emerging risk and provide early intervention. Tools such as Aon’s Health Risk Analyzer help employers identify age-specific risks and prioritize targeted investment, including support for musculoskeletal conditions and other prevalent issues.

82%

of UK employees were members of a workplace retirement plan in 2024.

Source: Employee workplace pensions in the UK, Office of National Statistics

Learn More
Healthcare Transitions

Healthcare transitions also represent a key moment of need. In the U.S., employers are providing unbiased education about Medicare enrollment to support transitions to public healthcare at age 65. In other markets, the parallel challenge is helping employees understand public-system entitlements, supplemental coverage and employer-sponsored programs to ensure care is accessed earlier and coordinated more effectively.

The health-wealth connection is critical: Employees experiencing financial strain face higher mental health challenges and greater exposure to chronic conditions, while stigma often leaves financially-driven health issues unreported. Across OECD countries, one in five workers aged 55-64 leave employment due to poor health, making workplace accommodations and preventive health programs essential investments.8

14%

Only 14% of multinationals have global guidelines encouraging local personalization or choice in benefits.

Source: 2025 Global Benefits Trends Study

Learn More
Quote icon

Offering employees flexible retirement options, financial education and targeted health benefits helps support people later in their careers to live and work healthier and more productively than they might not otherwise.

Andrew Cunningham
Chief Commercial Officer, Human Capital, Europe, the Middle East and Africa

Ensure your human capital strategy meets the needs of an aging workforce: Contact us to start a conversation.

Aon's Thought Leader:

Andrew Cunningham
Chief Commercial Officer, Human Capital, Europe, the Middle East and Africa

With contributions from Melissa Elbert, John Hardern, Grace Lattyak, Ashley Palmer, Oliver Walker and Thomas Williams.

1 UN report calls for re-thinking social protection as the world ages, UN News
2 2026 Human Capital Outlook: 5 Forces to Act on
3 How America Saves 2025, Vanguard
4 U.S. Bureau of Labor Statistics
5 Automatic enrolment detailed guidance
6 MySuper, Treasury.gov.au
7 Ageing and employment, OECD
8 Pensions at a Glance 2023: OECD and G20 Indicators

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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