Is the lack of meaningful benefits for long-tenured employees a form of ageism?
Could it be a subtle signal that companies no longer value retaining experienced workers?
In the past, defined benefit pension plans encouraged employees to stay with organizations for the long haul, rewarding them at milestones like 15, 20, or 25 years of service. Pensions not only incentivized loyalty but also created a reliable network of retired workers whom companies could tap during periods of peak demand. Retirees remained connected, and company-maintained access to a deep bench of seasoned talent.
Today, with the shift toward portable, contribution-based retirement plans (like 401(k)s), these service milestones have largely disappeared. Many organizations no longer even track their retirees, losing a valuable connection to their institutional knowledge and skills.
This raises a timely question: Is there an opportunity for employers to become more innovative and inclusive with their long-term incentives? Especially as today’s older workers are healthier, more active, and working longer than ever before.
Here are a few ideas for modern incentives — outside of traditional pensions — that employers could offer employees who are planning their transition to retirement:
- Stock grants at key service milestones
- Medicare Advantage premium reimbursements
- Continuation of life insurance coverage post-employment
- Extension of long-term care insurance
- Cash bonuses for milestone anniversaries
- Final-year service bonus payouts
- Ongoing 401(k) financial advisory support
- Access to company facilities (fitness centers, libraries, etc.)
- Participation in wellness programs after retirement
- Email address retention for a transitional period
- Formal retirement recognition programs
- Continued employee discounts
- Opportunities for consulting or project-based work
- Membership in company alumni networks
Medicare reimbursements, in the US, can offer real financial support. Through Health Reimbursement Arrangements (HRAs) such as Individual Coverage HRAs (ICHRAs) and Qualified Small Employer HRAs (QSEHRAs) are arrangements where employers can reimburse retirees for Medicare Part B, Part D, and supplemental premiums under certain conditions.
Given that replacing skilled employees is expensive both in terms of direct costs (recruitment, training) and indirect costs (lost productivity, weakened culture) it’s surprising how few organizations focus on longer-term retention incentives for non-executive staff. Older workers today consistently score higher in engagement, loyalty, and dependability. Meanwhile, average employee tenure continues to decline.
We often associate long-term incentive programs with executives, but skilled employees at all levels are valuable assets. Crafting incentives that cost less than the replacement value of these workers makes good business sense. Reducing turnover by even 2–3 percentage points could translate into significant savings and a stronger, more resilient workforce.
The right strategy will vary by organization. But the time has come to recognize and reward the value of our long-tenured, skilled employees, not just as a nice gesture, but as a smart, future-ready investment.
By Dennis Fitzgerald and Carol Jackson – Age Friendly Institute