A look at the semi-retirement trend and what would-be retirees can offer your company.
A new kind of American career is taking center stage. Dreams of the “ideal retirement” have shifted, and older generations have moved into “not-quite-retired.” A mix of work and leisurely activities has replaced visions of peacefully sailing off into the sunset or hitting the golf course full time.
According to an AARP survey of Baby Boomers, 80% said they were planning to work past 65, at least part time. As people are living longer and savings are becoming slimmer, many people heading into their golden years are unable to live the life they thought they would be able to, forcing would-be retirees to deal with an entire set of life challenges for which they may not be prepared.
The number of workers aged 55 and older is growing four times faster than the workforce as a whole, according to the US Bureau of Labor Statistics. Fortunately, the big picture seems to be brightening for this age of the American workforce. According to the Organization for Economic Cooperation and Development (OECD), employment rates for workers 55 to 64 have risen from 46% in 1994 to 51% in 2004.
Most research shows that retirees are going back to work for a number of reasons, including a desire to remain mentally alert and useful as well as to stay physically active. But the top two reasons are because of monetary necessity and health benefits. According to research from Fidelity Investments, Boomers only have enough in savings and other income sources to replace 59% of their pre-retirement income. Of those with 401(k) accounts, the average account balance is just $80,000 and many typically save just $2,750 a year toward retirement.
However, a recent General Social Survey found that non-financial considerations were important as well:
- 22% returned to employment because they did not like retirement
- 19% mentioned the intrinsic rewards offered by work (challenging tasks, social contacts, sense of purpose)
- 14% felt they were needed or wanted to help out
Adecco identified this trend early on and has been actively recruiting older workers who possess skills that are in great demand right now. Staffing companies large and small are promoting the advantages of temporary work as a part of a lifestyle that can be ideal for retirees who want or need to supplement their income, or to stay active in their retirement years. At the same time, it is advantageous for companies to utilize the resources of older workers because of their invaluable experience, strong work ethic and knowledge share. Additionally, they are excellent mentors for younger generations.
To help companies better prepare for the influx of older workers, Adecco has outlined some of the ways in which organizations can accommodate would-be retirees and succeed in this era of “retirement reversal.”How companies can prepare.
70 million Boomers expect to retire over the next 15 years and only 40 million workers are expected to enter the workforce in the same period. At this time, the workforce will experience a drought of knowledgeable workers to lead Corporate America through this next phase of growth and innovation.
Employers are most concerned about losing this segment of the workforce because Boomers are the managers running their businesses and servicing their clients. Additionally, they hold a high level of institutional knowledge and have the real-world experience to effectively run operations.
Baby Boomers are one of the most valuable segments of our workforce today. What employers must do to help their organizations soften the impact of Boomer retirement is to find ways to keep them on board for as long as they can. However, an “Older Workers Survey” conducted by the Society for Human Resource Management (SHRM) found that 32% of respondents said their organizations were doing nothing to prepare for the worker shortage, while 36% do offer increased training and 29% have implemented succession planning or replacement charts.
Boomers are looking for more meaningful work, to hone their skills and still contribute, and also to have flexible work options. Employers need to find ways to provide flexibility and ownership of projects or teams for their valued Boomers. One of the ways to do this is to create what economists call the bridge job – described as a part-time or full-time job typically held for less than 10 years following full-time careers. According to a 2005 working paper from the Center on Aging and Work at Boston College, one-half to two-thirds of workers take on bridge jobs before fully retiring, which is one reason the number of workers 65 and up is expected to increase 117% by 2025.
Additional ways to provide alternate work arrangements include:
- Flexible scheduling: Many workers believe that it’s not about how many hours you spend at the office giving face time, but how effective you are at your job, no matter how it gets done. There are multiple ways employers can provide flexible scheduling for their employees, including flextime, compressed work schedules and compensatory time off.
- Flextime allows workers to choose what time to begin and end their days (e.g., arriving at 10:00 a.m. and leaving at 7:00 p.m.)
- Compressed work schedules allow employees to work longer on some days in order to have more days off.
- Compensatory time off allows employees to get time off with pay after they have worked extra hours.
- Telecommuting: Currently there are 24 million employees who telecommute by working somewhere other than their regular work location – either at home, a satellite office or a telework center, where office equipment and technology is provided. Telecommuting often makes managing work-life balance easier for employees and increases morale and productivity. This type of scheduling, which indicates a high degree of independence and trust, should be balanced with regular visits to the office to meet with teams and clients.
- Part-time work: Part-time work is a great way to retain employees who enjoy – and deserve – independence and may want to abbreviate their schedule after having invested so much time in their careers over the years. There are multiple ways employees can work part-time, including sharing work and responsibilities with another employee of the same level, or phased retirement by staying with an employer, but working reduced hours over a period of time before full retirement.
- Consulting: Many organizations offer former employees that have retired the opportunity to rejoin the company on a consultative basis. According to a study by AARP, more than 60% of companies in the US are using retirees as contractors or consultants to hold on to tactical knowledge. Allowing retirees to come back to work and share their knowledge on an ad-hoc basis provides them with the flexibility to enjoy a leisurely schedule but, at the same time, have opportunities to be challenged and re-engage with former colleagues.
The Aerospace Corp: Offers “Casual Retiree” programs allowing older employees to work 1,000 hours a year, which equates to about half a year.
CVS: In the early ’90s, the company realized its workforce didn’t reflect the US population – only 7% of its workforce was over 50. CVS wanted its employees to mirror their customer so they began to actively hire and retain older workers. Now, 17% of the company’s workforce is over 50 – giving workers flexibility on hours, days and the jobs they do.
UC Berkeley: Started a pilot program where the university hires retired administrative and other professional workers on a temporary, part-time basis to replace workers on medical leave, to fill in when a position is being advertised or to help with a special project. The university has hired retirees for tasks like grant writing, budget work, strategic planning and organizational development.
How the government is helping.
Under current IRS rules, retirees younger than 65 cannot work part time for a company and receive a traditional defined-benefit pension from that firm. As a result, an employee who wants to phase into retirement at, say, 60 sometimes chooses to draw a pension from their original employer and then seek part-time employment from a competitor. To promote phased retirement, the IRS is considering allowing people to collect a pension at age 59-and-a-half and continue working part time for the same employer.
Other possible steps the government could take to assist Boomers in this era of phased retirement include making job assistance and training programs more widely available to older workers, and supporting elder care programs, since many older workers are responsible for their aging parents.
Prepare for the new era of employment.
Age-ism in the workforce is a danger to corporate productivity. Companies need to prepare for the new era of employment by removing barriers for Americans who wish to extend their careers. Organizations should also realize the looming talent shortage that’s already shaping up and that locating and securing top talent to replace their retiring workforce will take years to complete in today’s marketplace.
As a result, companies can take advantage of this ‘new’ workforce and create ways for millions of willing, seasoned and capable workers to continue contributing. Everyone – employers, older workers and the nation – will benefit from an effective pro-plan for older workers. In the end, the companies that are finding ways to retain senior workers benefit from an intangible, and often undervalued, commodity: wisdom.