Age-Related Determinants of Retirement Planning and Turnover
Funded: November 2007 Completed: December 2010
Ruth Kanfer, Ph.D., School of Psychology, Georgia Institute of Technology
Executive Summary
Retirement and Post-Retirement Work Intentions during an Economic Downturn
Workforce aging represents one of the greatest HR challenges facing organizations today. Demographic trends in most developed countries have created an environment in which many organizations face looming large-scale workforce retirements and potential shortages of skilled replacement workers. As a consequence, many firms have planned or implemented programs to help retain aging workers. However, the effectiveness of these programs depends on understanding the key factors that affect retirement intentions.
Research conducted by Ruth Kanfer and collaborators Julie Nguyen and Joerg Korff documents the effects of the recent economic downturn on employee experiences and retirement intentions, and the significant roles that employee motivation and attitudes play in predicting retirement and work intentions. Her findings with midlife and older working professionals and retirees suggest that firms could benefit by: (1) using a profile-based retention strategy to identify employees most likely to be successfully retained, and (2) focusing HR practices (for those employees most likely to be retained) on increasing motive satisfaction at work and in the job.
KEY FINDINGS AND IMPLICATIONS FOR PRACTICE
Midlife and older employees, self-employed workers, and top management pre-retirement professionals surveyed in 2009 (average age 52.6) reported an average intended retirement age of 64.4 years; approximately one year greater than the age they reported that they had intended to retire at prior to the economic downturn beginning in early 2008. Over 60 percent of employees reported intentions to work after retirement, and half the retirees surveyed (average age 59.4) reported currently working in full-time or part-time jobs. Employees 45 years and older who planned to work after retiring, intended to work for on average of 6.5 years after retirement (on average to 69.5 years of age).
- Organizations should offer programs to assist employees in developing and evaluating retirement plans that go beyond financial issues.
- Because many older workers intend to work post-retirement, organizations should build reverse socialization programs to help employees transition to post-retirement work.
Only 40 percent of all pre-retirement professionals reported an intention to postpone retirement in March 2009 because of the recent economic downturn. “Delayers” were significantly older, in poorer health, more motivated to prevent financial loss and negative outcomes, held more positive attitudes toward retirement, and viewed work as less central in their lives than “Non-Delayers.”
- Organizations are unlikely to successfully mitigate retirement intentions among Delayers, who can be expected to retire when personal finances permit.
- Organizations can improve workforce retirement prediction accuracy by identifying employees with Delayer-type profiles.
Striking differences were also obtained between the motivational and attitudinal profiles of professionals holding early and late retirement intentions, intentions work after retirement, and intentions to leave the workforce altogether. These differences predicted variance in retirement and post-retirement work intentions beyond that of age, health, retirement finances, and work centrality. Professionals who reported later retirement intentions and intentions to work after retirement were higher in achievement motivation and held less positive attitudes toward retirement than professionals who reported intentions to retire sooner and did not expect to work after retiring.
Motivational traits also differentiated employees and self-employed/top management groups, and contributed to the significant differences in work and retirement intentions found between these groups. Employees reported higher levels of avoidance motivation than self-employed/top management participants, held stronger positive attitudes toward retirement, and viewed work as less central in their lives than self-employed/top management participants. Health was not a significant predictor of retirement intentions for either group.
Motivational traits and retirement attitudes also differentiated retirees who were working and those that were not. Non-working retirees were significantly older, lower in achievement motivation, and held a more positive attitude toward retirement than working retirees, though the groups did not significantly differ on work centrality or health. Working retirees rated their current job (compared to their job at retirement) as less stressful, more enjoyable, less prestigious, and somewhat less demanding.
- To increase retention of older, achievement-oriented professionals, organizations should focus on providing intrinsic and extrinsic rewards at work and in the job, including for example, task assignments that utilize knowledge capital and mentoring opportunities.
- To avoid an increase in negative motivational states that make retirement more salient, organizations should establish norms that publically recognize older worker contributions to the firm and the work unit, minimize relationship-based stressors, and introduce greater job autonomy where possible.
Interestingly, midlife and older professionals reported relatively few major life events during 2009-2010, but did report the occurrence of many major work events. More than one-third of all employees took on additional work responsibilities, and about one-quarter of all employees reported changes in their work roles, being assigned a new supervisor, and/or increasing their work hours. One-fifth of the employee sample reported participating in training. Among self-employed/top management participants, over one-quarter reported losing significant revenue, changing their business plans, and/or laying off workers.
- Train supervisors to monitor older worker reactions and adjustment to major work changes in order to provide for early identification and mitigation of detrimental effects of work events on work motivation and attitudes.
Study Methods
This study used a two-wave design to examine the effects of the recent economic downturn and contextual, motivational, and attitudinal factors on retirement and work intentions of employed and retired professionals with a common educational and technical training background in engineering. Over 1000 working and retired professionals with college degrees in engineering (awarded between 1965 and 1990) were surveyed in March 2009. A follow-up survey was conducted in July 2010, resulting in a final sample of 599 persons; 461 pre-retirement employed professionals and 196 retirees.
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