It seems that more of us are thinking about retirement lately. And why not? Everyone enjoys dreaming of their eventual freedom from the working world: random trips to the beach, time to putter around the house and, ahhhhh, sleeping late!
Okay, (nudge, nudge), time to wake up now. Our golden years and a leisurely retirement might be on our minds, but today’s economic realities put them a little further out of reach than we originally planned. As a result, the global workforce is getting older because of a number of factors, chief among them the decline in household wealth and plummeting values of retirement plans that resulted from the Great Recession of 2007-2009.
In short, people are working longer because they have to. More than four out of five respondents to a February 2012 survey by Towers Watson said that their employer has curbed their pay and/or benefits during the past three years, and nearly half are worried about possible reductions to their retirement benefits. More than half of survey respondents said they’re willing to trade some pay for more generous and secure retirement benefits.
Of course, the health of particular job sectors is a factor driving retirement, too. For example, budget problems at all levels of the U.S. government help to explain why federal employee retirement applications jumped 24 percent in 2011 compared with 2010, according to a report by Federal Times.
Wait, Don’t Go
Conversely, in thriving job sectors, having older workers on the payroll longer can be a boon for those employers, who benefit from these employees’ expertise and commitment to the job.
Tim Driver, CEO of RetirementJobs.com—a career website for workers 50 and older—said it’s a common perception that older workers “stand in the way” of younger workers’ progress up the corporate ladder. But that’s not always the case.
“Our research indicates that most older workers want to downshift, not stand in the way [of younger workers],” Driver said. “That is, they’d prefer not to be managing [others] any more. Instead, they are very satisfied to work at the individual contributor level.” This is a plus for employers, Driver said, particularly because happy workers stay on the job longer and can have an impact on reducing recruiting and training costs.
Many companies are changing their recruiting strategies to reflect the trend of workers extending their stays in the labor force, Driver said. Airlines, utilities and insurance companies are among the industries with the highest percentage of their workforce over the age of 50, and other sectors are starting to embrace older workers as the solution to filling their employment needs.
“We see the biggest change taking place in companies where turnover is a problem,” Driver said. “Think retail, for example. The other big shift is in companies whose customers are older. They want to hire older workers to interface with older customers. This is why retail banks are such a big client base for us. They operate in a traditionally high turnover environment, and people who still do banking in person tend to be older [individuals].”
Whether it’s a result of individual choices or simple demographics, it’s clear that the country’s labor force is aging, and HR professionals should keep that fact high on their radar. The Baby Boomer generation moves entirely into the 55-years-and-older age group by 2020, according to the U.S. Labor Department’s Bureau of Labor Statistics, and it will increase that group’s share of the labor force from 19.5 percent in 2010 to 25.2 percent in 2020. What companies do with this segment of the labor force will have major implications on profitability, productivity and the development of younger generations of workers.