An aging workforce is quickly becoming a reality with projections as early as 2016. From 2016 on, one-third of the total U.S. workforce will be over the age of 50. Although millions of “Boomers” are hitting the official retirement age of 65 over a very short time period, the average actual retirement age is also steadily increasing.
The combination of these two trends means that employers will likely be facing two seemingly contradictory scenarios: the mass retirement of long time employees as well as an increasingly large proportion of older employees in the workforce.
1. Expectations & Finances
Over the past 20 years, the average actual retirement age has risen by 4 years, from 57 up to 61 years old. While the reasons for this increase are varied and complex, anything from the financial crisis to longer life spans, it is clear that employees and employers alike can expect the age at which they leave the workforce will continue to increase.
One major contributing factor pushing up the retirement age is a lack of worker confidence in their financial stability during retirement.
According to the Employee Benefit Research Institute (EBRI), only 18% of workers are “very confident” that they will have enough money for a comfortable retirement- a six year high. Based on EBRI’s 2014 Retirement Confidence Survey results, the key to building this confidence relies heavily on employee participation in a formal retirement plan, e.g. 20% of those without a retirement plan have saved for retirement as compared with 90% of those with a retirement plan in place.
As an employer, helping your employees start thinking about saving for the future as soon as possible can have a huge impact on their ability to retire and when.
2. Workforce & Succession Planning
With less than 20% of employers reporting that they have a formal succession plan in place and more and more employees eligible for retirement, many organizations may quickly find themselves in a difficult situation.
While bringing on young, enthusiastic newer employees into the roles being vacated by retirees can be a breath of fresh air, it is important to keep in mind that simply filling these jobs with new faces, does not automatically address the gaps left in terms of more subjective contributions and skill sets such as institutional knowledge. In order to help this inevitable transition run its course as smoothly as possible, individual organizations can start by simply taking stock of the jobs, skills, ages, etc of their employees.
But an analysis of your workforce is just the beginning. Organizations must take this information and apply it in order to achieve real results. For example, this type of information can be used to construct effective mentorship programs, strengthen training offerings, and help individual employees set goals for their professional development.
3. Retaining Older Employees
Whether or not your organization is underprepared for the longest termed employees to leave, in many cases retaining these older employees can work to the benefit of all parties involved.
As mentioned above, their strong skill sets and a maturity level are invaluable and should not be dismissed lightly over concerns about healthcare costs or higher salaries.
In addition, for employers looking to retain this valuable resource, options such as flexible work schedules and wellness initiatives that are often geared towards the up and coming Millennial generation, can be just as appealing for older employees who are not quite ready for retirement.
Another key element that can be helpful in retaining older employees is training. Despite concerns expressed by some employers about investing in training for these older workers nearing the end of their time in the workforce, as the retirement age continues to edge up and the number of younger workers entering the workforce drops, investing in employees at all stages in their careers may come to be seen in a more favorable light.
4. The Generation Gap
Currently much of the focus when it comes to the “generation gap” is on how the desired workplace culture of younger generations entering the workforce conflicts with the preexisting culture older generations have already set.
With the U.S. Bureau of Labor Statistics predicting that the growth in the labor force among workers age 65 and up will significantly outpace the growth of those aged 25-54 over the next 30 to 40 years, this conflict is not likely to disappear. In fact, many experts are anticipating that the aging workforce may force younger employees to adapt to existing norms, instead of pushing older employees to adopt new workplace practices and cultural habits.
Another shift that many organizations may see as older employees remain in the workforce longer is that age will no longer equate to seniority in terms of managerial structure. With the financial crisis and long term employment forcing many well established professionals to start over on the career ladder as well as a strong focus in on performance at a growing number of organizations, any employee, regardless of age, could find themselves with a “boss” that is younger than they are. Although neither of these scenarios is inherently good or bad, they are changes that employers should keep in mind and address as necessary in order to avoid fallout from the so called “generation gap”.
5. Second Careers
Although most of the discussion around older workers focuses on longtime employees with significant experience and strong skill sets, one sub-group that is beginning to garner more attention is those seeking employment in a second career.
For some this may mean an opportunity to turn a hobby or passion into a full time job post-retirement, while others may be seeking a new direction in their career for more sobering reasons. Regardless of the situation, organizations such as iRelaunch or Encore.org can help connect older professionals put their skills to good use in a different industry, retrain them to take a new direction in their career paths or as this 2014 interview on NPR illustrates, connect older job seekers with internship opportunities to build their resume in an entirely new field.
Ultimately, regardless of whether your organization is facing an exodus of your oldest, most experienced employees or if these employees are sticking around longer than anticipated, the issues and opportunities raised by an aging workforce are likely to demand significant attention by employers in the coming years.