Preparing Employees for Retirement and Reaping the Benefits
The near extinction of pension plans for the private workforce has been a factor in the number of Americans without retirement savings, or so the story goes. Whatever the cause, there is a retirement crisis as the result of an increasing number of people falling behind where they need to be financially in order to maintain their lifestyles during their retirement years. Some of the more dire forecasts predict that by 2035, nearly 20 million retirees will be living in poverty or near poverty and that by 2050, that number will reach 25 million.
The economic consequences of a poor and aging population will have adverse effects on public budgets and private enterprise. In the absence of pension plans, it behooves employers hoping to operate in a booming economy to consider ways to assist mature workers toward a more positive future. Even without the economic imperative, companies are beginning to look at retirement planning as part of their benefits offerings to secure succession planning initiatives and build employee engagement and loyalty.
The Impact of the Silver Tsunami
Despite the recent “silver tsunami,” a term used to describe the ten thousand Baby Boomers that retire every day, too many companies haven’t been addressing the immediate impact on their business as the mature workforce walks away from roles not easily filled in a nearly zero unemployment economy. In the near term, HR leaders can solve some of their talent pain points by looking at creative ways to retain institutional knowledge and capitalize on the accomplishments and experiences of their aging employee population.
Economic pressures and longer lifespans have been changing the realities of retirement for most Americans. Many people who would have previously been considered “ready for retirement,” are not prepared to totally call it quits. For organizations willing to change their perceptions and approaches to retirement age employees, the realities of mature age workers remaining at the company holds a multitude of benefits.
Even with the deficit left by retiring employees, too many companies continue to be unaware of the cost of letting these people take their talents elsewhere. And they are. According to a 2019 Small Business Trends for Baby Boomers survey, entrepreneurs over age 50 make up more than half of America’s small business owners and one-third of small business owners are between 50 and 59 years old. Clearly, this age group has the acumen to successfully own and operate their own businesses, and that same know-how could be applied to lead their employers to greater growth and business success. These individuals may want to remain with a company, but may not want to provide service in the same way as they have in the past. Mature workers may be looking for creative options to retirement. Options that allow them to remain productive and engaged.
Talent retention and mature age workers
Helping mature age employees plan for retirement requires more than simply offering a 401K benefit. Whether stated or not, mature age workers may feel that unless they continue in their same roles at the same pace, there may not be a place for them within the organizations where they currently work. As they age, older employees may start to feel that they are being put out to pasture before they are ready.
The companies that are anticipating, or already experiencing, the impact of large-scale workforce exits and those organizations that recognize the breadth and depth of knowledge they could potentially lose, have shifted their practices to get messages out to their workers over 50 that there are creative paths to a different work reality.
In these organizations, mature age employees are being walked through career development plans that include the retirement phase or encore career phase. Depending on the individual, career phases can include a blend of choices that could include more flexible work, consulting, mentoring, and possibly redeployment into other business units or departments. Whatever the path, organizations offering more options are benefiting from the continued contributions of their mature workers.
Retirement planning starts early
How early is too early to start talking to employees about their career plans past age 60? In my experience, when people start getting into their 40’s, they start thinking about how they can navigate their careers to stay relevant and how they can continue to make an impact after being on the job for a couple of decades. They see that they are getting on the other side of the mountain with their careers and still want to know how they will find purpose and provide value.
If companies can start delivering the right messages early, employees may find a reason to stay and contribute within the organization instead of looking for an exit strategy that will be more sustainable in their later years. At this point, both the organization and the employee need to feel open enough to consider and talk about how work may shift in the future. For instance, certain individuals may visualize a future where they don’t work full-time. Their roles may evolve so that they are adding value in a different way—in a consultative or advisory part-time role. Currently, there is still a big gap between what employees want and what employers are open to discussing and considering. Hence, the large number of talented people out there creating their own businesses.
Ageism and the millennial shift
What’s interesting is that companies may be looking at their mature age workers and thinking “how many years do they really have left?”. When, in reality, Baby Boomers may be some of the most loyal employees at a company. Millennials, whether deserved or not, have the reputation of leaving companies after only two years. In fact, the median number of years that all workers stay at an employer is 4.2 years. Given these trends and statistics, the argument that mature age employees are too short-term is no longer pertinent.
In the face of the reality that a 60-year-old may stay with your company for seven or eight years, ageism is a real thing and it’s affecting a large part of our society, especially women. Yet, companies are still relying on Baby Boomers to deliver results based on their experience and expertise learned and honed over the decades they have spent in the workforce. In reality, these people are still a large part of the workforce at many companies.
Although women tend to be the target of ageism more than men, a large population of women are reentering the workforce post-child rearing. Some are coming back part-time or recreating their careers in their 50’s. These women may be returning to roles they held prior to leaving to care for children.
In addition to their prior work experience, mothers returning to work bring with them the skills they gathered volunteering and organizing their children’s sports teams and school organizations. Companies looking for talented employees with well-developed soft skills might want to start looking to this population to fill their open roles. At the same time, these employees may want a path to career development and creative retirement in the future.
The retirement conversation
While planning for retirement might be perceived as the responsibility of the individual, it’s up to organizations to start the conversation and show an openness to looking at retirement in creative ways. If everyone who is of a certain age is put in the same bucket in terms of what they want or what they are looking for, companies lose out on opportunities to help these contributors create a unique path that meets their needs and the needs of the company.
The conversation doesn’t stop with employees over 50. Every client I work with over 50 and even over 40 are worried that employers are looking to attract Millennials or the younger Gen Z. For both the employer and the employee, the danger begins when assumptions are made about job fitness and fit. In fact, just because a job candidate has a resume spanning several decades doesn’t necessarily mean that person is looking to make a lateral move. They may have more flexibility than a hiring manager may assume upon first glance. This is one area where employers can be more creative in how they think about how to get value from a new hire.
The mature workforce is not going away. Baby Boomers—and soon Gen Y and all future generations—will be continuing to work well past the traditional age of retirement. Organizations with the foresight to predict the negative consequences of ignoring the career development needs of these workers will take positive action early to set mature age workers up for success within the company. Putting policies and initiatives in place now will prepare companies to continue to respond to the new realities of work.
Offering employees a path to creative retirement can lead to many benefits for companies, including:
- Retention of institutional knowledge
- Work experience
- Life experience
- Industry experience
- Advisory roles
- Trust and loyalty