‘Retire? Not Me': HR and the Aging Workforce
Employers are unprepared for the needs of older workers.
The fastest-growing population of employees is the "older worker."
I know, I'm offended by the term, too, but the good news is I'm not alone: I have a lot of friends over 50 who plan to work for a long time.
By 2024, one in four U.S. workers will be 55 or older, more than double the rate from 1994, when 55-plus workers accounted for just 12% of the workforce, according to the U.S. Department of Labor.
Older workers often have a deep knowledge of their industry, long relationships with customers and a loyalty to their employer, all of which make them valuable employees.
The 2018 Willis Towers Watson Longer Working Careers Survey found that 83% of employers report a significant number of employees at or approaching retirement age. However, only a quarter of those employers feel they have found an effective approach for dealing with this inevitability.
Other research also shows a lack of employer urgency to develop strategies to accommodate older workers. The Society for Human Resource Management found 35% of U.S. companies have analyzed the near-term impact of the departure of older workers and only 17% have considered longer-term implications over the next decade.
The lack of a strategy to address the needs of older workers may stem from employer perceptions about employees. According to our research, just one in five employers think their employees want to retire as soon as they qualify for retirement benefits, and 77% expect most of their employees won't need to work into their 70s for financial reasons.
On the flip side, the same survey found that 55% of employees want to retire as soon as they can afford retirement, and more than a third expect to retire after age 70 for financial reasons.
When older workers delay retirement, employers face financial challenges such as higher benefit, wage and salary costs. However, when we asked companies what worried them the most about the aging workforce, we found that transfer of knowledge and workforce productivity were greater concerns than financial costs, which ranked third.
While employers may not have plans to address the issues of older workers, researchers are offering innovative ideas to address some of the costs.
Linda Fried, dean of the Mailman School of Public Health at Columbia University, has proposed changing Medicare's rules to accept older workers, allowing them to shift away from employer health plans. Other researchers have proposed incentivizing employers by creating a 40-year cap on the total years of work requiring payroll tax contributions to Social Security.
With reforms of Medicare and Social Security unlikely, employers need to create strategies to address their growing population of older workers. Approaches to consider include:
Offering phased retirement programs
Creating flexible employment options like shorter work weeks, part-time employment or even part-year employment
Engaging former employees as contingent workers or consultants
Providing workplace training programs for older workers
Establishing reverse-mentoring programs for knowledge transfer
The Longer Working Careers Survey found many older workers are enthusiastic to downshift management positions and start working as individual contributors, but only 9% of firms in the survey offer phased retirement.
With nearly 18% of people in Northeast Ohio at age 65 and older, according to the Census Bureau, local employers have a real opportunity to embrace the aging workforce and be early adopters of progressive policies and innovative ideas. Let's not miss this chance.