Redefining Retirement Age

On September 25 the American Association of Retired Persons (AARP) announced its seventh annual awards call for “the best employers for workers over 50 years. The non-winning companies have won the trio simply offering traditional insurance: health, life and disability.

These companies, among which are SC Johnson, Principal Financial Group, Michelin North America and Mercy Health System-have been honored by the AARP for providing workers with more than 50 years of benefits “that look towards the future,” as alternatives such as working hours, learning or training opportunities throughout their working lives and a program that allows workers to care for their elderly relatives. AARP’s ruling included the statements of its CEO, William D. Novelli, at which emphasized the obvious: focusing on older workers have much economic sense and pays dividends from the companies that value the expertise of these employees.

“As you increase the gap between demand and supply of veterans and experienced workers, employers in all sectors should pay greater attention to recruitment and retention of experienced employees of a certain age”, said a recently published national report on the aging of the workforce conducted by MetLife Mature Market Institute, the information and political resources of the company. “This is true especially in sectors such as health services, government, education, manufacturing, energy and aerospace, which is particularly hard to cover the loss of veteran workers when millions of people from the baby – boomers begin to leave the labor market.

The influence of baby boomers

“Companies are making a big mistake assuming that older employees have no desire, motivation or physical condition to keep working,” says Wharton management professor Sigal Barsade. And since today’s veteran employees tend to enjoy better health than their predecessors, what does today the term “older worker”? Wonders Barsade. Companies that do not attach importance to its work force veteran “not only are behaving unfairly, Barsade says, “but they are also wasting extra workers with relevant knowledge about the institution and are still ready, willing and anxious to do an excellent job”.

According to U.S. Census Bureau statistics released in September by the CSR (Congressional Research Service), the demographic profile of the workforce in the U.S. “will suffer a profound change” when the baby boomers, i.e. those born between 1946 and 1964, reached retirement age but are less young people join the labor market. The number of people aged between 55 and 64 will increase by 11 million between 2005 and 2025, while the number of people between 25 and 54 will increase by only 5 million.

According to the MetLife report, Americans aged 55 to 70 years of age remain in the labor market for two main reasons: “financial needs and the desire to remain active and / or try something new.” Those who are now between 60 and 70 and some years represent “perhaps the last generation fortunate enough to enjoy widespread access to corporate pensions and Social Security,” the report adds. Employees of the baby boomers who are now between 50 and 59 years face a background of increased financial uncertainty.

Wharton Professor Olivia S. Mitchell notes that the sheer size of the cohort that makes up the baby boom generation is estimated to be 78.2 million people, is a very attractive. “The baby boom generation is so great that everything you do influences popular culture and news media, which is one of the reasons why it is now talking about it,” says Mitchell, director Executive Pension Research Council at Wharton and director of the Boettner Center for Pensions and Retirement Research. “But in my opinion the baby boomers will change the definition of retirement”.

In fact, in his new book, Redefining Retirement: How Will Boomers Fare? (Redefining retirement: What will the baby boomers?) Mitchell and two co-authors argue that “people will not follow the old pattern of work, and then retire. Rather they will accept what we call bridge work, that is, they will leave the company they have worked virtually his entire life and accept jobs part-time transition. Some set up businesses and become entrepreneurs and other volunteer work, Mitchell says. “This has changed from previous generations, and there is evidence that expectations have also changed. What I really do not know is whether there will be demand for such workers. Even if in the labor market supply continues to fall, “employers are interested in older workers? I think it is too early to tell”.

Mitchell recognizes that in some sectors, “this has already happened. We have already gone to older workers for call centers, hotel reservation companies to fill jobs or cyclical. But these are not permanent jobs, which brings us to the definition used to redefine retirement. Under this new definition, people not reach certain age and stop working no more. “

The Wharton management professor Peter Cappelli, director of the Center for Human Resources at Wharton, says another warning in regard to the labor market for people of a certain age. “Companies are still pushing them towards early retirement programs,” he says adding that despite some employers actively strive to retain them “in some posts that can be taught skills. It is worth remembering that employees have always left the companies. Nothing has changed. The companies retained knowledge through development programs that prepared young workers to be able to perform these tasks. The big problem is that companies have been more or less abandoned those programs.

The Retirement Decision: How the New Social Security and Retirement Age Laws Affect You

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