Baby boomers look to a working retirement

May 22 2006 by Brian Amble Print This Article

With three-quarters of U.S. baby boomers rejecting the traditional notion of retirement in favour of an altogether more flexible mix of work and leisure, employers have been warned they need to be aware of these new concepts of retirement in order to prepare for the new work force realities.

This disconnect between how Americans and their employers view retirement emerges from a new report by Merrill Lynch which reveals that while many people are actually working in retirement or have taken steps for a new retirement career, most employers have not started to prepare for this phenomenon.

The New Retirement Study, carried out by for Merrill Lynch by Harris Interactive, found that fully three-quarters of all baby boomers have no intention of retiring in the traditional sense.

Almost half of those who do plan to work during retirement say that they never intend to stop working completely

Instead, the ideal retirement for seven out of 10 of those surveyed is to work in some capacity, with almost half of those who do plan to work during retirement saying that they never intend to stop working completely.

Among those who expect to work in retirement and eventually stop, the average tenure of their "retirement career" is over nine years and the average age at which they stop working completely is over 70.

"Not only is the new model of retirement here, but it transcends many different age groups," said Michael Falcon, Head of the Retirement Group at Merrill Lynch.

"Multiple generations report cycling in and out of work and pursuing a new career in later life as the retirement ideal. This important study shows us that companies need to be aware of this new concept of retirement in order to prepare for the new work force realities."

The most frequently reason people gave for wanting to work during retirement was to stay mentally and physically active, although as with many other surveys on retirement - concerns about health insurance and financial realities also loomed large.

When asked about their ideal work arrangement during retirement, the most popular option was cycling between periods of work and leisure. But significantly, more than half said that they would like to change their line of work and have already taken steps to plan for this new career by attending classes or training sessions and researching other careers.

The boomer generation also appears keen to "give something back", preferring to pursue retirement careers such as consulting and teaching that enable them to share or pass on knowledge to others. Volunteering was also ranked very highly.

Those retirees who are already working emerged as more satisfied than those who are retired and not working. And unsurprisingly, they are less likely to fear not being able to afford healthcare and feel they have less debt.

The disconnect between employers and older workers emerged not in terms of simple ageism - only a quarter of those aged over 60 said they had difficulty finding work if they wanted to but rather around the structure and nature this work.

While companies recognise the shift toward people working in retirement, many still assume that employees want to work a regular part-time schedule rather than cycle between periods of work and leisure. They also have not responded to individuals' overwhelming desire to pursue a completely new line of work.

What's more, the survey also underlines the fact that many employers have still yet to grasp the full implications of the boomer outflow from the workforce, with almost a third saying there has not been much thought about it and four out of 10 companies reporting that it is not viewed as an important priority at either an HR or senior management level.

Those employers who have taken steps to prepare for future labour shortages have also tended to focus on younger workers, not recruitment and retention of older, skilled workers.

Instead, concerns over the increasing cost of benefit programmes ranked as the most pressing human resource and benefits issue that employers were facing, with well over half of the companies viewing this a very serious issue almost ten times as many as those companies that considered retaining older workers as a serious problem.

In other words, it seems that short-term competitive and economic pressures are the primary driving factors behind corporate benefit decisions, greatly outweighing concerns about work force shortages.

Until personnel shortages hit the bottom line, there will be little impetus for action

But, as the report points out, until personnel shortages hit the bottom line, there will be little impetus for action. So while the new retirement is on most company radar screens, the challenges that it brings have not been adequately addressed.

Those companies bucking this trend realise first and foremost the importance of attracting and retaining older and talented workers. And according to Cynthia Hayes, Head of Employer Plan Solutions at Merrill Lynch, awareness, recognition, understanding and a willingness to address the issues head-on is what is necessary for companies to manage boomer outflow and to be prepared for the next generations of career retirees.

"The pioneers on the employment front are those companies that have already realised that the 'new retirement' is here," she said

"By permitting telecommuting and more flexible schedules, providing coaching and mentoring services, as well as offering increased access to health insurance, these companies have demonstrated that they are already thinking about the new approaches they can take to leverage a very valuable work force segment that still has the desire to work."