The common vision for retirement used to be plenty of leisure time spent perfecting your golf swing or visiting your grandkids. For many Baby Boomers, retirement may mean not retiring at all but continuing to work well past their 50s and into their 60s and even 70s. The Wall Street Journal has even speculated whether retiring at 100 could be the new normal, and the AARP told a picturesque tale about a 70-year-old woman who came back to the workforce as an HR Director.
However, stories like these may be painting too pretty a picture. Some 53% of workers over 60 are putting off retirement, and 75% of these say that they are staying in the workforce because their finances have yet to recover from the 2008 downturn -- not because they're afraid of getting bored or not knowing what to do with unlimited leisure time. Some 12% of older workers don't think they'll ever be able to retire (Fortune, 2/18/2015). Delayed retirement is less a choice to continue to be engaged in meaningful work and more a necessity to remain solvent and avoid personal financial collapse.
Although the average retirement age has increased over the years, the average age for men has held steady at 64 since 2008, which is not a large leap from the average age of 62 in 1985 (Market Watch, 2/18/2015). Most Baby Boomers are not continuing to work past the average retirement age; only about one third of Baby Boomers over 67 are engaged in the workforce in some capacity (Gallup, 1/26/2015). Those that do continue to work do so out of financial desperation. Near-retirees over 55 years of age, on average, have about $165,000 in their defined-contribution plans (Fidelity, 2/13/2014). And those estimates are optimistic; more dire research estimates that 75% have less than $30,000 (Schwartz Center for Economic Policy Analysis, 7/3/2012). Even 401(k)s at the higher end of the spectrum will not sustain Baby Boomers through 20+ years of retirement. With pensions plans outside the public sector essentially nonexistent and average social security benefits at $1,294 per month, about $15,000 per year and not far above the poverty line (Social Security Administration, 4/2/2014), those considering retirement are finding it increasingly attractive to try and stay in the workforce.
The feeling is not always mutual for employers, however. Many companies blatantly advertise that they are looking for "young," "fresh," "energetic" employees. The tech industry especially is notorious for age discrimination, and many are unwilling to hire "graybeards." Mark Zuckerberg has claimed that "young people are just smarter," and a Santa-Clara-based IT services company recently used the phrase "We Want People with Their Best Work Ahead of Them, Not Behind Them" on their careers page (now removed). Even outside of tech, few companies are eager to higher older workers. Workers in their 50s who are looking for a job are 20% less likely than their more youthful counterparts to be hired; when they are, they earn 15-20% less than in previous jobs (CNN Money, 2/23/2013). In addition, some companies use methods to push Baby Boomers toward retirement; isolating aging workers, cutting job responsibilities or working hours, and denying promotions are all subtle ways to move out older employees.
Employers should think twice though before pushing out their older workforce, and not just to avoid a discrimination claim. When Baby Boomers exit, companies often don't understand the loss until after their tenured experts leave. Retirees take institutional knowledge, influential relationships, and honed capabilities out the door. Losing the intangible expertise of aging workers could come with a price tag of up to 20x higher than the typical hiring and recruiting costs (Harvard Business Review, 12/2/2014). Baby Boomers have maturity and knowledge that younger workers can lack, and forcing them out of the workforce if they want to keep contributing is a costly error on the part of organizations.
Retiring from the workforce may be viewed as a choice, but for many Baby Boomers, age discrimination and illness may force them into retirement and an uncertain financial future.
Readers, is delaying retirement the new normal? Comment and let us know.