Work Options

Wake up baby boomers: 76.4 million of you are rapidly approaching retirement. As with most things, baby boomers will be looking at retirement differently. Significantly, the new retirement for people 50+ won't involve withdrawing from working life. Remember, the average baby boomer can expect to live to be 83 (Hudson Institute). With better longevity and vitality than previous generations, baby boomers will choose to work longer:

• 83 percent of boomers say they will work after retirement
• 56 percent of those surveyed hope to work in a new profession
• average baby boomer plans to retire at age 61
• average age to stop work is 70
• 45 percent say they don't plan to stop working completely
• 14 percent of current working retirees say they'll never retire
• 28 percent of Cornell respondents say they'll work as long as their health permits

Boomers want to find a new life balance that includes some form of employment. To be more precise, the upcoming working retirees want to work on their own terms.

Baby boomers want to design the work/life that fits them. As the Merrill Lynch study demonstrates, most boomers would prefer to cycle back and forth between work and leisure. People want to work, but they desire employment that contributes to a balanced life plan.

Working beyond formal retirement isn't a new phenomenon. The Cornell Retirement and Well-Being Study shows that 44 percent of retirees have worked for pay at some point after retirement. Of those working retirees, 89 percent returned to work to stay active. In other words, the decision to return to work was not financially driven.

Many factors contribute to boomers' desire to work after they retire:

1. Health and vitality
2. Longevity
3. Passion--wanting to make an impact
4. Desire to change the world

In 2005, the MetLife Foundation joined with Civic Ventures to survey 1,000 U.S. adults. The objective was to study pre-boomers' and leading-edge boomers' priorities for the next stage of work. Ten critical trends emerged from the research:

1. Freedom to work: Baby boomers are choosing to work and inventing a new stage between middle age and true old age - a new stage of their working life.
2. Doing well by doing good: Boomers want to enhance the well-being of others. Areas of interest include education, social services and health care.
3. The great connect: With worker shortages looming in some of these same areas (e.g., teaching, health care, etc.), mature workers might serve to fill the gap.
4. Beyond volunteering: Mature workers desire meaningful work that contributes to the common good. They are less interested in doing more traditional volunteer work, such as stuffing envelopes.
5. Beyond the retail model: Boomers want to move away from retail or fast-food positions to those that contribute to social renewal. Having an impact is important to retiring boomers.
6. A new career arc: Having another 10-20 years of work ahead, mature workers have the time and energy for further education or training.
7. Not fading away: Although boomers have a desire to better balance their work and leisure activities, they still envision work that can make important contributions. They believe their future impact can be significant.
8. The pull of people and purpose: The real draw to new work for boomers - besides work that provides meaning or purpose - is connections with other people who are committed to similar goals.
9. All dressed up, but where to go? Although mature workers want to find high-impact work that provides meaning in their lives, they are concerned about the difficulty of finding opportunities. Part of this problem could be concern about the lack of receptivity by volunteer and for-profit organizations. The other obstacle is lack of planning and support to help boomers develop a plan for their "second half."
10. The second coming barrier-busters: Boomers have faced challenges all their lives. This is the "transformational generation" that will change the face of retirement work, just as it has changed everything else.

The proportion of the U.S. workforce made up of people age 65+ will have increased more than 5 percent between 2004 and 2014, from 14.4 percent to 19.7 percent. This increase will make mature workers the fastest-growing workforce segment, according to the U.S. Bureau of Labor Statistics. By 2012, nearly 20 percent of the workforce will be age 55 or older, up from just under 13 percent in 2000. Such rapid growth is due to three factors:

• The large baby boom generation
• Low birth rate of the "boomer buster" generation
• Longer life expectancy

Retirement will blend work with leisure activities. The boundaries between work and play will no longer be so firm. Flexible work will become the rule. The boomer generation will demand more autonomy, flexibility and satisfaction on the job.

A second trend that will affect working retirees is the imminent talent shortage.

• 1990s saw a 14 percent decline in younger workers because of the lower birth rate
• Workforce has increased only 1.5--2.0 percent over the past 20 years
• These facts will have an impact on the economic growth of our country
• The Federal Reserve is projecting an annual economic growth rate of less than 3 percent based on the talent shortage compared to 3.3 percent rate enjoyed through the 1990s
• 58 percent of human resources managers find it more difficult today than five years ago to find qualified job applicants (2005 AARP survey of human resources managers)
• More than 50 percent of HR managers surveyed fear their companies will face a shortage of qualified talent within the next five years
• Many experts are predicting a shortage of 10 million-workers by the year 2010
• Nursing shortage is already at a critical point, with 200,000 vacancies
• Even more frightening is the anticipated shortage of 800,000 nurses by 2050
• Engineers are in their 50s, and enrollment is down in engineering programs

More significant than the talent shortage is the looming "brain drain." Few companies have solved the knowledge-transfer problem. Think about all the knowledge, experience and wisdom that are preparing to walk out the door. A survey by the Society for Human Resources Management concludes that 66 percent of companies think they'll lose talent when the baby boomers retire. But, even with this threat, few corporations are coming up with creative solutions to attract and retain older workers.

• Retaining older workers, even part-time, allows them to teach younger employees
• Mentoring and action-learning teams are proven knowledge-transfer techniques
• Director of the United States Office of Personnel Management reports that 6,000 federal executives will be eligible for retirement in the next 10 years
• Institutional knowledge of the retiring boomers will be irreplaceable

The considerable burden of attracting and retaining talent in this new environment will land heavily on corporate America. Companies will have to be more creative about the ways they motivate and reward workers. With an aging workforce, they'll need to find ways to develop a more flexible workforce. Shaping a stable workforce by retaining older workers will pay dividends in productivity and savings from lower turnover rates. With turnover costs as high as 50 percent of salary for certain positions, these savings help to offset the incrementally high compensation and benefit costs of workers over age 50.

Mounting evidence suggests that workers age 50+ can sustain productivity, creativity and motivation.

• Mature workers are more motivated to exceed expectations on the job than younger workers (2003 AARP Talent Study)
• Workers age 50+ are more likely to be engaged than younger employees (2005 AARP Global Workforce Study)
• Workers age 55+ in the energy industry are almost three times more likely to be highly engaged than workers in their 20s
• Other studies have linked employee engagement with superior business performance
• Older workers are more loyal and reliable than their younger counterparts (HSBC Future of Retirement survey)
• HSBC employers found older workers productive and motivated

What attracts and retains younger workers isn't necessarily the same as what is meaningful to older workers.

• Employees age 50+ put competitive retirement benefits and challenging work opportunities at the head of their list
• Top drivers for retaining older employees include working for an organization that retains people with needed skills and having enough decision-making authority

Employers are aware that they must intensify their efforts to attract and retain mature talent if they want to have the competitive human capital they need to succeed. To retain workers over 50, employers will need to change their attitudes about work schedules--offering part-time, telecommuting, or project-based alternatives. Boomers crave the flexibility to perfectly blend work with leisure.

The coming talent shortage might force employers to overcome their age bias. Research has shown that many negative stereotypes about older workers are wrong. Corporate America needs the skills and knowledge of older workers if the U.S. is to remain globally competitive. Government and the business community need to develop strategies that will help attract and retain mature workers beyond their traditional retirement age.