Aging Workforce is Confounding American Employers
Aging Workforce challenges are on the rise within corporate America. Much of America’s aging workforce is choosing to work beyond traditional retirement age, which has typically been 65. Some of the aging workforce is choosing to remain on the job because they know they can’t afford to retire. In fact, one in five Americans age 65 and older is prolonging their career for this reason — the highest percentage in more than a century. Nonetheless, this American aging workforce phenomenon seems to be taking employers by surprise.
A recent article from the Chicago Tribune addresses the surprise-factor of the aging workforce. Citing a survey from Willis Towers Watson, the Tribune points out that nearly three-quarters of companies report they expect to face significant or moderate challenges due to the aging workforce, in the form of late retirements. On the other hand, a significant number of employers also express concern over early retirements, despite an aging workforce.
The employers Willis Towers Watson surveyed said they worry more than they used to be about the cost of the aging workforce, and they are also concerned with the challenges associated with replacing the knowledge and skills those older workers will take with them when they do retire. Two-thirds of employers also reported “blocking promotions of younger employees” as a moderate concern. Willis Towers Watson surveyed 143 HR managers at companies that employ a collective 2.9 million people.
What are some of the employers’ challenges when planning for America’s aging workforce? For starters, it’s hard to plan for their retirements. And this is all occurring in record-breaking numbers. According to the Tribune article citing a 2018 Gallup poll, 41% of workers expect to stay on the job past age 65. This is a huge increase since Gallup began tracking this data in 1995. In that initial survey, of the same topic, just 13.5% of employees said they planned to work past age 65.
There are multiple factors at work here. Today, the required age to collect full Social Security benefits is higher. Something that neither employees nor employers can control. (Sixty-five is the age of eligibility for Americans born before 1937. The standard retirement age is 66 for the normal retirement age for the Baby Boomers, born in 1954. Boomers and others born after 1960 aren’t eligible to receive full Social Security benefits until age 67.)
In addition, the aging workforce doesn’t always communicate their retirement plans or intentions to their employer. This may be the result of the worker not wanting to be locked into a date, or truly the worker does not have a plan. Sometimes workers are not clear in their own minds, on when they are going to retire. In all of these cases, it results in the worker not communicating well with their employer. Thus, making it difficult for companies to plan for an orderly knowledge transfer and the transition of the daily work-load to a less experienced and younger workforce.
In addition, employees may be reluctant to discuss their financial situation with their employers. An aging workforce may be fearful that they are opening themselves up for replacement if they reveal that they are considering an imminent retirement.
Moreover, the meaning of retirement has changed, and no one really knows exactly what “retirement” means anymore. Employees’ relationships with their employers are ever-evolving, and as such, there’s no definitive “magic moment” when employees stop working entirely. According to data cited in the Tribune, about two in five companies are considering offering part-time work or flexible hours by 2020. That’s nearly double the current rate. Other companies plan to keep their aging workforce around with reduced responsibilities. Still, others are considered a hybrid of volunteer work and traditional employment.
Another reason an employer will struggle with the aging workforce and retirement is that, in some industries, older employees will be extremely difficult to replace once they’ve left their roles. According to the Willis Towers Watson survey, four out of five manufacturers and 2 out of 3 employers in the mining and nonprofit sectors surveyed said they are worried about a loss of talent. Retail and service sector employers were less concerned. Employers also face with trepidation, the uncertainty of who, how or what will be replacing departing employees. Many are concerned with what will the era of a retired aging workforce mean for our company? Respondents said that the loss of legacy company knowledge would be a difficult challenge, as would “finding workers with similar knowledge and skills.”
Employers who are concerned about the departure of their aging workforce should be proactive and initiate conversations with older employees to “take their pulse” on where they’re at in their careers. Employers should attempt to get a sense of the retirement plans for their aging workforce. After all, if you don’t ask, they might not tell you. Frankly, it behooves employers to be in the know about older workers’ retirement plans. This should be done as quickly as is comfortable for all, rather than later. It is also a good idea to approach these conversations with an open mind. Flexibility and having a workforce that is retirement ready can be advantageous when it comes to meeting the needs of your organization and an aging workforce.
Latest posts by Steff Chalk (see all)
- Multiple Employer Plan Rules are Poised to Include More Employees - March 20, 2019
- Retirement Plan Professionals Make a Difference - March 19, 2019
- Financial Literacy Awareness Can Greatly Improve - March 17, 2019