Retirement, deferred: The new reality.
More Americans than ever are working past 65
Life after 65 is starting to look a lot more like life at . . . 64. The percentage of Americans working past the traditional retirement age hit new highs in the most recent jobs numbers, according to recent reports, with 19 percent of those 65 and older working at least part-time. And it’s only expected to increase: The over-65 set is expected to be the fastest-growing demographic in the workplace by 2024, according to the U.S. Bureau of Labor Statistics.
So what are companies doing to respond? A few have redesigned manufacturing plants to adapt. Some lucky employees are getting higher 401(k) matches to help them save. More recently, many companies have launched financial wellness programs to help employees of all ages make sure they’re better prepared to retire on time.
Meanwhile, one might assume “phased retirement” programs, which started 15 years ago or so to help employees gradually step away from their jobs, would be hotter than ever. The programs allow workers to keep working part-time or in alternative arrangements while helping companies hold on to workers with valuable skills.
But the numbers don’t show that. According to WorldatWork, a nonprofit human resources association, the percentage of companies that offer the benefit — 29 percent — dipped slightly in 2017, and growth has stalled over the past six years.
The Society for Human Resource Management, whose surveys include more small and midsize companies, found that the use of formal phased retirement programs is just 6 percent — roughly the same as in recent years — while informal use of the idea has ticked up to just 13 percent.
“We haven’t seen a flood of large employers saying we want to have phased retirement programs lock, stock and barrel,” said Roselyn Feinsod, a senior partner in Aon Hewitt’s retirement practice. “We just haven’t seen a huge prevalence.”
However, that doesn’t mean employers are being more stingy about a more gradual retirement. Human resources experts say that instead, companies are offering the option to near-retirees under the broader umbrella of flexible work arrangements — a development that could help older workers in some ways, but possibly hurt if they work for organizations where flexibility isn’t as highly valued.
“If there’s anything employers want, it's a committed employee,” said Jacquelyn James, co-director of the Center on Aging & Work at Boston College. “They don’t want a sign they’re one foot in and one out the door.”
Phased retirement, human resources experts say, emerged in the early 2000s as companies grew concerned about a baby boomer exodus. The programs saw an uptick in popularity around the middle of that decade after regulatory changes helped address questions about how traditional pension benefits would be paid out, said Lenny Sanicola, a senior practice leader at WorldatWork, but then the benefit fell in popularity during the Great Recession, as so many workers felt they could no longer retire.
The prevailing trend is to include the option in the part-time, job-sharing and other flexible arrangements that the employer offers to all workers. “There’s been a leveling off” in offering a distinct benefit, Sanicola said. “I think it’s being done more on an informal basis.”
One upside to this trend for older workers, James said, is that employees won’t have to be as clear about their plans with their boss. “The phased retirement [benefit] has a lot of complications to it,” she said. “It means you are signaling to the organization that you’re retiring,” even years out, when more promotions or big assignments could be in store.
Another issue with more formal programs, she said, is that they often require employees to set a date when they plan to retire — a decision that could change over time.
Still, she points out that people who work for bosses who frown upon flexible work arrangements more broadly could have a tougher time. “The downside will be if the organization has [flexible] policies on the books but doesn’t really support them,” she said. “If you know the manager thinks that’s a whole bunch of ‘gobbledygook’ from HR,” employees might not ask for them. “Supervisor support for these programs and policies is essential.”
Renee McGowan, who leads Mercer’s global retirement savings and financial wellness business, said there’s also “absolutely” a risk that such approaches to flexibility won’t help older workers if employers don’t communicate them well, and they seem more oriented toward, say, parents of young children. “We’re going to need a far more overt conversation around employers and employees about their retirement plans,” she said.
In addition to the shift in flexibility programs for older workers, McGowan and others said the recognition that people aren’t financially ready to retire has made “financial well-being” programs a popular new corporate benefit. Employers, she said, are “realizing that ‘I can’t expect my employees will want or be able to retire at 65. How do I help [them]?’ That's been a huge impetus for the financial wellness programs,” she said.
The benefit, which can include financial education, actual coaching and advice on everything from college savings to when employees can afford to retire, have grown in popularity in recent years but “have become really hot this year,” McGowan said. An Aon Hewitt report found that almost 50 percent of the employers it surveyed were in creating a strategy to do more to help workers with their financial health.
The most sophisticated companies, McGowan said, are recognizing that this is a challenge that’s here to stay, and trying to make the most of it, planning for a future where the skills and careers of over-65 workers are very much part of the workforce.
“There is this large shift from a world where employers really wanted people to retire at 65,” she said, “to one where they realize that may not be a reality, either on the part of employers or employees.”
Nineteen percent of those 65 and older work at least part-time.