Article Archive

Fall 2008

The Workforce Landscape — Graying but Gritty
By Athan Bezaitis, MA
Aging Well
Vol. 1 No. 4 P. 16

For a variety of reasons, older adults are choosing to remain in the workforce longer. Many employers welcome their knowledge, skills, and work ethic.

When Social Security was established in 1935 for Americans aged 65 and older, the average life expectancy in the United States was 61. Today, people in their 80s make up the fastest growing segment of the population.

In a rapidly graying America, however, a longer life expectancy doesn’t necessarily mean a better life, especially with the meteoric increase in healthcare costs and looming questions about the long-term solvency of Social Security. To protect themselves from financial uncertainties and stay actively engaged, baby boomers—those 76 million Americans born between 1946 and 1964—expect to stay employed much longer than previous generations.

Baby boomers’ extended careers come as no surprise to gerontologists. “The myth is that the traditional retirement age is 65 when it is not. Nor is 65 the official Social Security age,” says Neal E. Cutler, PhD, executive director of the Center on Aging of the Motion Picture and Television Fund in Woodland Hills, CA. “The age 65 became synonymous with retirement because, for years, it was the age when workers qualified for full Social Security benefits.” In fact, American workers can begin collecting partial benefits at the age of 62. For those born after 1938, Social Security reform has created a sliding scale for full benefits that increases incrementally until the age of 67.

At the turn of the millennium, leaving the workplace at 65 would have been considered a late retirement. Years of economic prosperity combined with Social Security and robust pension plans allowed the average retirement age to decline steadily from age 67 in 1950 to age 62 in 2000, according to the Bureau of Labor Statistics. That 50-year trend is now shifting as baby boomers march toward the highly stigmatized but relatively young age of 65.

“Boomers are the healthiest generation and the best educated. Some lawyers and physicians can work forever—and they will,” Cutler says. “The curve of early retirement is flattening out, and people are staying on the job longer.”

But they don’t plan to transition directly from cubicles to cabanas. A 2005 survey from Merrill Lynch found that 76% of baby boomers intend to work and earn in retirement. On average, they expect to retire from their current positions around the age of 64 and then launch into entirely new careers.

For some, an extended work life will be a way to provide meaning in their later years. For others facing a daunting economic reality, employment will not be a choice but a necessity.

Three-Legged Stool to a Pogo Stick
The erosion of traditional means of financial support for retirees is one major reason for boomers’ extended careers. “We used to have private pensions, Social Security, and personal savings—what is called the ‘three-legged stool of retirement,’” says Stephanie Chappell, MSG, MBA, a corporate gerontologist at The Hartford Financial Services Group in Connecticut. “Without having to do anything, retirees would get about 67% of their income in their first year out of work. In the new retirement, defined-benefit pensions are disappearing, and we have defined-contribution alternatives such as 401(k) and 403(b) plans, which put more responsibility on the individual to save for retirement.”

Instead of the three-legged stool, Chappell says, “We’re on more of a pogo stick, where you have to support yourself on personal savings and a little bit of the other two. It’s a bit trickier on the pogo stick.”

Individuals considering retirement need to have a better idea of their longevity, Chappell says, which will tell them how long they need to make their benefits last. A 2005 Society of Actuaries Retirement Risk Survey found that nearly two thirds of people underestimate the average life expectancy, and about 40% are off by more than five years. On average, a woman who is 65 today can expect to live to the age of 85, while a man who is the same age can expect to live to the age of 82.

Planning to work longer is one way to increase Social Security and savings. “Deferring your Social Security benefits past the age of 65 or 67 can have a significant impact on the monthly check you get from Social Security for the rest of your life,” Chappell says. However, unforeseeable health issues and forced retirement can interfere. She says a financial advisor can play the role of coach, expert, or motivator to shape up personal finances in preparation for retirement, which will have what she calls “income phases” as boomers stay employed longer in order to make their money last.

The Job Lock
For many middle-class boomers, the cost of health insurance provides more compelling motivation to stay in the workforce than the money they stand to earn. Medicare Part B, which helps pay for doctors’ services, outpatient hospital care, medical equipment, and some home health services, does not cover routine physical exams, eyeglasses, custodial care, dental care, dentures, routine foot care, hearing aids, orthopedic shoes, or cosmetic surgery. “People need to eat, they need to see, and they have to be able to walk decently to stay independent,” Cutler says.

Another study conducted for AARP by Towers Perrin of workers aged 50-plus indicates that healthcare coverage and competitive retirement benefits are the most frequently cited financial incentives in surveys of workers aged 50-plus. Further research conducted by The Hartford Financial Services Group in partnership with the Massachusetts Institute of Technology AgeLab found that 83% of people between the ages of 45 and 75 said healthcare inflation was their biggest concern.

Cutler, an expert in financial gerontology, calls the phenomenon of keeping one’s job for the sole purpose of holding on to health coverage the “job lock.”

“A lot of people in their 60s say they have enough money in their 401(k) or pension plans, but they can’t replace their healthcare insurance, especially if they’re under 65 and don’t qualify for Medicare,” he says. “You can take money out of your individual retirement account at 591/2, but you can’t qualify for Medicare until 65.”

Cutler believes only the wealthiest boomers will be able to afford to leave their jobs at age 59 or 62 and that most are unaware of how high their healthcare costs are going to be.

Accommodating the Aging Workforce
On the other side of the spectrum, employers are likely to become dependent on the aging labor force to keep their companies afloat. A glimpse of the future workplace (less than 10 years away) illustrates changing demographics. By 2015, the number of employees over the age of 55 will reach a record 31.9 million compared with 18.4 million in 2000, according to research from

In the public sector, research reveals that more than 50% of workers are five years or less from retirement, says Linda Wiener, the age issues expert for “In some public sector entities in Washington, DC, and inside the beltway, this age group makes up 70% of positions.”

Offering health benefits to those workers willing to stay on the job is one option to keep them around. Other innovations are critical to maintaining the balance of the bottom line with a productive staff.

“The trend of an aging workforce is global,” Wiener says, pointing to labor shortages in Japan and Finland caused by older populations and low birth rates. The United States is not immune to this problem that creates the need for strategic planning to manage employees of different ages and institute knowledge-transfer programs. “As older workers transition from the workforce, there will be a talent shortage; that’s the bottom line,” she says.

When advising companies about ways to deal with potential pitfalls related to employing older workers, Wiener emphasizes the importance of maintaining what she calls the “three Rs.”

The first is recruitment, which involves tactics and hiring policies to be either age neutral or favorable to midcareer and older job seekers. She encourages companies to become what she calls employers of choice, which means friendly to older workers. “As people reach their 50s, they want more flexibility in scheduling and workplace assignments,” she says.

The second R is retention of older employees. According to Wiener, there is a schism between employers who say, “We can’t let our older employees go,” and other companies “that just get rid of them.” Retention involves evaluating workplace practices for age neutrality in performance management, promotion, and opportunities for professional development.

AARP reports that the cost to recruit and train a new worker can be 50% or more of an employee’s annual salary. That doesn’t include the loss of institutional knowledge. “The ‘golden watch syndrome’ where you give a worker a watch that says ‘Good luck, Bob’ after 35 years of faithful service is a thing of the past,” says Wiener. The Bobs of the transforming workplace are too valuable to be dismissed so easily.

The third R is replacement that allows for knowledge transfer or phased retirement, possibly including the development of formal mentoring programs. The state of California, Wiener says, has wisely set up a pool of retired state employees available to work if needed. “These kinds of annuitant programs are important in order to prevent a brain drain,” Wiener says.

Companywide audits that examine staff talent level, age, and vulnerability also need to be conducted, Wiener advises. “They [companies] need to ask questions such as ‘Where are we right now with our talent pool? How old are our workers? How long will they stay in their jobs?’”

Managing multiple generations means understanding how to get the most out of each age group. For example, Wiener says, “Boomers don’t like using instant messaging, but Generation Xers are more familiar with the tool.” Sensitization is also critical for older employees, she says, as people between the ages of 48 and 65 say they don’t want to quit working but want more control over their careers.

Granting mature workers certain freedoms may be a smart move for employers. Research shows that they more than carry their weight. Workers over the age of 50 have a winning combination of experience, maturity, and positive attitudes, according to another AARP study. This study also found that workers over the age of 50 exceeded job expectations and had the highest engagement levels of all workers.

Still, older workers are forced to overcome on-the-job prejudices. A 2004 AARP survey found that two of every three workers over the age of 45 felt that age discrimination hindered professional advancement and well-being. Misconceptions about “aged” workers abound. For just that reason, older adults are usually the first to go in downsizing, according to Wiener. Other stereotypes hold older workers to be inflexible, unable to work with new technology, more expensive than younger employees, and unable to work as part of a team. These labels, Wiener says, “are extremely damaging and need to be overcome. For example, it is not that older workers are unable to utilize technology. They just use it differently. As for older workers being short timers, you actually cut down on turnover if you have older workers because ‘recareer people,’ or those in their second and third careers, tend to stay in their jobs longer than younger people who perceive their jobs to be transient.”

Encore Careers
A 2008 MetLife Foundation survey estimated that between 5.3 million and 8.4 million Americans have already launched “encore careers,” or late-life jobs that combine income and personal meaning with social impact.

“Meaningful is, of course, in the eye of the beholder, and there is both personally and socially meaningful work,” says David Bank, vice president of San Francisco-based Civic Ventures, a nonprofit that works to define the third age as a time of individual and social renewal. “But for a large number of people, personal meaning comes from giving back, making a difference, helping others, getting involved, building community, tackling challenges, or leaving a legacy. That is, people have different language and different approaches, but they all lead in the same direction—being part of something larger than themselves.”

According to research from the Civic Ventures’ Web site, of those workers between the ages of 44 and 70 who are not employed in encore careers, one half are interested in pursuing positions in education, healthcare, and the nonprofit sector. Civic Ventures looks to combine aspects of work income and health benefits with elements of service through second careers tailored to baby boomers’ interests and circumstances.

The combination of what Civic Ventures calls “the experience dividend” and the baby boomers turning 60 provides America with new assets in the form of unprecedented human capital.

According to the 2005 “MetLife Foundation/Civic Ventures New Face of Work Survey,” 48% of boomers strongly supported increasing funding for Americans who go back to school or who undergo training to prepare for work in schools or social services. Forty-six percent strongly supported a grant or tax credit for Americans over the age of 50 who spend a year in training for community service or actually work in a job in public or community service. Community colleges have become breeding grounds for elders looking to recareer. “Older learners are going back to community colleges in droves,” Wiener says. Returning to school will help older adults into encore careers rather than “bridge jobs.”

Pioneered by Joseph Quinn, PhD, of Boston College, a bridge job spans the gap between a primary career and retirement. “At a superficial level, some bridge jobs may resemble encore careers, but the distinction is in the trajectory. Bridge jobs assume that the best is already over and it’s a descent—slower or faster—from here to true retirement, which is considered the goal,” Bank says. An encore career, on the other hand, can be seen as the destination itself, the payoff, the cap of a life, he says. “Some people in encore careers remark that what they may have originally considered their primary careers in fact turned out to be merely training for the most important work of their lives.”

A New Retirement
To many baby boomers, social stimulation, mental engagement, and the feeling of doing something positive will be more fulfilling in later life than a paycheck. “Boomers are redefining what it means to become an older adult,” Wiener says. “Some people are done, but that’s only a small percentage. Others will go in and out of work. They’ll say, ‘I’m going to travel for a year and then start working again.’ That’s real common these days—that’s what I did.”

Bank, Wiener, and other experts see a collision of two paradigms as the 20th century notion of retirement evolves into an employment lifestyle in which people have the freedom to decide whether and when they’ll stop working. As time marches on, the gray-haired worker will become a more common part of the social milieu.

“For an increasing number of people, longer lives combined with shorter careers mean that retirement could stretch to 30 or even 40 years. It’s tough to have a financial plan that covers that amount of time,” Bank says. “Retirement is increasingly an incorrect description of this new stage of life or at least retirement is being deferred to that period—75, 80, and 85—when continued work is really no longer possible or desired.”
Time spent on the job for boomers in their 70s may be as common as a daily exercise routine, spending quality time with family, and leisure activities. While it seems idyllic for those who are healthy and willing to work late in life, Wiener emphasizes the importance of planning ahead.

“Workers of any age need to take responsibility for their own careers. You need to ask yourself, ‘What do I want out of my work life?’ You’re probably going to have five to seven careers in your lifetime. This is really a new concept for older workers, who have never made these choices before.”

The good news about multiple career changes is that older workers will be coveted. They will have choices, especially boomers who are generally both well educated and experienced. This should fit well with the collective philosophy of a generation used to doing things differently. They will likely rewrite the rulebook not only for what it means to retire but also on how to grow old in healthful, productive, and positive ways.

— Athan Bezaitis, MA, is a freelance writer based in southern California.


Still Sharp at 70
Cognitive decline is proving to be less of an issue than expected for aging workers. Evidence suggests that elders today are more mentally fit than their counterparts in previous generations. A recent study, published by Elizabeth Zelinski, PhD, of the University of Southern California Davis School of Gerontology, found that contemporary 74 year olds performed better on mental capacity tests than individuals the same age 16 years ago. In a test of word recall, today’s septuagenarians performed as well as the earlier generation did at 59.

“Aging has varying effects on cognitive processing and functioning,” Zelinski says. “Someone who is 70 could perform as well at a given job as a robust 40 year old or, alternately, as poorly as a frail 100 year old. In other words, a person’s age isn’t necessarily a reflection of mental capabilities, physical well-being, or even longevity.”
Zelinski predicts things will be even better for the baby boomers. “Older adults now and in the future will be better mentally equipped to stay employed and engaged in our information-sensitive culture,” she says.

 The study suggests that for occupations requiring strong reasoning and memory abilities, future older adults should have the functional ability to remain productively employed into their 70s, and “the declines shown for elders in aging studies of the past do not apply to contemporary older adults,” Zelinski says.

— AB


Graying Worldwide
The graying workforce is a global phenomenon. The New York Times reported that Japan, one of the world’s oldest populations, is facing acute labor shortages in factories, restaurants, nursing homes, and on construction sites. The article says, “The labor shortage has grown serious enough that a group of influential politicians in the long-governing Liberal Democratic Party recently released a report calling for the admission of 10 million immigrants in the next 50 years.”

In the European Union, according to the Ministry of Foreign Affairs of Finland, elders’ permanent exclusion from the labor market at least partially accounts for the high structural unemployment.

— AB

Enthusiastic Employers
For the past seven years, AARP has compiled a list of the top 50 innovative employers that have created welcoming workplaces for their 50-plus employees. Following is a list of the top 10 from 2007:

1. SC Johnson, Racine, WI (consumer products)

2. Mercy Health System, Janesville, WI (healthcare)

3. First Horizon National Corporation, Memphis, TN (financial services)

4. Scripps Health, San Diego, CA (healthcare)

5. Stanley Consultants, Muscatine, IA (consulting services)

6. Lee Memorial Health System, Fort Myers, FL (healthcare)

7. Leesburg Regional Medical Center and the Villages Regional Hospital, Leesburg, FL (healthcare)

8. George Mason University, Fairfax, VA (higher education)

9. Principal Financial Group, Des Moines, IA (financial services)

10. Massachusetts General Hospital, Boston, MA (healthcare)