As much as 18% of the U.S. workforce could retire within the next five years, says a new study from ADP, the payroll and HR outsourcing firm. That’s assuming the average retirement age is 61.
That might be a big assumption.
More workers are pushing retirement age past the traditional timeline. Northwestern Mutual’s Planning & Progress 2013 study, for example, reveals that 10% of employees hope to hold off retirement until they are in their 80s. Another 32% say they will retire in their 70s. Only 52% want to clock out in their 60s, and just 6% expect to retire before they turn 60.
No rush for the door
On average, pre-retirees told Northwestern pollsters they will retire at age 68. Reason: “We’re seeing more than three-quarters of mature workers putting off retirement, largely due to financial concerns, but also as a personal decision made by people who enjoy their work,” said Brent Rasmussen, president of CareerBuilder, which ran a separate study on retirement attitudes.
The U.S. Bureau of Labor Statistics estimates that by 2030, one in four workers will be older than 55.
That presents HR pros with two big challenges: hiring replacements for the many older employees who will retire over the next few years, and accommodating the needs of the ones who plan to stick around well past retirement age.
Here are suggestions for addressing those challenges:
Find out who’s leaving
There’s no foolproof way to predict when older workers will actually retire. It’s best to prepare for an exodus of experience—but plan for many employees to stay on.
Tip: Survey your employees to get a glimpse into the future of your workforce. If you find that you will have to deal with significant losses, use the data to inform your strategies for recruitment and training.
The number of workers reaching retirement age in the next five years varies widely across industries. Public administration and health care services will lose more employees than hospitality and retail businesses, for example, because the average age of their employees is higher.
Advice: Tap your professional network and industry-specific trade groups to learn the workforce trends that will affect your sector.
Recruit more older workers
Consider replacing your retirees with … more older workers. CareerBuilder researchers say 60% of workers older than age 59 plan to continue working even after retiring from their current jobs.
Jim Gibbons, CEO of Goodwill Industries, lauded older employees during a National Employ Older Workers Week speech this fall. “It makes sound business sense to tap into this talent pool and take advantage of the expertise and life experience of older workers,” he said.
He cited research showing older employees are motivated to exceed employer expectations, exhibit a strong work ethic, and demonstrate a desire to mentor younger workers.
Welcome older workers to stay
Having an open conversation that explores all options can set up a win-win situation for employers and employees alike. In the CareerBuilder study, workers who had talked with bosses about staying on past retirement age found remarkable openness to the idea.
Help create exit strategies
A few years ago, the assumption was that retirement-age employees who put off retirement because of the shaky economy would take their leave when stock prices started rising, unemployment dropped and the economy recovered. That hasn’t happened, at least not across the board.
A report by The Conference Board reveals that 20% more mature workers are planning to delay retirement today than in 2010 when the organization conducted its last poll on the topic.
Gad Levanon, director of macroeconomic research at The Conference Board, calls the numbers “disconcerting,” noting that the reluctance of 45- to 60-year-olds to retire has pros and cons. A workforce of experienced employees saves businesses from facing labor shortages or skills gaps, but it also can prevent companies from cutting costs.
The reason for the reluctance, the report notes: Older employees who have lost prior jobs, suffered salary cuts, depleted their savings or have upside-down mortgages don’t feel financially secure enough to give up their full-time incomes.
Tip: Help older employees with financial planning education so they know what they need to do now if they hope to end their careers in the near future.
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