Phasing into retirement
Over the past decade, employers have been warned that they would face a shortage of workers once members of the Baby Boom generation started to retire. As it turned out, many Baby Boomers stayed in the workforce beyond the traditional retirement age. Now they are starting to retire, and many employers are reporting difficulty finding candidates with desired skill sets. Others members of that generation are still working, however.
According to Gallup polls, the average retirement age stayed around age 60 from 2005 through 2012. It then rose to age 61 in 2013, and then to age 62 in 2014. This trend is expected to continue. Some employees are still retiring around age 60, but others are working until 70 or even later. One reason is that many employees don’t have sufficient savings to retire.
Retirement income traditionally had three sources: a pension offered by the employer, Social Security, and personal savings. Fewer employers now offer pension plans, and some pension plans have been frozen over the last decade. In addition, the age at which full Social Security benefits are available has risen. Limited benefits are available at age 62, but employees who are in their 60s today must wait until 66 or 67 to collect full benefits.
While some employees continue working because they can’t afford to fully retire, others choose to keep working in order to stay active and maintain social relationships. Whatever the reason, these workers may be ready for a phased retirement plan.
Offering options for phased retirement can benefit an organization by removing obstacles to advancement for younger employees. Long-term employees who remain in the workforce may be roadblocks to the advancement of younger employees. This can even contribute to generational conflict. If you’ve heard comments such as, “Why doesn’t Walter just retire already?” then you may have a roadblock employee.
You cannot force employees to retire based on age; that would be age discrimination. You may, however, offer options for partial retirement. For employees who are thinking about retirement, but aren’t quite ready to start touring the country in a motorhome, evaluate what options would allow them to continue making contributions.
Part time work
Experienced workers may have extensive knowledge that allows them to continue performing at a high level, even if working only part time. Phased retirement can also allow them time to pass along knowledge to a new generation of employees, while continuing to earn income during early retirement years.
On call status
Some experienced workers might be offered on-call positions so they can fill in when other employees take vacation, sick days, or medical leave. This option may not be practical if the job involves ongoing project work, but may be feasible in many retail, manufacturing, or service jobs.
Some older workers may be suited for taking on mentorship roles that allow them to pass on knowledge while bringing their future replacements up to speed. All too often, employers wait until an employee retires before hiring a replacement. Providing for some overlap allows for additional knowledge transfer. This option also allows for immediate upward mobility because the older worker no longer holds the former position, but serves only as a trainer to his or her replacement.
From Mary Borsecnik at J. J. Keller & Associates, Inc.