It's nice to get out of the rat race, but you have to learn to get along with less cheese. - Gene Perret
Retirement at sixty-five is ridiculous. When I was sixty-five I still had pimples. - George Burns
The Conference Board has this month published a new report “U.S. Workers Delaying Retirement: What Businesses Can Learn from the Trends of Who, Where and Why” which highlights the need to pro-actively quantify future retirements and create a strategic workforce plan to address long-term issues.
Median retirement ages have been trending upwards for many years, and the report attributes this trend to several factors, including:
- people are living longer and require more wealth to be accumulated before they retire;
- changes to social security such as increasing the minimum age for receiving a full pension from 65 to 67 are forcing workers to delay retirement (increasing pension ages by 2 years seems a popular trend – both Spain and France have also done this in the past year)
- the removal penalties for collecting benefits while working has enabled workers to continue working beyond their nominal retirement age; and
- systemic shifts from defined benefit plans (employers bear the investment risk) to defined contribution plans (employees bear the investment risk) have made retirement intentions more responsive to economic conditions.
The report also finds marked differences in retirement rates and ages across industries and geographies. As a whole, the report raises some interesting points for Strategic Workforce Planning:
a) Planners should identify which of the changes that are delaying worker retirements are permanent, as opposed to temporary – temporary changes such as workers delaying retirement due to stock-market performance may lead to a glut of retirements when the investments recover. Multiple scenarios should be modelled – at a minimum, consider a scenario where retirements revert to pre-recession levels; and another where the current retirement rate (or median retirement age) is now a permanent attribute.
b) Some industries, such as Health and Construction, have had a more significant drop in retirement rates than others. States suffering from the largest house-price slumps tend to have more workers delaying retirement. It’s important that planners model figures relevant to their industry and geographies, rather than generic economy-wide figures.
c) As with any trend, there are opportunities as well as threats. Some of the retirements that are occurring are involuntary retirements, meaning that there is a pool of highly-skilled workers who may be looking for work on a temporary basis or outside of their traditional industry.