While the American economy remains strained by a worker shortage, employers may need to turn to older hires — or try to retain their aging employees — to fill in the gaps.
In fact, more older workers are choosing to extend their careers, even once they hit the traditional retirement age of 65.
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While many of these “employment extenders” say they’re working longer because they want to, the reality is that as many as 60% say they have less than $500,000 saved — according to a recent report from Voya Financial, a retirement, investment and insurance company.
“Retirement is a misnomer — there is no more retirement,” says John Tarnoff, a reinvention career coach based in L.A.
“I think that older workers are going to be caught in a tight squeeze, because they don’t have the income overall to keep up with inflation.”
Americans are pushing back retirement or rejoining the workforce
Voya surveyed two major groups of older employees that it considered “employment extenders.” Workers aged 50 or older — who’d previously retired, but then rejoined the workforce in a different role — accounted for one half of respondents. The rest were at least 65 years old and were either working or planning to work past retirement age.
Nick Bunker, a labor economist at Indeed, says the number of “unretirements” (the phenomenon of retirees heading back to work) is moving toward 3% again — after peaking at 3.2% in March 2022, according to Indeed’s analysis of U.S. Census Bureau data.
Part of that, Bunker says, can be explained by movements caused by the COVID-19 pandemic. In the early days of the crisis, many older workers were either pushed out of the workforce or voluntarily stepped back in order to prioritize their health and safety.
But now Bunker says many of those workers have returned to the labor force.
“And now we’re sort of normalizing back to what you expect in a strong labor market,” he explains.
Employers also need more workers to fill in the gaps
However, compared to pre-pandemic numbers, older workers are more inclined to be “employment extenders” these days — with nearly a third of those aged 65 to 74 expecting to be working in 2030, compared with 27% in 2020 and 19% in 2000.
For employers, the news that older workers are returning to the office may come as a relief. As America contends with a rapidly aging workforce, those bums in seats are desperately needed — and that gives experienced employees an edge.
Jessica Tuman, head of Voya Cares and ESG practices at Voya Financial, which ran the study, says older workers have greater bargaining power now, thanks to the tight labor market. The U.S. economy added 517,000 jobs last month, while the unemployment rate slid to a half-century low.
Read more: Here’s how much money the average middle-class American household makes — how do you stack up?
Older workers have the institutional knowledge on how to perform in their jobs and can serve as mentors to new and younger employees. Employers also save on the costs of rehiring and training workers — many of whom may either lack the experience or are less likely to remain loyal to just one company.
Tarnoff notes older workers can stay up-to-date and add new skills to their repertoire to compete with younger workers as well. And with Americans living longer, enjoying their work and having access to employment, Tuman says the convention of retiring at age 65 needs to be revisited.
“It’s vital that older workers dive in and roll up their sleeves along with everybody else. There is no reason why an older worker can’t learn the same remote work skills and technology skills as a younger worker.”
Workplaces needs to initiate these conversations
With many companies in dire need of hires, employers need to consider how best to retain their aging and experienced employees.
For many Americans putting off handing in their lunch pail, it may be down to simply not having enough money to retire. Nearly half of “employment extenders” say they’re working longer to maintain their current lifestyle, to deal with inflation and cost of living concerns and to have a “safety net” in retirement — despite also claiming they’re working longer because they want to.
And they may be reluctant to lose vital job benefits, like health insurance and their 401(k) plans, once they stop working.
Tuman says companies need to provide more support and education in order to help their older workers eventually retire. This could include offering 401(k) plans and catch-up contributions and access to financial advisers, and estimating income needs to get employees a more holistic picture of their retirement plan.
She adds it’s also important to promote vehicles like emergency savings accounts, health care spending plans, insurance and student debt programs. She’s seen some companies offer student debt management programs, or even pay off part of their employee’s loans.
Workers should also take advantage of any health and wellness benefits that are being provided — and ask for flexible working arrangements if needed.
“I think, generally speaking, [older workers are] in a power position, because they do have the expertise to fulfill the roles and there’s no sort of training required,” says Tuman.
“So I think there’s a lot that they can ask their future employer.”
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
Source: https://finance.yahoo.com/news/employment-extenders-power-position-experts-150000602.html