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Americans are going to have to retire later, we're often told. They live longer than their ancestors. Neither their retirement savings nor the taxes of younger generations can support ever-longer retirements.
Americans are, in fact, working longer, reversing a long trend toward earlier retirement.
The nation's typical worker now retires at age 62, up from 60 a decade ago, according to the Employee Benefit Research Institute. About 60 percent of men between 60 and 64 are in the labor force, and 20 percent of men over 65, up from 55 percent and 17 percent, respectively, a decade ago, says the Bureau of Labor Statistics. The pattern is similar for women.
But will employers want more older workers?
"There's a lot of happy talk around that we're going to have slowing in the rate of growth in young workers and, therefore, employers are going to want to hire older workers just at the time that older workers are going to want to work," says Boston College economist Alicia Munnell, co-author of Working Longer, a book to be published this month by the Brookings Institution. "We think it's much less clear than that."
The "happy talk" case relies on the demographic fact that the ranks of prime-age workers will shrink as the huge baby boom generation ages and on the logic that employers will have no alternative to older workers. Plus, today's jobs require less of the physical stamina that led to mandatory retirement ages, changes in pension plans have diluted economic incentives for employers to encourage retirement, and age discrimination was banned in 1967.
A significant minority of employers see this demographic reality, broadcast affection for "mature workers" and win plaudits from AARP, an advocacy group for older people.
CVS Caremark, the drugstore chain, advertises for older workers with the slogan: "Abilities are ageless." Of its 190,000 employees, 18 percent are over 50, up from 7 percent in the early 1990s. More than 1,200 snowbirds, mainly older workers, work at CVS in the north in the summer and in Florida in the winter.
Bookstore chain Borders Group says it finds "mature workers" appealing because half its customers are over 45 and turnover among older workers is one-sixth that of under-30 workers. About 18 percent of Borders' 30,000 workers are over 50, double the fraction six years ago, and the company anticipates by 2010 one in four will be.
At the Blue Cross Blue Shield Association in Chicago, 40 percent of 1,000 mainly professional employees are 50 or older and 25 percent are 55 or older. "We want to keep these people as long as we can. They know the business, the values, the customs. And recruitment is becoming more difficult," says William Colbourne, senior vice president for human resources. The trade association has sweetened benefits for older workers, paying half the tab for financial planning and awarding extra days off to those 62 and over. It soon will offer part-time work at full-time pay to selected workers who agree to defer retirement and mentor successors, Mr. Colbourne said.
For all the heart-warming pictures such efforts produce, they appear to be exceptions. Buyouts of graying colleagues and early-retirement parties are common in many workplaces. "Relatively few companies thus far have fully positioned themselves for the coming work-force demographic shifts," consulting firm Towers Perrin said in a 2005 report prepared for AARP.
Surveys by Boston College's Center for Retirement Research found that employers expect about a quarter of employees currently in their 50s will want to work two to four years longer than past workers. Then employers were asked if they would accommodate half those who wanted to work later. "On a scale of 1 (unlikely) to 10 (likely), the median response was a lukewarm 6," the researchers say.
While employers are "reasonably comfortable" with the older workers they currently employ, "they are not keen on retaining even half who want to stay on to age 67 or 69," the Boston researchers concluded. They predict "a messy and uncomfortable mismatch with large numbers of older workers wanting to stay on while employers prefer that they do not."
Why? Employers fear older workers "cost too much, lack current skills and don't stick around long," Ms. Munnell and co-author Steven Sass write. Wages tend to rise with seniority. Health costs for older workers are higher. Older workers are viewed, rightly or not, as less supple in dealing with new technologies. And old workers tend to be in older industries and occupations in which employment is growing slowly if at all.
The image of companies loyally retaining scarce, seasoned workers is at odds with reality. Among male workers between 58 and 62, only 44 percent still work for the outfit that employed them at 50, down from 70 percent two decades ago. And even if labor shortages emerge, they argue, many employers will hire younger immigrants, shift work overseas or deploy labor-saving technology (like the cashier-less grocery-store checkout) instead of hiring older workers.
One silver lining: Lengthening life spans don't mean you have to find a boss who will let you work forever. The Boston College scholars say delaying retirement three or four years - to 66, instead of 62, say - will boost retirement income by a third.
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