hile financial hardships may force people to delay retiring, whether they’ll work for you is another matter.
When making a decision about retirement, people must weigh the costs and benefits of such things as additional time for family, friends and travel versus financial concerns, keeping both mentally and physically active and the pleasure that comes from work, says Brian Hayhoe, a partner with Toronto-based Acquaint Financial Inc., a firm that provides independent financial education to employees.
Due to the poor financial markets during the past couple of years, many employees are second guessing, and in a lot of cases delaying, their planned retirement dates, says Hayhoe.
In some cases employees have lost 20 to 50 per cent or more of their retirement savings during the last few years due to the poor markets. Although employees not in a defined benefit plan are likely to have been hit the hardest, those in a defined benefit plan are still exposed to the volatility of the markets through their personal savings, says Hayhoe. For someone nearing retirement, this can have a significant impact on the ability to retire as planned. As a result, employees now have to reconsider how and when they are going make the transition into retirement.
With a large number of baby boomers exiting the workforce, having experienced workers remain due to financial concerns related to retirement is a welcomed development in the eyes of most employers. However, employers still face the challenge of making sure these workers do not go somewhere else, says Hayhoe.
There are a few alternatives employees may consider, he says. One of the more popular ones is phased retirement, which allows the employee to reduce the number of hours worked while maintaining some level of income. However, pension regulations can make this difficult. Another alternative is to retire and begin collecting a pension and then find a job at another organization. A lot of people have a desire to open their own businesses doing something they are passionate about. And there’s always the solo-consultant option.
Companies will have to make themselves attractive places for continued service, says Hayhoe.
Older workers are highly regarded right now for several reasons, says John Challenger, chief executive officer of Challenger, Gray & Christmas, Inc., a New York-based international outplacement firm. Employers see them as valuable assets in the struggling economy because their experience and skills make them better able to do the work of two and sometimes three younger, less seasoned workers, he says.
“In this fiercely competitive worldwide market, employers need the most talented people, those who understand how business functions.”
Challenger notes employer interest in older workers has resulted in falling unemployment rates for people 55 and older. In the U.S., the participation rate, which is the percentage of the population 55 or older that is working or looking for work, stood at 36 per cent in September, which is the highest since 1973.
“The gains made by older job seekers may persist beyond the recovery as companies look ahead to potential labour shortages that could stretch out for 15 to 20 years as the huge population of baby boomers reaches retirement age. Companies could find themselves unable to meet demand unless they are able to convince a significant number of these retirement-eligible workers to stay,” says Challenger. “Many companies are already implementing programs that will help them retain their older workers.”
Neuville Industries, of Hildebran, N.C., employs a combination of programs to delay the retirement of its oldest workers. At age 59, employees are eligible for pre-retirement benefits. They are no longer required to work overtime and performance ratings for advancement and pay raises are lowered from 100 per cent to 85 per cent, meaning they do not have to work as hard, according to a company spokesperson. Those with five years on the job are also eligible for job sharing with another eligible employee. Each person works 20 hours of a 40 hour work week.
CVS Corp. employs more than 17,000 workers 50 and older. The drugstore chain offers flexible work schedules and employee discounts of up to 20 per cent on merchandise. CVS will also find openings for workers in its Florida stores for those who migrate to the state in the winter.
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