Kevin McGrain has prepped well for his golden years. He saved diligently, invested wisely and now at age 63, he enjoys traveling with his wife, spending time at their new North Carolina home near the mountains and visiting with his grandkids.
“My in-laws are going through this right now,” he said. “My father-in-law worked for a family business his entire life and retired at 63. He’s now 93 and he and my mother-in-law have aides that live in the house 24/7. He prepared well, but what money they have is disappearing rapidly.”
With people living longer and healthier lives than ever before, it’s a thought that’s scarier than death for many older Americans. In fact, 43 percent of workers over 50 indicate that outliving their savings and investments is their No. 1 fear surrounding retirement, according to a 2016 study by the Transamerica Center for Retirement Studies. It ranks higher than declining health and loneliness.
A look at the numbers explains why.
For much of the 20th century, the number of older workers steadily declined thanks in part to rising incomes, the introduction of Social Security and Medicare and the willingness of many employers to provide a pension plan. As life expectancy increased, the number of years that the average employee spent in retirement stretched dramatically from about 10 years in the early 1950s to 20 years in 2000, according to a Social Security Administration report.
And in the midst of that shift, employers began abandoning traditional pension plans with their lifetime benefits in favor of defined-contribution plans such as 401(k)s, which are riskier for employees. Add soaring health care costs and rising living expenses with an uncertain future for Social Security and it’s no surprise more employees are working at an age when their parents and grandparents had long since sailed into the sunset.
But some entrepreneurs have found an opportunity to help retiring boomers confront their capital crisis.
In 2010, Sharon Emek launched an employment agency specializing in placing aging boomers into work-at-home jobs called Work at Home Vintage Experts, or WAHVE. At age 64, she was a former insurance industry executive who foresaw an impending brain drain as boomers retired and younger workers bypassed insurance jobs and headed for Wall Street and Silicon Valley.
“There’s a real problem in the insurance industry and I see it in accounting, too,” said Emek, who is now 72. “Young people don’t want to go into insurance. I kept saying, ‘There’s got to be an opportunity here.’ ”
Today, the company, which is based in Melville, New York, has 23 employees around the country and 400 boomers placed and working as underwriters, claims specialists, and accountants from their homes. In November, she launched WAHVE Accounting, which caters to the accounting and finance industries.
“It’s very hard when you spend the majority of your life working and all of a sudden you’re doing nothing,” she said. “You can’t go cold turkey into retirement. We have done a lot of things and we have a lot of knowledge. We travel, we do yoga, and we stay active, which our parents’ generation didn’t do. Boomers are creating a new paradigm.”
Today nearly three-fourths of employees plan to work past 65, according to a recent Gallup poll, compared to only 14 percent who said they plan to work past retirement age in 1995. These employees are redefining retirement and challenging employers to change how they view older workers.
At 62, Susan Sferas had no intention of retiring from her lengthy career as an IT specialist, but when her long work commute began taking a toll on her health she said that she had no other choice. It was a hard transition. She quickly got bored and began worrying about the cost of her health insurance, which became her responsibility. Her Medicare wouldn’t kick in for another three years.
“I had to purchase health care through the marketplace at a very significant cost. I had a 401(k) but no pension and the only real income I had was Social Security,” said Sferas, who is now 65.
Luckily, she said, she discovered WAHVE and has been working steadily ever since.
“A lot of people I know aren’t retiring and the main reason is the health benefits,” she said. “It’s a very different world from when our parents retired. I always invested in my 401(k) at the maximum level, so unless something catastrophic happens I’m OK. But if I had kids I wouldn’t have money to leave them. You can’t plan on that now and your kids shouldn’t plan on it, either.”
But this changing view of retirement offers opportunities for workers and employers alike, according to journalist Chris Farrell, author of “Unretirement: How Baby Boomers Are Changing the Way We Think About Work, Community and the Good Life.”
“No longer is it desirable to say, ‘I’m 65 and I’m going to walk away from my skills and knowledge,’ ” said Farrell, who is an economics commentator at Minnesota Public Radio. “People are searching for bridge jobs, they are looking at semiretirement and are staying engaged in the workforce even if it’s not full time.”
This bodes well for employers who are facing a skills gap and a shrinking labor pool, according to Farrell.
“HR conferences used to be all about the aging workforce but employers did nothing about it,” he said. “You still have a system designed to get the older worker out the door, but they don’t have a line of people walking in the door and that’s forcing (employers) to change how they see older workers.”
Companies are responding in a number of ways, such as offering flexible work arrangements, providing retirement planning and elder care benefits, and in some cases, offering phased retirement programs that allow employees to gradually decrease their work hours, according to Roselyn Feinsod, a senior partner in the retirement practice at Aon Hewitt. Phased retirement is touted as a way to help employees ease into retirement and to assist employers with workforce planning issues, like transferring knowledge to younger workers. However, only a handful of companies offer them, she said, focusing instead on offering flexible work arrangements.
“What we’re seeing in place of phased retirement is a huge push around a flexible workplace, whether it’s part-time, telecommuting or flex hours,” said Feinsod. “That’s a new form of phased retirement — letting people work in a different way.”
While many retirees continue working to make ends meet, money is not always the primary reason for working beyond retirement age, according a 2014 report by Merrill Lynch (now Bank of America Merrill Lynch). The study found that 72 percent of preretirees want to work after they retire, according to Kevin Crain, head of workplace financial solutions at Bank of America Merrill Lynch.
“Before it was that they had to work,” he said. “People are saying, wait a minute. In the world of longevity 60 isn’t old. Also there is an increasing concern about Alzheimer’s. People feel that they need to remain socially stimulated and stay active to avoid cognitive decline.”
At PNC Financial Services, older workers pass their knowledge to younger employees who in turn teach their elders new skills through the company’s mentorship program.
Last year the Pittsburgh-based financial services corporation launched an employee affinity group that focuses on intergenerational workplace issues, according to Marsha Jones, chief diversity officer at PNC. The group is among 10 employee-resource groups that focus on some aspect of diversity.
“Some older employees over 50 indicated that they wanted a vehicle to give back to the organization,” said Jones. “They still had a number of years to go before retiring and they felt they had a lot to offer so they suggested an intergenerational group to interface with employees across generations. We use an algorithm that matches employees relative to experiences and attributes and we do reverse mentoring so older workers can engage, share and learn from younger employees.”
In 2016, the company launched a series of retirement planning webinars and has since expanded it to offer financial planning for employees of all generations.
While Jones could not provide the number of PNC employees who are working past traditional retirement age, she said that more employees are taking sabbaticals from between six months to a year to pursue personal interests before returning to work, either full time or part time.
“Baby boomers are living longer and they are healthier and more vibrant,” she said. “They want to be more active than our parents were. When you retire, that becomes your reality so you have to ask yourself, ‘What am going to do for the next 35 years?’ ”
Rita Pyrillis is a writer in the Chicago area. Comment below or email firstname.lastname@example.org.