A New Generation Redefines Retirement

July 1, 2000
Love, like youth," wrote Sammy Cahn and Jimmy Van Heusen, "is wasted on the young."

Love. Youth. In today's sizzling economy, a forward-looking, HR-minded songwriter could add another thing that's wasted on the unwrinkled set: career opportunities.

A growing number of experts are warning that the future workforce won't rely on the peripatetic hotshots of Generation X, but on the ever-expanding pool of older workers and retirees. Part of it is a matter of simple economics; with the unemployment rate hovering consistently around 4 percent, companies are already scrambling to keep up with the demand for qualified employees. And part of it is demographics.

The aging of the Baby Boom generation has already lifted the median age in this country from 28 in 1970, to 35 today, to a projected 40 by the year 2010. By 2006, the number of workers age 34 and younger will dip to 36 percent of the U.S. workforce.

Any company that hopes to keep pace with its competitors in the coming years will have to convince a wary work-force that careers can indeed be more fulfilling the second time around.

Fortunately for employers, the concept of retirement is changing as quickly as the composition of the workforce.

"Right now, depending on which age group you look at, we have about 12 to 16 percent of our retirees who are working after retirement," says Scott A. Bass, Ph.D., a gerontologist and dean of the graduate school at the University of Maryland, Baltimore County. "As we look to the future, a recent survey by the American Association of Retired Persons showed that 80 percent of the baby boomers say that they expect to work after retirement. That's dramatic."

The employer gets to take advantage of the seasoned employee's Institutional knowledge and specialized skills while at the same time reducing the considerable costs associated with hiring and training an new employee.

Roughly half of these retirees will be working because they have no choice, Bass says. Lacking adequate pensions or assets, they will linger in the work force as the "have nots" of an aging American population. The other half, however, will continue to work simply because they want to. Missing the social experience of interacting with peers and colleagues, and seeking personal fulfillment, they will stay active in the workforce.

They won't necessarily want to shoulder the same responsibilities they had when they were younger, but they will want to stay professionally active just the same.

Those who want to tap into this pool of employees will not only have to remember that the reasons for seeking employment vary greatly according to individual need. They also will have to keep in mind that the terms "older worker" and "retirement" refer to stereotypes that no longer have any useful meaning. Depending on whom you ask, older workers today are variously considered to be anywhere from their 50s through their 80s.

And given the rash of mergers, consolidations and restructurings we've seen in recent years, a retiree could as easily be 55 as the 65 we traditionally peg as retirement age.

"One of the things about the older population is that it is extraordinarily diverse," says Bass. "There will be people who want to work just like they did when they were younger. There are going to be those who say they're leaving at age 50. There will be those who have retired and take what we call 'bridge' jobs -- temporary, transitional jobs without benefits or security. There will be those who go into new careers and go through re-training. And there are going to be those who create new companies and new businesses that we hadn't imagined. All those things are going to happen."

Despite the tight labor market and the inexorable aging of the nation's workforce, it is surprising to find that very few American companies are actively courting older workers.

In its most recent survey of the issues facing employers and older workers, the Society for Human Resource Management (SHRM) found that 65 percent of the companies surveyed do not actively recruit older workers to fill open positions, and only 45 percent actively attempt to retain older employees. A full 81 percent of the employers reported that they do not offer any provisions or benefits that are designed specifically with the older worker in mind.

A similar survey, conducted by AARP and FGI, Inc., corroborates these findings. This study found that only 40 percent of human resource managers interviewed have implemented any of the policies that they believe would be most effective in better utilizing older employees. The approach deemed most likely to appeal to older workers -- benefits packages tailored to meet their specific needs -- had been embraced by only 18 percent of the respondents.

"For the most part, employers have not been taking many steps toward thinking about what their future workforce will look like," says Deborah Russell, AARP's senior program coordinator for economic security and work issues. "Knowing the demographics the way we do, the majority of the pool of workers available to choose from are going to be older workers.

And whether it's because they want to or because they need to, the fact of the matter is that the boomers are completely redefining the whole idea of what retirement is all about."

Perhaps because this pool of workers is so diverse, and expects so many different things from its retirement years, the companies that are actually reaching out to older workers are reaching out to the older workers they know the best -- their own senior employees and recent retirees.

In the SHRM survey, 62 percent of the respondents reported that they are currently hiring retired employees as consultants or temporary workers. Twenty- nine percent provide opportunities for workers to transfer to jobs with reduced pay and responsibilities, and 19 percent have instituted a phased retirement program that enables workers to ease into retirement by reducing their work schedules.

In each case, these initiatives make a great deal of sense for both the employer and the older worker. The employer gets to take advantage of the seasoned employee's institutional knowledge and specialized skills while reducing the considerable costs associated with hiring and training a new employee. The employees get an unprecedented opportunity to define retirement in a way that suits both their financial and emotional needs.

"What we want is to have a worker not feel like work is an all-or-nothing proposition, that they're either going to work five days per week or they're going into retirement," says Bill Miner, retirement practice leader in the Chicago office of Watson Wyatt, an international human resources consulting firm.

"When they reach the point where they no longer want to work five days a week, it's the option to retire in stages rather than fall off a cliff, to go from high-intensity work to no work at all."

Indeed, a 1999 survey conducted by Watson Wyatt found that three out of four older workers indicated that they would rather reduce their work hours gradually than face the traditional all-or-nothing sort of retirement that is the norm today.

Phased retirement, part-time employment, and consulting arrangements all imply an unusual degree of flexibility on the part of employers, and flexibility is a term that comes up repeatedly in conversations about what employers will have to do to meet the needs of older workers. You can talk about elder care: A growing number of 55-year-old Americans have 85-year-old parents to look after. You can talk about child care: A lot of 60-year-old Americans are looking after their children's children.

Name a traditional work/life benefit and chances are it will appeal to an older worker as much as it appeals to an employee who has been in the workforce just a handful of years. This, perhaps, explains why so few employers in the SHRM survey (11 percent) reported that they offer benefits tailored to the needs of older workers.

Representatives for IBM and 3M, in fact, told Workforce that these perennial leaders in innovative work/life initiatives simply offer a broad range of employee-friendly benefits. If they appeal to older workers, so much the better. A representative from a third industry leader noted, however, that even if a company did actively seek to recruit and retain older workers, it might well prefer to avoid publicizing the fact.

Singling out any group of employees for special treatment in today's litigious environment is just asking for trouble, said the representative, who asked not to be named.

In the absence of specific initiatives, then, employers are simply advised to be flexible when forced to contemplate building a business on the shoulders of an aging workforce.

"You need flexibility," says Barry Dym, Ph.D., president of WorkWise Research & Consulting. "Flexibility of work, of space, of time. It's customizing work to fit different people's needs. So if you think of that with older workers, you would want to think about having them work part-time; you would have them work from home. A lot of people want to be with their grandchildren and travel more. Yet they really want to work. They could put in a tremendous amount of time."

Beyond making it easier for older workers to balance the demands of work and life, there is a growing sense that employers also need to make them feel good about themselves, to help them see that they are not dinosaurs lumbering around in a world increasingly dominated by quick-witted mammals.

To that end, 55 percent of the human resources executives in the AARP survey listed "Skill Training for Older Employees" as one of the top five approaches to more fully utilizing older employees. Forty-seven percent of the respondents in the SHRM survey indicated that their companies already provide training to upgrade the skills of older workers. Thirty-eight percent said that they plan to offer such programs in the next five years.

Ongoing education and retraining can help keep older workers engaged and productive, but it is equally important to show them that their years of experience -- both on the job and in the community -- count for something as well.

"There's a wonderful thing that a lot of employers are doing," says Kathleen Conroy, vice president of client relations at, a provider of Web-based work/life programs. "They're beginning to reach out to their retiree populations, bringing them back and creating mentoring relationships. They take a retired executive, for example, and match him up with one of the younger professionals, somebody who might be a rising star but who doesn't have the same kind of executive experience and acumen and doesn't know all of the boardroom politics."

Mentoring relationships demonstrate to older workers that their experience is valued. Such relationships also foster continuity in an organization. For this process to work, however, managers must be especially sensitive to issues of intergenerational conflict. If older workers feel threatened by the new ideas advanced by their younger colleagues, or if the company's rising stars sense that they're being patronized, trouble is sure to follow.

"Senior leadership is best served if they reinforce a partnership model of leadership," says Bob Turknett, president of Turknett Leadership Group in Atlanta. "Then, when you're mixing up older and younger workers, it doesn't become as big a deal. I would encourage leadership to create a culture and an atmosphere that promotes partnership, that says we're all part of a team, that we have different roles and we have to organize this way to get things done more efficiently, but it doesn't matter what age a person is. It's more determined by who's on the job and what needs to be done. Everyone is highly valued."

Turknett also believes that the primary responsibility for making these relationships work must be borne by the younger employees. Generation X, in particular, is known for being brash and self-confident. But according to Turknett, a little respect and humility can go a long way toward bridging the gap between the generations. Successful organizations will be sure to instill these qualities in their younger employees even as the proportion of older workers inevitably grows.

Respect. Flexibility. A chance to do something meaningful. Ultimately, it seems, older workers want the same things that all employees want. The companies that do the best job of attracting and retaining them will most likely be the companies that have already shown a strong commitment to innovative human-resources strategies. Whether it's their first time around or their second, or even their third or fourth, employees are attracted to employers who appreciate them.

It's a fundamental truth, perhaps, but one that employers ignore at their own peril.