Commentary: Aging Workforce Presents Longterm Retirement Planning Opportunities for Employers and Employees

Ian Martin, UK Head of Retirement Businesses, HSBC Insurance, suggests that "Ageing populations are an opportunity for us all--be it increased longevity for individuals or access to mature, skilled workers for employers." However, this opportunity also comes with responsibilities: "for individuals to prepare and for employers to understand the value of older workers and ensure the working environment helps older workers to continue to flourish."

Martin's comments drew on an HSBC Insurance global report--"The Future of Retirement: Investing in Later Life"--which identified an ill-prepared generation with high expectations for their retirement but, perhaps unwittingly, unprepared for the cost implications for funding their increased longevity and desired retirement lifestyle.

Source: Director of Finance Online "Long term retirement planning " (September 26, 2008)

New Mexico: Census Bureau Issues Profile of the Older Worker

In a continuation of its partnership with 31 states on a series of reports on workers 55 and older, the Census Bureau has released its report on New Mexico, the 17th state to be released in the series. Among the highlights of the report--"The Geographic Distribution and Characteristics of Older Workers in New Mexico: 2004":

• 14.1% of workers were 55 and older, while 3.2% were 65 and older;
• statewide, the educational services industry had the highest proportion of or workers 55 and older, with 22.0% of its workers in that age group; and
• the state's health care and social assistance industry employed the greatest number of older workers, with about 16.9% of the workers 55 and older being in that sector.

Source: U.S. Census Bureau Longitudinal Employer-Household Dynamics What's New (September 29, 2008)

AARP Announces 2008 Best Employers for Workers Over 50

Cornell University heads the list of AARP's 2008 best employers for workers over 50. According to AARP CEO Bill Novelli, a "diverse group of corporations and not-for-profits are increasingly recognizing the importance of innovative policies as employers seek to retain and recruit experienced workers." In particular, Novelli pointed out that, in the face of rising health care costs, many of the top 50 employers are adopting practices such as health screenings and other wellness programs that will pay off for both the employee and the employer.

With respect to Cornell, the University offers a variety of health-related programs through the year, including health screenings in office buildings on campus, and computerized and in-person health counseling for those enrolled in its Health Program for Healthy Living. Among other things, its wellness program provides access to five fitness centers on campus, an ice skating rink and several swimming pools, along with group fitness and nutrition classes. Other policies include flexible arrangements such as flextime, compressed work weeks and telecommuting; a formal phased retirement program for faculty; a robust retiree health and prescription drug plan heavily subsidized by the university; temporary work assignments for non-faculty retirees; paid time off for care giving, and access for retirees to continued university education at no charge.

In announcing the list of the top 50 employers, AARP also issued a compilation of employer strategies for addressing the issues of an aging workforce. AARP has grouped these best practices exhibited by one or more of its top 50 employers according to recruiting, training, phased retirement, retiree relations, and caregiving programs.

In addition, AARP has identified its top 10 international innovative employers.

Source: AARP Press Release (September 23, 2008)

Advocate General Opinion Supports U.K.'s Mandatory Retirement Law at European Court of Justice

Jan Marzak, the Advocate-General for the European Court of Justice, has issued an opinion recommending that the Court uphold the United Kingdom's law taht bans discrimination on the ground of age but excludes pensioners, who can be dismissed at 65 without redundancy payments, or at the employer's mandatory retirement age if it is above 65. According to Marzak:

A rule such as that at issue in the main proceedings, which permits employers to dismiss employees aged 65 or over if the reason for dismissal is retirement, can in principle be justified under Article 6(1) of Directive 2000/78 if that rule is objectively and reasonably justified in the context of national law by a legitimate aim relating to employment policy and the labour market and it is not apparent that the means put in place to achieve that aim of public interest are inappropriate and unnecessary for the purpose.

According to Gordon Lishman, director general of Age Concern, one of whose member organizations--Heyday--brought the case to set aside the law, "This is a set back, but it is not a disaster." While Age Concern would have preferred to have the Advocate General’s support, his "opinion confirms that the EU Directive requires age discrimination to be justified. It’s now up to the UK government to prove to the High Court that their social and employment policies are important enough to justify kicking people out of work at 65."

Sources: The Times "Setback in battle against compulsory retirement age" (September 24, 2008); Personnel Today "Heyday age discrimination ruling: what the employment lawyers and experts say" (September 23, 2008); Age Concern Press Release (September 23, 2008); Employers Forum on Age Press Release (September 23, 2008)

Oregon: Census Bureau Issues Profile of the Older Worker

In a continuation of its partnership with 31 states on a series of reports on workers 55 and older, the Census Bureau has released its report on Oregon, the 16th state to be released in the series. Among the highlights of the report--"The Geographic Distribution and Characteristics of Older Workers in Oregon: 2004":

• 14.9% of workers were 55 and older, while 3.1% were 65 and older;
• statewide, the mining industry had the highest proportion of or workers 55 and older, with 23.2% of its workers in that age group, with the real estate and rental and leasing industry following with 21.1% and the utilities industry with 20.7%; and
• the state's health care and social assistance industry employed the greatest number of older workers, with about 14.9% of the workers 55 and older being in that sector.

Source: U.S. Census Bureau Longitudinal Employer-Household Dynamics What's New (September 23, 2008)

Research: Scope and Impact of Unemployment on Older Americans

A report by Heldrich Center researchers Carl Van Horn, Ph.D. and Maria Heidkamp looking at unemployed older workers finds that older unemployed workers face more significant challenges than their younger jobseeking counterparts. In particular, older unemployed workers take longer to find new jobs, and when they do, it is often in a different occupation, a different industry, and at much lower earnings than in their previous job.

Published as an issue brief by the Sloan Center on Aging & Work, "Older and Out of Work – Trends in Older Worker Displacement" reports that a growing proportion of older adults do not have the option of retiring from work, due in part to rising prices and lack of sufficient savings. Thus, Heidkamp says: "It is time to ask how employment and training programs can be more effective in bringing older unemployed workers back into workplaces where their talents are still needed and valued."

With talent shortages approaching as the Baby Boomer generation reaches retirement age, employers need to proactively ensure that they provide their older workers with a supportive work environment sensitive to their needs. For older workers, this often means providing greater workplace flexibility and benefits packages.

Source: Sloan Center on Aging & Work Issue Brief No. 16 (September 2008)

Research: Is Continued Work Linked to State Economics or Individual Characteristics?

The Center for Retirement Research at Boston College has released a research report investigating some stark differences in labor force participation rates of men aged 55-64 in different states--for example, West Virginia has a participation rate below 60%, while South Dakota has a participation rate of nearly 90%. The study ("Do State Economics or Individual Characteristics Determine Whether Older Men Work? "), authored by Alicia H. Munnell, Mauricio Soto, Robert K. Triest, and Natalia A. Zhivan, concludes that while differences in the nature of state economies, or the characteristics of their employers, affect the labor force participation rates of older workers, individuals characteristics are far more important in terms of extending working careers.

Factors that vary among states that affect participation rates include a pseudo replacement rate, the unemployment rate, the percent of men self-employed, percent of men in manufacturing, percent of men aged 55-64 with a college degree, and the ratio of men aged 55-64 to the total population. Individual factors that can affect participation were grouped into three categories: demographics (age, college, nonwhite, fair/poor health, and married), characteristics of the spouse (working, fair/poor health, and earnings), and respondent’s wealth (owns a home and financial assets).

As expected, older individuals and individuals in fair/poor health are less likely to be working than their counterparts. Having greater financial wealth is associated with a low probability of working. Having a college degree, having a working spouse or spouse in poor/fair health, and being a homeowner are associated with a higher probability of being employed. While having a high-earning spouse is associated with a lower probability of working relative to having a low-earning spouse, overall married men are more likely to be working than singles.

Accordingly, the authors conclude that the best way for policymakers to help struggling states is to develop policies that target individuals with particular characteristics rather than states themselves.

Source: Boston College Center on Aging & Work Issue Brief No. 8-13 (September 2008)

United States: Older Workers Labor Participation Rates Examined

The Congressional Research Service has updated its research report on "Older Workers: Employment and Retirement Trends" to reflect census data suggesting that a trend of reduced participation in the labor force by older workers could affect economic growth. However, the report also notes that benefit changes may encourage higher participation rates.

Specifically, the data shows that while the number of people between the ages of 55 and 64 will grow by about 11 million between 2005 and 2025, the number of people who are 25 to 54 years old will grow by only 5 million. With respect to labor force participation, in 2007, 91% of men and 75% of women aged 25 to 54 participated in the labor force, but just 70% of men and 58% of women aged 55 to 64 were either working or looking for work.

On the other hand, the report notes that the rate of employment among persons age 55 and older is influenced by general economic conditions, eligibility for Social Security benefits, the availability of health insurance, and the prevalence and design of employer-sponsored pensions. Thus, participation rates among these older workers may be affected by the trend away from defined-benefit pension plans that offer a monthly annuity for life to defined contribution plans that typically pay a lump-sum benefit. In additin, the declining percentage of employers that offer retiree health insurance may result in more people continuing to work until they are eligible for Medicare at 65.

Source: Congressional Research Service Summary (September 15, 2008)

Urban Institute Study Finds Delayed Retirement by Poorer Boomers May Improve Retirement Finances

The Urban Institute has released a paper projecting wealth and income at retirement for low-income boomers. The findings suggest that most with low lifetime earnings will also have low incomes at older ages unless they either continue working or move in with others who help support them financially. Among other things, the report suggests that delaying retirement will improve outcomes for low-earning boomers, but will not increase retirement living standards dramatically.

In "Boomers at the Bottom: How Will Low Income Boomers Cope with Retirement, the authors Barbara Butrica, Eric Toder, and Desmond Toohey looked at the possible effects of delayed retirement, along with saving more and working more consistently over their lifetime. With respect to working longer, they projected delaying retirement by five years (from 62 to 67) and found that this would have a modest 10% increase on average lifetime earnings for purposes of calculating Social Security (rising from $11,000 to $12,100), but it would raise household income by 13% (from $10,700 to $12,100), because of the additional earnings that working generates on top of the increased income from Social Security, defined benefit plans, and retirement accounts.

Among low-lifetime-earner boomers, those with low income at age 67 have strikingly different work patterns at older ages than those with higher income at age 67. Only 15 percent of low-lifetime-earners with low-income work at age 67, and 11 percent work during retirement. In contrast, 47 percent of low-lifetime-earners with higher-income work at age 67, and 35 percent continue working after retirement. Among low-lifetime-earner boomers, low-income retirees will receive only $600, or 6 percent of their household income, from earnings, compared with %9,000, or 37 percent, for higher-income retirees.

Source: Urban Institute Research Summary (September 16, 2008)

Ohio: Study Shows Older Workers To Remain in Workforce

According to research conducted by Miami University's Scripps Gerontology Center, more workers over the age of 55 are expected to stay in the workforce in Ohio, with the proportion of older workers in the state's workforce expected to rise from 16.7% percent to 22.4% from 2006 to 2016--an increase of 34% during that 10-year period. The study ("Ohio's Aging Workforce: Opportunities and Challenges for Ohio's Employers"), authored by Lydia K. Manning and Shahla A. Mehdizadeh, focused on anticipated age-related changes in Ohio’s workforce and the effect these changes might have on employers, employees and society.

Among other things, the authors note that two-thirds of Ohioans age 55 to 64 are expected to be in the state's workforce in 2016, roughly 20% of Ohioans age 65 and older are expected to be in the state's workforce in the year 2016, and, by 2016, two-thirds of all job openings in Ohio are expected to be for positions replacing retirees. Circumstances keeping people in the workforce include the elimination of traditional pension plans by many private employers, stock market losses eroding the value of 401(k) plans, and need for many people to retain access to employer-based health insurance.

Sources: Miami University's Scripps Gerontology Center "Ohio's Aging Workforce: Opportunities and Challenges for Ohio's Employers"; AHN "More Workers Over Age 55 Expected To Remain In Workforce" (September 12, 2008)

United Kingdom: Research Suggests Older Workers Key to Retail Industry

According to new research by Skillsmart Retail, older employees are likely to be more loyal and stay in the retail sector long term. Following a survey by the Sector Skills Council into the attitude of retail workers that found that although while one-third of the retail workforce is under 25, employees in their 30's, 40's and 50's saw their jobs as much more permanent, Skillsmart Retail undertook a larger piece of research investigating the importance of older workers in an ageing population and shrinking labour pool.

The "Adult Retail Employment Survey" carried out in August 2008 by TNS Research found that 63% of 35-64 year-olds saw themselves continuing in retail for the foreseeable future-- nearly twice the average of that of all ages (37 per cent)--and that just 17% of 35-64 year-olds saw retail as a temporary phase, compared to the average figure of 41%.

Karen Charlesworth, Head of Research at Skillsmart Retail, said: "While more research needs to be carried out, this age group may be a key way of increasing the skills base in the industry and we are now looking into expanding our research in order to investigate this further."

Source: Skillsmart Retail News Releae (September 10, 2008)

Survey: Flexible, Delayed Retirements on Increase in United Kingdom

As part of CBI (Confederation of British Industry)/Pertemps Employment Trends Survey on telework and flexible work, CBI reports that the United Kingdom is experiencing a growth in flexible retirement. Specifically, in 2007, 31% of employees reaching retirement age asked if they could postpone their retirement. Employers granted 81% of those requests were granted, which CBI points out is still significantly lower than the 95% of flexible work requests from parents which are accepted.

Employers continue to face challenges when assessing requests to postpone retirement, and it is essential to keep a default retirement age as a trigger for discussion.

[John Cridland, CBI Deputy Director-General] said: "Many older workers do not want to retire, or do not feel financially secure enough to do so, particularly with the downturn in the housing market. In the majority of cases employers are very happy to retain older staff, who often have invaluable skills and experience."

Source: Confederation of British Industry Press Release (September 8, 2008)

Additional Reading: The Times "It is no time to retire as the gloom deepens" (September 8, 2008)

Canada: Study Evaluates Worker Understanding of Anticipated Retirement Income

According to research published by Statistics Canada, about two-thirds of Canadian "near-retirees" anticipate that their retirement income will be adequate or more than adequate to maintain their standard of living once they have left the workforce. In addition, individuals who receive advice are more likely than others to express confidence in the adequacy of their retirement savings to maintain their standard of living in retirement.

Of the 7.2 million Canadians aged 45 to 59 in 2007, about 80% or 5.7 million were actively or recently employed and had not previously retired. Of these 5.7 million near-retirees, 71% received financial advice from at least one source, and 50% received advice from at least one source in the financial industry. However, 29% do not receive any advice.

These results come from two articles by Grant Schellenberg and Yuri Ostrovsky drawing on the results of the 2007 General Social Survey (GSS) on family, social support and retirement: "The retirement plans and expectations of older worker", which examines when individuals plan to retire, the certainty they have in their plans, and their confidence in their financial preparations, and "The retirement puzzle: Sorting the pieces", which examines the retirement advice and information they receive.

Source: Statistics Canada The Daily (September 9, 2008)

Commentary: Myths and Prospects for Older Workers

James E. Challenger, president of Challenger, Gray & Christmas, Inc, debunks the myth that "[w]orkers over 50 who have lost their jobs will have a very difficult time obtaining another job." On the contrary, he says, older workers "are winning new jobs in approximately the same length of time as their younger counterparts."

Among other things, he points out that many employers are "placing a premium on experience to help them meet their increasing worldwide competition." In addition, a new study by Challenger, Gray & Christmas "shatters the myth that older workers are particularly vulnerable in this economic downturn. The fact is that pared-down companies may increasingly rely on seasoned veterans to get them through the downturn."

Challenger advices older workers looking for work to be accommodating, emphasize past examples of loyalty, emphasize relevant experience, demonstrate flexibility and creativity, look and act young, and stay current and embrace technology. In addition, he cites several industries as looking particularly favorably on older workers: healthcare, teaching, consulting, nonprofit Organizations, customer service/customer relations, and small Business.

Sources: Challenger, Gray & Christmas "Older Workers Still In Demand!" (September 10, 2008), "Advice for Job-Seeking Older Workers" (September 10, 2008); California Job Journal "Older Workers Find Favor in the Current Job Market" (September 7, 2008)

Montana: Census Bureau Issues Profile of the Older Worker

In a continuation of its partnership with 31 states on a series of reports on workers 55 and older, the Census Bureau has released its report on Montana, the 15th state to be released in the series. Among the highlights of the report--"The Geographic Distribution and Characteristics of Older Workers in Montana: 2004":

• 14.6% of workers were 55 and older, while 3.1% were 65 and older;
• statewide, the real estate and rental and leasing industry had the highest proportion of or workers 55 and older, with 22.9% of its workers in that age group, with the transportation and warehousing industry following with 20.9%; and
• the state's health care and social assistance industry employed the greatest number of older workers, with about 18.1% of the workers 55 and older being in that sector.

Source: U.S. Census Bureau Longitudinal Employer-Household Dynamics What's New (September 8, 2008)

Netherlands: Government Encourages Work Changes to Allow Later Retirement

Netherlands social affairs minister Piet Hein Donner has said taht people involved in physically heavy jobs, such as construction work, should be able to switch to lighter tasks so they can continue to work after they are 62.

In addition, Donner says that the government is working on measures for to make older staff more attractive to employers. This could include giving employers a discount on social security contributions if they employ someone between 62 and 65 years.

Sources: NU.nl "'Doorwerken in andere baan na zwaar werk'" ["'Give older workers lighter tasks'"] (September 3, 2008)

Survey: Older Workers Have Healthier Diet, Exercise More

A survey conducted by ComPsych Corporation found that 52.2% of workers in their 60s have healthy diets, compared to only 17.7% of employees in their 30s. In addition, employees in their 50s and 60s fared better in level of exercise, outlook on life, social support and stress levels.

Specifically, 27.3% of employees in their 50s exercised more than four days a week, while 19.6% of 30-something workers did so, 82.6$ of workers in their 60s had a very positive outlook on life, compared to 46% of employees in their 30s, and 30.4% of employees in their 60s had high stress levels, while 64.7% of 30-somethings had high stress.

"Our survey showed employees in their 30s were remarkably inactive," said Dr. Richard A. Chaifetz, chairman and CEO of ComPsych....

"Workers in their 30s may be at peak productivity but also at greatest risk for neglecting their health and developing long-term health problems due to poor lifestyle choices," he added. "Corporate wellness programs should be especially attentive to the needs and issues of this age group."

Source: ComPsych Press Release (August 25, 2008)

Study Establishes Baseline for Civic Engagement among Retirees

According to an article published in The Gerontologist, civic engagement--defined as volunteerism and paid work, done for at least one day per week, that directly impact the local community--can now be considered a distinct retirement role. In "Civic Engagement as a Retirement Role for Aging Americans", written by Brian Kaskie, PhD, in collaboration with a team of University of Iowa researchers including Sara Imhof, PhD, Joseph Cavanaugh, PhD, and Kennith Culp, PhD., the authors argue that a more precise meaning of civic engagement is important to policy makers and program administrators and found that engaged retires differ significantly from those who volunteer less, work in non-civic roles, or do neither.

The research encompassed a survey of 683 retirees. Among the findings: 18% of respondents volunteered for more than five hours per week, and 6.3% held paid positions that were classified as civically engaged. The results also indicated that the non-engaged older adults tended to be less educated, less financially secure, and less healthy than their engaged counterparts.

Source: Gerontological Society of America Press Release (September 3, 2008)

New Zealand: Guidelines Issued for Retaining and Recruiting Mature Employees

New best practice guidelines to help employers look at innovative ways of retaining and recruiting mature employees have been released in New Zealand. The guide provides information both on older worker’s rights and responsibilities and tips for employers and was produced by a group comprising the Human Rights Commission, the Retirement Commission, the EEO Trust, Business New Zealand, the CTU and the Canterbury Employers’ Chamber of Commerce. The guide--"Valuing Experience: a practical guide to recruiting and retaining older workers"--is available online and as a downloadable PDF.

According to Ruth Dyson, Minister for Social Development and Employment:

"The guidelines are part of The Tapping into the Talent of Older Workers project which builds on recent important steps, in particular the legislation to overcome age discrimination which has been important in shifting employer attitudes.

"Recent research by Victoria University's Institute of Policy Studies has highlighted changing employers' attitudes towards older workers. Many employers recognise that older workers are loyal, reliable, committed and have more experience. However, some employers also believed inaccurate stereotypes such as thinking that older employees are unable to adapt to new technologies. We need to do more to challenge these misconceptions and combat age discrimination."

Sources: Minister for Social Development and Employment News Release (September 3, 2008); New Zealand Council of Trade Unions Press Release (September 3, 2008)