Generational issues remain a hot top in human resource management. Predictions regarding baby boomer behavior are especialy important in workforce and succession planning. This leads into the topic of the impacts of the economy on retirement. Counter to the predictions of many, the retirement age for men has been falling. However, financial issues may lead to a reversal in this trend. According to NPR and Watson Wyatt Worldwide Inc., a retirement consulting firm, three-quarters of those now planning to postpone retirement cite the loss of savings in their 401(k) accounts as the single biggest reason, the survey showed. The respondents also said they need to work longer because of rising health care costs and fears about price inflation. If Americans do keep working longer, it would reverse a decades-long trend toward earlier retirement.
Of course, the financial crisis has probably had its own direct impact on the process of workforce planning. Many US organizations appear to be putting off workforce planning as a way to respond to the uncertainties of the market and the tightening of belts. As with many human resource practices, we seem to reduce our emphasis on future planning at the very time we need it most.
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People tend to forget that “retirement” as a social institution, is not really that old, really only exists for a small proportion of the world’s over-60 population, and is the by-product of a quirky set of social, demographic, and economic circumstances; a sort of “social eclipse”. Personally, I give it about another 20 years because it is largely unsustainable.
That little rant aside, there is an emerging social bifurcation in which those folks who do knowledge work, or other types of work that do not require either physical speed, strength, or endurance, are remaining in the workforce longer than they had previously. In many instances, they may be “retiring” on paper, but it is really only a retirement from their primary employment/employer, and not a total withdrawal from the labour force by any stretch of the imagination. They use their pension income to essentially unyoke occupational choice from fiscal necessity, taking on preferred work (or work schedules) which either compensates at a rate lower than what they would need to maintain their expected quality of life in the absence of pension, or else compensates well but is too precarious to be depended on solely (e.g., consultancy).
Fundamental to these choices, however, are their consumer expectations. This is why I declare retirement as unsustainable. It’s also why those people who *can* (as in able to work, and suitable work is available for them) and feel the *need* (i.e., their consumer expectations exceed their anticipated income in the absence of continuing employment) are remaining at work in some capacity, and in some instances returning to work. The collapse of their investment income is certain amplifying this trend, but even in the absence of the cataclysmic events of last summer and autumn, the fact remains that, for many in certain parts of the world, the present day conception of “retirement” involves a fairly affluent lifestyle with travel and participation in other activities which require more sustainable income than did the conception of retirement a mere 40 years ago. Although the income may have taken a sudden left turn, the social expectations do not adapt quite so quickly. Hence the current reversal in labour-force participation amongst those in the 55+ bracket…who are professionals.
As stated earlier, there is a social bifurcation. The world is not made solely of those with graduate degrees who can easily parlay their prior employment into consulting work. A great many have participated in work which is modestly compensated, and more demanding of their health and endurance than their 60’s permit. Moreover, there is little about the nature of the work they used to do which is intellectually or emotionally appealing to them anymore. In a great many instances, these are the folks who, once they leave the workplace, never turn around and simply deal with their income level as is. Many, I imagine have defined benefit plans, and more modest consumer expectations, tailored to that anticipated income level. In a sense, professionals whose lifestyle is predicated on more income (and especially more *potential* income from their investments; something that now lies in question) are more likely to notice the missing income when they don’t work and more likely to remain in the workforce as a result. People who worked blue collar jobs obviously face a drop in cincome too upon retirement, but the contrast is likely not as great (though that is an empirical question). Between the low attraction of their prior work, and the more modest “push” back to work created by this lower contrast in income level, there is a large group of people who will not be part of this back-to-work trend.
Consequently, the trend noted in the original article and blog post, is a trend among a certain group of people.