America’s workforce is getting grayer by the second, a phenomenon that some employers regard as a competitive disadvantage: older workers drive up the cost of wages and benefits, and can impede the progress of younger workers—or so the conventional thinking goes.
But employers who think that way may be woefully behind the times.
People age 55 and older are expected to make up a quarter of the U.S. workforce by 2026, and the number of workers ages 65 to 74 is projected to grow by 4.2% a year between 2016 and 2026 — versus just 0.6% for the workforce overall.
While more people are staying on the job longer because they haven’t saved enough to retire, many older workers are extending their careers by choice. “More people want to work longer because they’re living longer,” says Steve Vernon, a consulting research scholar at the Stanford Center on Longevity and author of Retirement Game-Changers.
In many cases, however, they don’t want to stay on the same career trajectory, he says. Increasingly, the preferred path is for people to phase into retirement by going part time, moving out of management positions, working remotely, or shifting into consulting roles with their former firms.
For employers, more-seasoned workers offer a wealth of industry and institutional knowledge, make excellent mentors, and are often more productive than their younger counterparts. The result: “Employers who need these older workers are going to need to be creative in designing their benefits,” Vernon says.
It’s still early days, but employers are beginning to roll out programs aimed at helping older workers move into a different phase of their careers without clocking out altogether.
In a survey of 143 large U.S. employers conducted by Willis Towers Watson late last year, 30% of respondents said they currently allow workers to change positions — such as from a management role to being an individual contributor—and that share is expected to increase to more than 50% by 2020.
A quarter of respondents offer part-time employment as an option, and that’s poised to increase to 45% by 2020.
Consulting is another avenue that is gaining traction. Nearly half of respondents allow their retired employees who are collecting benefits to work as consultants or contingent workers, and that’s expected to reach 60% by 2020.
The benefits of working longer
You may not relish the grind of a long commute or constant deadlines in your golden years, but research has shown a strong link between work and better cognitive, physical, and emotional health.
On the financial side, it’s often a no-brainer. For one thing, there’s health insurance — which can be a major expense for retirees who are too young to qualify for Medicare. At the same time, delaying taking Social Security benefits — to get larger checks later — and savings drawdowns can dramatically change your outlook for retirement income.
In one analysis by Vernon, a hypothetical couple with $350,000 in savings and $100,000 in household income who fully retire when they are both 62 could expect about $42,500 in annual retirement income. But if they work part time until age 70 — enough to cover their expenses so they can delay tapping their nest egg and claiming Social Security — they could boost their annual income to $73,000.
This is all to say that if you’re weighing your options for the later innings of your career, take a close look at the programs and policies aimed at more seasoned staffers.
In-house yoga sessions and all the cold-press coffee you can drink are fine perks to get you through the work day, but when it comes to career longevity — and lasting financial security — the firms that think progressively about retirement just might have an edge.