Used to be a time when you reached the age of 65, you could retire. But now, with the rising costs of living and the economy, people who once retired are now working longer. In fact, more than three in five U.S. workers in their 50s and 60s plan on working past 65. And 47% say they will continue in the workforce because of financial needs or the need to retain health benefits, according to a 2011 study from the nonprofit Transamerica Center for Retirement Studies.
“This trend will continue until at least the 2012 elections. A lot is riding on who will be in power in 2013. The economy will continue to grow but at a slow rate. And, the aging workforce will probably remain in the workforce, if their health permits, for at least another five to ten years. It will take that long or more for their investments to recover. They will use this time to adjust their living standards toward retirement,” says Princess Clark-Wendel, a consultant on wealth management, financial planning, investment, and retirement issues. “Additionally, I think retirement age itself is going to rise. However, the younger generation is unlikely to be able, or willing, to pay for generous and early retirement for aging Baby Boomers. Moreover, healthcare costs continue to rise, and people are living longer. Given all of these trends, it is almost certain that retirement is going to rise soon to 70, and probably to 75 by the time we get there. This is a long-term change.”
Americans are living longer, which will also cause the aging workforce trend to continue. According to research recently released by the Institute for Health Metrics and Evaluation at the University of Washington, the average American man in 2007 could expect to live 75.6 years, and a woman 80.8 years.
Job fairs are luring more and more elderly people looking to re-enter the job force. Depleted savings, dwindling 401(k) accounts and nest egg investments – along with spiking health care costs and rising housing costs – have caused near-retirees to stay on the job and retirees to start to work again. According to the 2011 Associated Press and LifeGoesStrong.com surveys, 60% of retirees lost value in investments because of the economic crisis; 42% are delaying retirement; and 25% claim they’ll never retire (currently still working).
“Baby Boomers, the largest generation in the U.S., are not leaving the workforce and many cite this is because they lost a large share of their investment during the economic crisis. Actually 60% of Baby Boomers lost value in their investment accounts during the economic crisis according to a 2011 lifegoesstrong.com survey. This has caused an aging workforce and it has negatively impacted corporate capabilities and productivity,” says Clark-Wendel. “As technology and social media develop at the speed of lightning, an aging workforce may be less productive and yield less innovation than organizations ripe with newly graduated employees that have grown up with changing/advancing technology and use social media on a regular basis.”
More than 69 million workers are 40 years of age or older, representing 48 percent of the total U.S. workforce. In the next several years, experts expect this number to increase to more than 51 percent. The average age of the American workers is expected to increase from 34.6 years to 40.6 years while the number of workers 55 and older will grow to 20 percent in 2020–or one out of five people in the workforce. The American Association of Retired People (AARP) reports that 69 percent of employees over the age of 45 are planning to work past the age of 65. Meanwhile, the number of workers between the ages of 25 and 39 has been decreasing.
An older workforce can affect new entrants, such as college graduates, to the job arena. “Budgets are tight within organizations due to aggressive legislative change (health care, impending tax cuts/increase), the recession, and deficits. Organizations have gotten used to doing more with less and until much of the uncertainty eases, they will continue to do so. Newly graduated students will have to be very innovative in finding employment during this period,” Clark-Wendel points out. “More companies will offer internships, temporary- to-permanent staffing arrangements or will contract positions rather than offer direct hiring opportunities. Students will have to use these opportunities to network and form relationships with people inside organizations where they would like to work. Organizations are not interested in “risky” hires. The market is full of talent, so newly graduated students will have to position themselves as assets that an organization needs rather than what they would want or simply like to have.”