The U.S. population – and the nation’s workforce – is aging. According to the US Census, from 2005 to 2035, the population of individuals over age 65 will double to more than 83 million. From 2015 to 2030, the population under age 18 is projected to grow by only 5%, while the population age 65 and over is projected to grow by 55%.
The nature of retirement is changing, and many workers do not wish to experience a sudden end to work, followed by the equally sudden onset of full-time retirement. Instead, many workers wish to ease into retirement, transitioning out of the workforce with a reduced workload.
In this report, key statistics and trends are identified, strategies and tips are provided, and case study examples of what other companies are doing to prepare for an aging workforce are presented.
The U.S. population—and the nation’s workforce—is aging. According to the US Census, from 2005 to 2035, the population of individuals over age 65 will double to more than 83 million. From 2015 to 2030, the population under age 18 is projected to grow by only 5%, while the population age 65 and over is projected to grow by 55%. The nature of retirement is changing, and many workers do not wish to experience a sudden end to work, followed by the equally sudden onset of full-time retirement. Instead, many workers wish to ease into retirement, transitioning out of the workforce with a reduced workload.
Over the next ten years, record numbers of leaders and managers will approach retirement in the U.S. labor force and look to off-ramp. The trend provides companies with a unique opportunity to accelerate their demographic profile at the management and executive level. Leaders need to assess their organization’s
demographics and age profile, identify when employees in mission critical positions will retire, understand what knowledge and skills will be lost, and develop a plan to advance and onboard the next generation of diverse talent.
A new standard for paid leave is emerging across corporate America that increasingly focused on caregiving. Every year, more than 40 million people, or 18% of the U.S. working population, spend an average of 24 hours a week providing unpaid care for a chronically ill, disabled, or elderly family member. As our population ages, caregiving needs will only increase, with a disproportionate impact on working women and people of color who make up the majority of unpaid family caregivers in this country.
The 2018 Longer Working Careers Survey found 83% of employers have a significant number of employees at or nearing retirement. However, only 53% have a good understanding of when their employees will retire. While 81% say managing the timing of their employees’ retirements is an important business issue, only 25% do this effectively.
According to the survey, 80% of respondents view older employees as crucial to their success. 54% believe the loss of talent due to retiring workers will be more significant than other labor market risks over the next five years. Additionally, 50% expect difficulty finding workers with similar knowledge and skills over the next five years; 48% worry about the loss of organization-specific knowledge.
Employers are also concerned over workers delaying retirements. 49% worry that delayed retirements will increase benefit costs over the next five years, 41% are concerned they will increase wage and salary costs, and 37% worry that workers who stay on the job past normal retirement will block promotions for younger employees.
69% of older workers wish that employers would make working past conventional retirement age easier. About two thirds would prefer to remain at their current employers, even if a comparable job is available elsewhere. Still, 55% of employees over 50 express a desire to retire as soon as they can afford to. For many, reaching that goal could be delayed: more than half of older employees report financial worries, and about a third feels stuck in their jobs. Many older
employees expect to defer retirement until after age 70.
Employers are out of touch with employee perceptions. 71% of employers believe that most of their older employees are likely to have adequate funds to retire when they choose, and 77% expect that most of their older employees are not likely to need to work into their 70s for financial reasons.
More than Half of Workers Expect to Work Past Age 65. 54% of workers expect to work past age 65 or do not plan to retire. Expectations differ across generations: 69% of Baby Boomers either expect to or are already working past age 65, or do not plan to retire, compared to 57% of Generation X workers and 58% of Millennials.
More than Half of Workers Plan to Work in Retirement. 55% of workers plan to work in retirement, including 41% who plan to work part time and 14% full time. Just 28% do not plan to work after they retire and 17% are not sure. Baby Boomers, Generation X, and Millennials share similar expectations of working in retirement; however, Millennials (17%) and Generation X (14%) are significantly more likely than Baby Boomers (8%) to plan to work full time after they retire.
Four in Ten Envision a Phased Transition Into Retirement. 44% of workers envision a phased transition into retirement during which they will reduce work hours (27%), or work in a different capacity that is less demanding and/or brings greater personal satisfaction (17%). 22% plan to continue working as long as possible until they cannot work anymore. Only 22% expect to immediately stop working either when they reach a specific age or savings goal, and 12% are not sure. Generation X (26%) are more likely to envision continuing to work as long as possible, compared with Baby Boomers (21%) and Millennials (19%).
Most Are Realistic About Compensation in Phased Retirement. Most agree that if they were to reduce their hours, they would expect to be paid the same hourly rate (82%). If they were to take on a new role with fewer responsibilities, the majority would expect their job title to change (80%), and would expect to be paid the market rate for duties involved, even if it means a reduction in their level of pay (77%). Notably, 59% say that if they were to shift from full to part-time work, they would expect the same level of employee benefits—an expectation that may not be realistic because many employers do not offer benefits to part-time workers.
Age discrimination is illegal at any stage of employment, including during hiring, promotions, raises and layoffs. The law also prohibits workplace harassment, by coworkers, supervisors or clients, because of age. Also prohibited: mandatory retirement ages except for a few exemptions, such as airline pilots and public safety workers.
It is currently legal for employers and prospective employers to ask your age as well as your graduation date. There is nothing stopping a prospective employer from asking.
A 2009 U.S. Supreme Court ruling made it harder for older workers who’ve experienced proven age discrimination to prevail in court. The court said plaintiffs must meet a higher burden of proof for age discrimination than for other types of discrimination. In other words, the Supreme Court moved the law backward and sent a message to employers that some amount of proven discrimination is legally allowed.
Most people believe age discrimination begins when workers hit their 50s, according to AARP research of workers between the ages of 45 and 74. Still, 22% believe it begins even earlier, when workers hit their 30s and 40s. And 17% say they think it begins in one’s 60s.
There’s also a gender difference in the perception of age discrimination: While 72% of women between the ages of 45 and 74 said they think people face age discrimination at work, only 57% of men in the same age range said so.
Among older workers, not getting hired is the most common type of age discrimination they experienced, with 19% of respondents citing it. An additional 12% say they missed out on a promotion because of age, and 8% say they were laid off or fired.
In 2017, the EEOC received 20,857 charges of age discrimination. Age discrimination makes up more than 1 in 5 of the discrimination charges received by the EEOC.
Contrary to stereotypes, workers age 50 and up are among the most engaged members of the workforce, according to an AARP study. 65% of employees age 55 and up are “engaged,” compared to 58 to 60% of younger employees. They also offer employers lower turnover rates and greater levels of experience.
• Establish policies to prevent age discrimination in recruitment, hiring, and career advancement.
• Provide training to combat age-related bias and stereotypes in the workforce.
• Involve professionals from HR, occupational health, facilities, workplace wellness, and employees in identifying goals and actions to establish an age-inclusive culture.
• Establish flexible work schedules and job design modifications.
• Offer benefits that address the needs of older workers.
• Create an employee affinity group on aging—topics might include workplace health and wellness, work-life balance, benefits, training needs, and retirement options.
• Foster a dialogue among generations in the workforce around common areas of interest to develop intergenerational rapport
• Get input on issues related to flexible work schedules, job modifications, safety, and retirement alternatives.
The nature of retirement is changing, and many workers do not wish to experience a sudden end to work, followed by the equally sudden onset of full-time retirement. Instead, many workers wish to ease into retirement, transitioning out of the workforce with a reduced workload.
A phased retirement often refers to a broad range of flexible retirement arrangements, both informal practices, and formal workplace policies, which allow employees are approaching normal retirement age to reduce the hours worked or work for their employers in a different capacity after retirement.
It is seen as a benefit by many older workers, as it allows them to gradually ease into retirement while maintaining a higher income than they would receive if they quit work entirely. From the employers’ point of view, phased retirement programs can be used to retain skilled older employees who would otherwise retire (especially in sectors where there is a shortage of entry-level job applicants), to reduce labor costs or to arrange the training of replacement employees by older workers.
The 2018 Longer Working Careers Survey found a majority of employers either have adopted or plan to adopt one or more of the following strategies over the next few years:
Wellbeing enhancements: 66% offer financial wellbeing or retirement planning programs tailored to older employees approaching retirement. Another 19% are either planning to offer these next year or considering these programs for 2020. 36% have modified working conditions to conform to preferences of older employees, and that is expected to increase to 43% by 2020.
Flexible employment: 30% of respondents allow workers to change positions (e.g., shift from management to individual contributor), and this could increase to more than half by 2020. 27% provide part-time employment, and this could increase to 45% by 2020.
Consulting arrangements: 49% allow their retired employees who are collecting benefits to work as consultants or contingent workers. Another 10% might add this by 2020. A similar percentage hires experienced retired employees in their industry on a consulting or contingent basis.
Phased retirement: 9% offer formal phased retirement programs, but this could grow to 23% by 2020. However, informal phased retirement programs are much more common, since they avoid some of the administration and compliance challenges of a formal program. Employers offer these informal phased retirement programs more often to senior workers in professional roles, and less so to those in sales, administration or hourly positions.
Formal phased retirement programs can take many forms. Examples cited in a 2017 report by the Government Accountability Office include:
• One program that allows workers who are at least 55 years old with 10 years of service to cut their hours by 20% with a 20% cut in pay, but keep health insurance and pension accrual benefits.
• Another that allows employees 60 and older with five years of service to reduce their hours by 20% to 50%, or even more if they’re willing to lose their health insurance benefit.
• An employer that allows workers 55 and older with seven years of service to negotiate their own “glide path” to retirement, ramping down from full time to full retirement while retaining benefits.
• Yet another company that allows any employee to switch to less stressful or complex duties or phase to part-time work, retaining health insurance if they work at least 25 hours a week.
Whatever your organization’s size and your target, a succession plan should focus on certain core elements:
• It’s up to CEOs, CFOs, COOs and other C-level executives to set the stage and agenda for succession.
• Be sure your HR leadership has a seat at the executive table to ensure that succession planning strikes that fine balance between a data-driven initiative and a people-centric approach to talent management.
• Identify mission-critical positions and any current or impending talent gaps – based on the strategic opportunities you identify and how you create competitive advantage. Which jobs and skills are must-haves? Do those positions already exist or do we need to create them?
• Identify employees at every level who have the potential to assume greater responsibility advancing your organization’s strategic goals and how they fit together—what combination of A, B and C performers do we need and how do we attract and keep them? As leadership roles rapidly evolve in our digital age, the succession plan and profiles of future leaders must keep up.
• Encourage meaningful investment in a training and development program for high-potential employees—be ready to defend allocating resources to a given talent pools. Many organizations find that the women and culturally diverse employees don’t quite have the experience and skills they need to become top leaders. Be sure you’re expunging unconscious bias in your systems and your culture, so your assessments and succession plans reflect gender-neutral and race-neutral standards.
• Establish a process for revisiting and revising your succession plan as conditions change.
What are the external and internal factors affecting this specific position?
• How will the position be used in the future?
• What competencies or skillsets will be required?
• What is the current bench strength?
• How will you provide stretch opportunities to high-potential employees?
• What is the path from where they are to where you need them to be?
• What are the gaps (competencies or skillsets not possessed by current employees)?
Workforce goal setting should be based on a sound methodology. The methodology should be able to stand up to any challenges and be able to answer the simple question of: What is the basis for establishing this goal?
Is it based on:
• US Census? Global Market Region Data availability? Designated market area (DMA)?
• # of ethnic groups available in the workforce for each particular function/role or industry?
• % of demographic represented in the business unit’s DMA?
• Based on the year over year hiring trends for diverse groups in each department?
• Determine the scope: Will you establish by region? By country/location? By business?
• Or a combination of the list above?
Note: Gender and diverse representation in the manufacturing sectors may be less available than other industry sectors, so a combination of # of talent available by industry or region and historical hiring trends may work best.
The Goal:
All workforce goals would be based on Meeting or Exceeding the designated market area (DMA) for each business unit. In more simplistic terms, we want to look like the places where we live, work and play.
The Process for establishing Workforce Goals based on DMA:
A new standard for paid leave is emerging across corporate America that increasingly focused on caregiving. Every year, more than 40 million people, or 18% of the U.S. working population, spend an average of 24 hours a week providing unpaid care for a chronically ill, disabled, or elderly family member. As our population ages, these caregiving needs will only increase, with a disproportionate impact on working women and people of color who make up the majority of unpaid family caregivers in this country.
U.S. Employers are totally unprepared for the caregiver boom. When most people think about the unmet need for paid leave in the U.S., they think of new parents who need time to be with their infants, but just 21% of family leaves from work are taken for new babies.
People who make more than $75,000 a year are twice as likely as those who make less than $30,000 to get paid leave. The majority of paid family leave policies reinforce class and racial divides by giving different paid family leave benefits to different classes of employees, with those in salaried positions getting much more
leave than those in hourly jobs. This is reflective of a national reality where only six percent of low-wage earners have access to paid family leave.
Today’s leading companies understand that quality paid family leave policies are good for business. Benefits include cost savings in recruitment and retention, increased employee morale, and an effective tool for narrowing the gender leadership and pay gap. Companies will need to adhere to new standards in paid family leave to remain competitive.
“Like so many companies before us, my company, Rent the Runway, had two tiers of workers. Our salaried employees—who typically came from relatively privileged, educated backgrounds—were given generous parental leave, paid sick leave and the flexibility to work from home, or even abroad. Our hourly employees, working in Rent the Runway’s warehouse, on the customer service team and in our retail stores, had to face life events like caring for a newborn, grieving after the death of a family member or taking care of a critically ill loved one without this same level of benefits. I had inadvertently created classes of employees—and by doing so, had done my part to contribute to America’s inequality problem.
But over the years, I began to reflect on how the system that I and others had constructed may have been perpetuating deep-seated social problems. Last month, I equalized benefits for all of our employees at Rent the Runway. Our warehouse, customer service and store employees now have the same bereavement, parental leave, family sick leave and sabbatical packages that corporate employees have.” – Jennifer Y. Hyman, co-founder of Rent the Runway
Discovery’s parental leave benefit was expanded to a full 12 weeks of paid leave, and will now offer those same 12 weeks as part of a caregiver leave benefit designed to support families in the case of serious health conditions. Paid at 100 percent and created to assist all of today’s growing, evolving, and unique family
structures, the caregiver leave benefit will extend the definition of family beyond children, spouses, and parents to also include care for qualified domestic partners, siblings, parent-in-laws, and grandparents.
Caregiver leave also will extend to military caregivers caring for seriously injured or ill veterans as defined under the FMLA. With the option to add up to two weeks of vacation time, caregiver leave will max at 14 consecutive weeks. As part of the company’s new policy, these 12 weeks—covering both parental and caregiver leave—can now be taken consecutively or divided as needed over the course of a 12-month period. Under the new policy and with the addition of short-term disability and up to two weeks of vacation time, maternity leave will now max at 20 to 22 weeks, depending on delivery. With the option to add up to two weeks of vacation for all parental leave, paternity, adoption, and foster care placement, leave will max at 14 consecutive weeks.
While Novartis provides generous benefits to caregivers, the company recognized that not many employees utilize those benefits, or even know what is available to them. The CARES employee resource group (ERG) understood that employees had concerns about how they would be perceived when they needed to provide caregiving support to family members, depending on who the family member was and what the circumstances were. For example, they were worried that providing caregiving to a child might be seen as more important than caring for an elderly parent. The group also understood that associates can find themselves thrust into a caregiving situation with little or no warning or preparation. The emotional stress of caring for persons who are aging, chronically ill or disabled is debilitating for family members, especially when they are also managing career demands.
The ERG brought specialists into the organization and worked closely with HR to provide their perspective on being a caregiver. The ERG was able to provide important information and insights about the needs of caregivers and to bring
attention to the challenges they face, at home and in the workplace. In recognition of the number employees in the workforce providing caregiving, and the toll of those responsibilities, the company implemented a reason neutral workplace flexibility policy to support caregivers.
Over the course of six months, CARES joined with a team of multiple cross-functional business units to create The Caregiver’s Guidebook. The collaboration included medical practitioners from corporate health, benefits and HR
professionals, patient support services, legal, and the company’s in-house print production team. The Guidebook examines the company’s benefit programs through the lens of a caregiver and provides guidance on all areas of caregiving, not just elder care. It is designed to communicate internal and external caregiving resources to Novartis associates, and includes a wide range of information, from detailed guidance on how to write a will, to where to find a home health aide, or how to navigate the care of an elderly parent.
To be successful, benefits must be relevant and responsive to the needs of employees—all employees. To gather employee input, many companies hold regularly scheduled meetings or conduct ad hoc focus groups to discuss work-life priorities and frame benefits and work-life strategies It is important that data collection efforts fully engage employees across diversity dimensions and in different life- and career-stages.
The behaviors of company leadership can have a significant impact on how employees view and embrace work- life integration. In a Harvard Business Review study of employees across global locations, only 25% of employees reported that their company leaders modeled sustainable work-life practices. Simply stating the company supports work-life integration isn’t enough. Business leaders need to ‘walk the talk’ and demonstrate their own commitment to achieving work-life equilibrium: this means taking advantage of the same benefits and leave options offered to employees.
Unless properly managed, differences in beliefs and expectations about work-life integration can lead to discord and resentment. Business leaders need to develop clear work-life policies, communicate the benefits of effective work-life integration to the organization and the individual, and strongly encourage employees to utilize available work-life supports. In the absence of formal policies and a clear articulation of company expectations, employees reluctant to participate in new business practices may resent workers who take advantage of those practices, and managers may view those same workers as less committed to their job.
Family-care supports vary for different generations in the workforce. For workers with young children, employers might offer onsite babysitting and daycare services, or discounts for childcare services if it isn’t feasible to offer on-site supports. Other benefits include flexible start/end times for workers who drive their children to school, or time off to pick up a sick child or attend a soccer game at the end of the day. Family-care supports also apply to workers caring for aging parents or a spouse.
According to a Pew Research Center report, one in seven US adults in their 40s and 50s financially support both an aging parent and at least one child. For workers that have responsibility caring for a parent or ailing spouse, employers can provide reduced hours and workload, and offer caregiver-specific assistance through their EAP. Other options include flexible spending accounts that can be used to pay for elder care services, or establishing leave banks that allow participating workers to donate and draw upon paid leave after exhausting
their own.
Major life events such as death, providing care for an ill family member, and even the birth of a child create stress for employees and distract from the job. Offering time off builds loyalty and allows employees to deal with complicated situations in an effective way. Some employers offer paid leave for life events that don’t
qualify under the Family and Medical Leave Act, such as caring for a sick family member, or providing bereavement leave following the death of a loved one.
