Note: Deloitte released the following report in 2013 however the data is still useful.
Organizations can capitalize on shifting retirement patterns to help narrow their talent gap.
The traditional view of retirement is changing—and it’s changing fast. As mature workers realize they either can’t afford to retire—or aren’t quite ready to make the big move, many are continuing to work past the standard retirement age. Still others are semi-retiring by shifting to part-time roles or consulting, especially in areas where the gap between supply and demand for talent is increasing. In fact, a recent Deloitte study found that 48 percent of baby boomers expect to keep working past age 65, and 13 percent believe they will work into their 70s.1 For organizations, this shift is both a blessing and a challenge.
On the plus side, changes in retirement patterns can help avoid or defer the baby-boomer brain drain that has been looming for so long. Organizations now have a fresh opportunity to address the talent gap created by a shortage of critical skills in the marketplace, as well as the experience gap created by multiple waves of downsizing over the past decade. On the minus side, shifts in retirement have the potential to increase payroll and benefits costs, and may even disrupt the talent pipeline.
While the idea of “retiring retirement” has been a point of discussion for many years, organizations are finally starting to capitalize on the opportunity as thousands of baby boomers become eligible for retirement every day.
What’s driving the trend?Four emerging patterns in the broader marketplace account for the shift in how mature workers are thinking about retirement—and how organizations are responding.
Lower than expected wealth. Many workers on the verge of retirement are not yet wealthy enough to fulfill their retirement dreams. Some simply haven’t saved enough. Others have watched their retirement savings stagnate or decline in the face of a struggling global economy.
Better than expected health. Advances in healthcare and nutrition have kept today’s mature workers healthier and more active than ever. Many still have a lot of value to contribute—and the vigor to do it. They are also living longer, which means they may feel less urgency to start enjoying retirement as soon as possible. Many feel the need to build a bigger nest egg so they don’t outlive their savings.
Shifts in government policy. New laws and regulations are having a large but varied effect on this trend. Changes in healthcare policy will presumably make it easier for mature workers to leave or to accept part-time or contractor positions that don’t include full benefits. On the other hand, proposed increases in the qualifying age for public pension schemes around the world could lead workers to stick around longer. This uncertainty alone could prompt some workers to defer retirement in order to avoid making an irreversible decision they might regret after government policies are finally settled.
Continued demand for key skills. Organizations are struggling to find and retain the critical skills required to achieve their strategic objectives. For example, 67 percent of U.S. manufacturers report a shortage of available and qualified workers and 56 percent anticipate that the shortage will continue to grow over the next three to five years—despite frequent reports of high unemployment in the industry.2 In many cases, the jobs that are hardest to fill have the biggest impact on performance and require the most experience. This talent gap creates new opportunities for workers near retirement age to extend their careers.