Q: We’re noticing that some of our near-retirement employees are not retiring when we thought they would.
We have younger workers waiting in the wings to move up, but we don’t always have a spot for them. Is it just our company?
A: No. In fact, Bloomberg recently addressed this trend, stating that nearly one in five Americans over the age of 64
continued to work at least part-time during the second quarter of 2017. This is the highest percentage noted on the U.S. jobs report in at least 55 years. Some continue to work because they want to and are physically and mentally able. Others simply can’t afford to retire.
As an employer, the actions you take today may help younger employees avoid staying in the workforce only because they need the money. Stay on top of trends in 401(k) plan design and communication, and make sure your plan advisor does too. For example, auto enrollment and auto escalation can encourage more saving. Using a stretch matching contribution strategy can also encourage a higher contribution rate. And a quality default investment, like a target date fund, can help too.
The irony is, those seniors who find it easiest to keep working—healthy, well-educated, and highly skilled people who enjoy their jobs—tend to be the least likely to need the money. Other older Americans, faced with few good job choices, often just decide to retire and and live frugally off Social Security and savings.
The share of older people in the workforce is higher than at any point since before the creation of Medicare. Even more older Americans might be out there working, though, if they were healthier and had better job prospects.