Do You Know Why So Many More Employees Are Working Past Retirement Age?

Lately, we've been seeing a significant change in how people approach retirement, with many employees deciding to work beyond what we once considered the "normal" retirement age. There are many reasons for this, from needing the extra cash to simply loving what they do.

As someone in charge of managing employees or directing HR departments, it's super important to wrap our heads around why this is happening and figure out how to support those who choose to keep working into their golden years.

In this article, we're going to explore the reasons behind this trend and share some useful tips on how to help your organization successfully navigate this new landscape of an aging workforce.

The Reasons Behind Working Past Retirement Age

According to a report by Voya Cares, the workforce participation of those past traditional retirement years is expected to climb to 32% by 2030, compared to 27% in 2020 and 19% in 2000.¹

While many employment extenders claim they continue to work out of choice, the report suggests that some might be doing so out of necessity. The current economic climate, cycles of debt, market instability, along with increased workplace flexibility, are influencing their decision to continue working.¹

Employers must recognize the unique retirement planning needs of employment extenders, such as reallocating income streams and providing education on maximizing benefits. 

As life expectancy increases, employers must also accumulate more retirement savings in a shorter period. According to the survey, only 37% of employment extenders are planning to ensure they do not outlive their savings, indicating a need for education on catch-up contributions and other strategies.¹

Let’s look deeper into the reasons why employees are working past retirement age:

Financial Security

For many employees, the primary reason for working past retirement age is financial necessity. According to a 2020 report by the Transamerica Center for Retirement Studies, 54% of employees plan to continue working past age 65 or don't plan to retire at all.²

This decision is often driven by concerns about insufficient savings, the rising cost of living, and the need for continued access to employer-sponsored benefits like health insurance.

Longer Life Expectancy

Advances in healthcare and technology have contributed to increased life expectancy, leading individuals to work longer to support a potentially extended retirement period. The World Bank data indicates that global life expectancy has risen to 72.81 years in 2019, up from 67.42 years in 1990.³

A Desire for Purpose and Fulfillment

Many employees find satisfaction and purpose in their work and may choose to continue working to maintain a sense of engagement and accomplishment. A 2019 study by the Employee Benefit Research Institute found that 80% of employees who work past retirement age do so because they enjoy their jobs or want to stay active and involved.⁴

Phased Retirement

Some employees may opt for phased retirement, gradually reducing their work hours or responsibilities over time rather than retiring abruptly. This approach allows them to ease into retirement while maintaining a sense of purpose and social connections.

The Benefits of Employees Working Past Retirement Age

Employees working past retirement age can offer several benefits to organizations, including:

• Knowledge Retention: Older employees often possess valuable institutional knowledge and expertise that can be shared with younger colleagues. By retaining these employees, organizations can ensure a smoother transfer of knowledge and maintain continuity in operations.
• Diverse Perspectives: A multigenerational workforce brings together individuals with varying experiences and perspectives, fostering innovation and problem-solving. A study by the Harvard Business Review found that age-diverse teams are more likely to display higher levels of collaboration and adaptability.⁵
• Strong Work Ethic: Older employees tend to have a strong work ethic and commitment to their roles, contributing positively to overall productivity and team dynamics.

Potential Risks of Working Past Retirement Age

While there are benefits to employees working past retirement age, it's essential to recognize the potential downsides this trend can have on both employees and organizations. 

By understanding these challenges, employers can take proactive steps to mitigate potential negative impacts.

• Increased Health Risks: Older employees may face increased health risks as they continue to work beyond the traditional retirement age. These risks can include physical strain, chronic conditions, and mental health challenges. 
• Potential for Burnout: Employees working past retirement age may be more susceptible to burnout due to the extended duration of their careers. 
• Limited Opportunities for Younger Employees: With more employees working past retirement age, there may be fewer opportunities for younger workers to advance within the organization. This can lead to a lack of diversity in leadership positions and hinder the development of new talent. 
• Stagnation of Skill Sets: Employees who work past retirement age may struggle to keep up with rapidly evolving technology and industry trends. This can lead to a skills gap and reduced competitiveness in the marketplace. 

Supporting Employees Working Past Retirement Age

As this trend gains momentum, it's becoming increasingly important for employers and HR directors to adapt and create supportive environments for these experienced workers. To effectively support employees working past retirement age, organizations can consider implementing the following strategies:

• Offer Flexible Work Arrangements: Providing flexible work options, such as part-time schedules or remote work, can help employees balance their personal and professional lives while easing the transition to retirement.
• Foster a Culture of Lifelong Learning: Encourage continuous learning and development by providing access to training programs, workshops, and mentorship opportunities that cater to the diverse needs of your workforce.
• Reevaluate Benefit Programs: Review your existing benefit programs to ensure they are relevant and supportive of employees working past retirement age. This may include offering phased retirement options, access to financial programs and planning resources, and tailored health and wellness programs.
• Encourage Multigenerational Collaboration: Create opportunities for employees of different ages to work together, share knowledge, and learn from one another. This can be achieved through mentorship programs, cross-generational project teams, and inclusive team-building activities.

Finding a Way to Support These Employees

The trend of employees working past retirement age is becoming increasingly common. While this shift presents unique challenges, it can also offer some significant benefits if properly managed. 

As employers and HR directors, it's crucial to understand and support employees working past retirement age. By implementing the right strategies, organizations can create an inclusive and supportive environment that enables employees to thrive at any age.

To help achieve this, consider partnering with Enrich Financial Wellness. Enrich offers a comprehensive financial wellness platform designed to address the diverse needs of today's employees, including those working past retirement age.

With Enrich, your organization will gain access to a wealth of resources, including financial education, budgeting tools, and personalized coaching, all tailored to meet the needs of your unique workforce. 

The platform also offers customizable content that reflects the diverse backgrounds of your employees, ensuring that everyone feels included and valued.

Investing in a financial wellness program like Enrich can help your organization better support employees working past retirement age and, in turn, create a more engaged and productive workforce. 

Don't wait – start your journey to a more inclusive and supportive workplace today with Enrich Financial Wellness.

1 - https://www.voya.com/article/employment-extenders-labor-force-to-be-reckoned 

2 - https://transamericacenter.org/docs/default-source/retirement-survey-of-workers/tcrs2020_sr_20th_annual_compendium_of_workers_report.pdf

3 - https://data.worldbank.org/indicator/SP.DYN.LE00.IN

4 - https://www.ebri.org/docs/default-source/rcs/2019-rcs/2019-rcs-short-report.pdf

5 - https://hbr.org/2016/11/why-diverse-teams-are-smarter