Spring 2006

Baby Boomers - Changing the Look of Retirement

Author: Mary Willett, Willett Consulting

The first baby boomers turned age 60 this year. Over the next 25 years, 77 million Americans who were born between 1946 and 1964 will become the new generation of senior citizens. It shouldn't be surprising that they are once again breaking molds and traditions…opting for a retirement lifestyle that is significantly different than their parents or grandparents.

Instead of reaching for rocking chairs and golf clubs, boomers are looking for ways to become reenergized and engaged through new experiences and challenges. Planning for life after career employment is now more likely to include going back to school, starting a business or new career, or taking on new or expanded volunteer roles.

Many boomers are planning a phased approach to retirement through bridge or transitional employment for a number of years before beginning a full retirement. This may be with the same employer, or a different one, but typically involves a shorter work schedule or a job with reduced physical or mental stress.

State and local governments are already feeling the impact of the aging workforce as their employees are, on average, older and retire earlier. In order to address current and future worker shortages, some have already begun to implement new strategies to meet the needs of employees at, or near, retirement age.

Phased employment opportunities such as job sharing, telecommuting, and part-time or temporary reassignments are being established to help employers retain their skilled and experienced employees beyond a normal retirement age. Mentoring programs are also being used to provide new challenges to older workers while transferring knowledge to new employees.

According to a March 2005 report from AARP entitled The Attitudes of Individuals 50 and Older Toward Phased Retirement, about four in ten employees over age 50 stated they would be very or somewhat interested if their employer offered this option. Eight in ten of those expressing interest indicated that this would result in their delaying full-time retirement beyond a normal retirement age. The features of phased retirement that were most desired included:

    • The average work week is reduced by 16 hours or more
    • Pension benefits continue to accrue during bridge employment and the value is protected during this period
    • Retirement benefits (e.g., partial payment) can be accessed during phased employment to supplement income
This report suggests that just offering bridge employment opportunities may not be enough. Employers should also examine current retirement benefit structures - both primary and supplemental programs - to determine if enhancements are possible to better meet the changing retirement needs of their aging workforce.

The public sector offers excellent employee benefits, particularly pensions and deferred compensation programs, but they were designed to fit a traditional retirement. As employers evaluate these programs in the future, it may be desirable to determine if changes can be made to address the baby boomers new phased approach to retirement.

About the author…Mary Willett, Willett Consulting, CRA, CRC, has more than twenty years experience in the field of public employee retirement benefits. She currently is the project manager for the InFRE Retirement Readiness Study that is being conducted with the Federal government to create a retirement readiness profile index and also serves on the InFRE Board of Standards. Willett is working with Nationwide Retirement Solutions to develop educational programs and material for the public sector plan sponsor community and chairs the Panel of Advisors of the Nationwide Retirement Education Institute.

Prior to her current role as a benefit plan consultant, Willett was Director of the State of Wisconsin Deferred Compensation Plan and the FY 2000/2001 President of the National Association of Government Defined Contribution Administrators (NAGDCA).