Flexible retirement requires support from employers
Workers are expecting to transition into retirement but face a significant obstacle – few employers have employment practices to support them.
Today, Aegon Center for Longevity and Retirement (ACLR) in collaboration with Transamerica Center for Retirement Studies® (TCRS) released a new report, The New Flexible Retirement, which illustrates this cornerstone issue for retirement planning.
“Population aging is a global phenomenon. The shift toward a proportionally smaller working-age population and larger older population is disrupting traditional employment models and the fundamental economics of government-sponsored social security systems around the world,” said Catherine Collinson, executive director of ACLR and president of TCRS.
“A flexible retirement, which offers workers the ability to pursue their own personalized transition, can create opportunities to work longer, continue earning income, and stay active and [be] involved in society.
“Moreover, a new flexible retirement can create a win-win situation by serving as a powerful tool to help solve the government, social security, and employer-related retirement issues resulting from an aging population.”
This new report is based on research from the Aegon Retirement Readiness Survey 2015, comprising 16,000 workers and retirees. It presents global trends and profiles for 15 countries, offering unique perspectives on the state of flexible retirement in Europe, the Americas, Asia, and Australia and includes recommendations for policymakers, employers, and workers.
How do workers envision their retirement?
“The concept of retirement is changing rapidly. As people live longer and in good health, retirement is becoming a more active life stage, with more people looking for the opportunity to combine work and leisure,” said Ms Collinson. “Many workers have retired the notion of fully retiring at age 60 or 65.”
Globally, the survey found that 51 percent of all workers now expect to retire at age 65 or later, or not at all. The mindset of working beyond traditional retirement age varies around the world; in Japan, 43 percent of survey respondents aspire to continue working past retirement compared to only 15 percent in France.
More than half (56 percent) of workers globally envision a flexible transition to retirement; with 55 percent of those age 55 and older, and an even higher proportion of younger workers, holding this vision. The most common reasons for continuing to work to some extent in retirement include keeping active, enjoyment of work, and financial-related concerns.
Employers can do more to support a flexible retirement
“How workers can successfully extend their working lives is a complex issue. Workers in jobs that involve manual labor may find it difficult to continue in their current profession. Others may encounter workplace biases against older workers,” said Ms Collinson.
“Employers play an all-critical role and can make or break workers realizing their vision of a flexible retirement.”
Workers indicate that their employers are doing little to help them phase into retirement. The survey found that only 27 percent of workers age 55 and older say their employers offer the opportunity to shift from full-time to part-time working arrangements as they phase into retirement.
Only nine percent of workers age 55 and older say their employer offers retraining opportunities to extend their careers and help them phase into retirement.
“Maintaining existing job-related skills and acquiring new ones are important for workers of all ages and especially for older workers who want to work past normal retirement age,” said Ms Collinson. “Employers can do more to help their older employees keep their skills up-to-date.”
Despite the lack of pre-retirement assistance from employers, older workers are nevertheless loyal. Almost half (48 percent) of workers age 55 and older say they feel a strong sense of belonging to their employer and 73 percent say they plan to work with their current employer until they retire, if possible.
Ms Collinson said, “Employers may be overlooking the opportunity to tap into the knowledge, skills, and loyalty of older workers. By adopting business practices to support a flexible retirement, employers can benefit from improved succession planning and the ability to optimize their workforce management.”
How employers and policymakers can help workers transition into retirement
Policymakers, employers, and workers each play a critical role in redefining retirement, retirement benefits, and employment practices to keep step with increases in longevity and the implications of population aging. The New Flexible Retirement offers a full set of recommendations, including:
Governments should consider reforms to social security benefits that can positively influence workers’ behavior and attitudes to retirement. Examples include increasing the age at which government benefits begin and providing enhanced benefits for those deferring their entitlements.
Governments should identify and remove disincentives in social security and workplace retirement plans to working past a fixed retirement age. Examples include the ability to start receiving retirement benefits while continuing to work.
Employers can and should promote an aging-friendly work environment and culture designed such that workers of all ages thrive. Flexible work arrangements and ongoing training help workers maintain a good work-life balance and keep their skills current. Employers should conduct a review to see how changing demographics will affect their workforce and assess the value of retaining older workers as a way of retaining institutional knowledge and address potential labor shortages in the future.
“A clear strategy for promoting the new flexible retirement can benefit workers, employers, and governments in addressing the challenges created by population aging and building retirement systems that are affordable, sustainable, and achievable for all,” Ms Collinson concluded.
See the Australian retirement country profile at http://www.aegon.com/Documents/aegon-com/Research/Flexible-Retirement/Fact-Sheet-Flexible-Retirement-Australia.pdf
28 January 2016.