It’s becoming increasingly common to see retirees attempt to
rejoin the work force due to the prospect of depleting previously accumulated
assets. In a recent analysis from Mercer on the “four generations at
work,” suggests the United States’ economy-wide shift in career and retirement
savings arrangements is having the greatest impact on the generation of workers
born between 1946 and 1964, widely known as the Baby Boomers.
Many Boomers are stuck between the fading defined
benefit-dominated retirement system and the still-developing defined
contribution system. Entering the later stages of their working lives, Boomers
have spent long portions of their careers under the defined benefit (DB)
paradigm—and while many Boomers expect to receive some lifetime pension
benefits from a current or former employer, many are not saving enough in
supplementary defined contribution (DC) accounts to adequately supplement
future income streams.
Mercer’s research suggests Baby Boomers are also stuck
between the need to save for their own retirement and other pressing daily
financial concerns. Other primary challenges facing Baby Boomers include
lingering recessionary impacts, lengthening lifespans, and increasing health
care expenses. These pressures are already reshaping retirement for the modern
individual. Retirement is no longer necessarily a one-time event for many
workers, as it once was for earlier generations. More Boomers will continue to
work part-time or attempt to re-enter the work force after a short break, making retirement
a phase.
Most Boomers are planning to rely at least in part on
supplemental retirement income from the federal government. But whereas younger
generations have time to prepare for any cutbacks in promised Social Security
benefits, late-career workers would find it more difficult to replace anticipated
income without delaying retirement.
It can be predicted the aging of the Baby Boomer
population will bring a lot of long-standing predictions about the potential
shortcomings on the DC retirement system to a renewed public focus. The 2014
Retirement Confidence Survey conducted by the Employee Benefit Research
Institute (EBRI), which shows nearly a quarter of workers age 55 and over have
saved less than $1,000 for retirement. A third of this same age group thinks an
individual can retire comfortably on less than $250,000 in savings.
In addition, those born in the later part of the Baby
Boomer generation are not assured to get Social Security payments. The sheer
size of the Baby Boomer generation threatens the viability of the federal
safety net program. Mercer cites the U.S. Census Bureau to suggest there will
be 84 million people in the 65-and-older age category by 2050.
Even in the face of these obstacles, plan sponsors and
advisers have the opportunity to maximize employee productivity and give
employers a recruiting edge through superior benefits offerings. For example,
taking a proactive stance to help Baby Boomers make informed caregiving
decisions regarding an elderly parent could have a positive residual impact on
an entire work force.
Employees providing elder care—most of them are Baby Boomers—were
significantly more likely to report depression, diabetes, hypertension, or
pulmonary disease. In addition, these employees were more likely to report
negative influences of personal life on their work. Offering some sort of elder
care support or education could help mitigate some of these effects. Other
challenges may require other tools.
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