The seismic shift in career, health, and wealth responsibilities is having the greatest impact on the generation of people born between 1946 and 1964, known as the Baby Boomers.
“They are moving from the age of dependence and support, whether it was government support, or corporate support, or program support, into an era of individual accountability,” said Garry Adams, Talent Business Leader, Pacific at Mercer. But slowly, the ground upon which the employer-employee relationship was built began to shake, turning longstanding pillars of the employment agreement into building blocks for a new future driven by the individual.
As a result, Baby Boomers who are now approaching retirement age might defer the decision or choose to not stay retired for very long.
“For those who choose to retire, many are going to realise five to seven years into retirement that they don’t have enough money to sustain themselves, and they’ll be back in the workforce,” Adams said. “The implications for employers are quite fascinating. How are you going to help retirees re-enter a changing workforce? How are you going to manage people in their second or third career, while engaging people who are in their first career at the same time?”
For Baby Boomers, adopting an interrupted or phased retirement will require a mindset shift. The reality today is that retirement is not a one-time event, as it once was for earlier generations. Continuing to work part-time or re-entering the workforce after a short break will become common.
Baby Boomers are feeling financially vulnerable and insecure about retirement — and it’s having a negative impact on everyone else, said Michelle Smith, Partner and Financial Advice Leader, Pacific at Mercer.
“This issue is starting to have some interesting consequences on the broader workforce,” Smith said. “If senior employees can’t afford or don’t want to retire, it creates increasing frustration in the workforce, resulting in a lack of focus and lost productivity among younger workers who feel their advancement opportunities are limited.”
“The role of employers today is far less paternalistic than it used to be when defined benefit pension plans were the norm,” Smith said.
However, the shift toward individual accountability for retirement savings is clearly putting today’s workers at risk. A survey conducted in 2014 revealed that 83% of pre-retirees in Australia believe their superannuation should provide an income for life*. Without the right tools, support, and education, employees are completely failing to prepare for their financial needs in retirement, which means they’re forced to hold onto their jobs longer.
In addition, Baby Boomers nearing retirement saw their super savings plummet during the global financial crisis in 2008 meaning they either had to delay their retirement, take a smaller super payout or transition to retirement rather than stopping work altogether.
The GFC crippled stock dividends and yields on bonds. As a result, it put more financial pressure on Baby Boomers ― a generation that already suffers from poor saving habits and unrealistically low perceptions of retirement income needs.
“This generation is still expecting to get the age pension,” Smith said. “The nuance is the eligibility has changed and will continue to. They already have to wait longer before they can get it, and it is harder to obtain.”
What this means is that the litany of financial setbacks for Baby Boomers has forced many of them to be singularly focused on retirement. The economic realities they face have garnered their full attention. It has cemented their modus operandi.
Care Givers in Need of Care
Baby Boomers are at that perfect-storm age to still have some financial responsibility for their children, who may be in college or still establishing a career, while also perhaps helping to take care of their elderly parents’ health and wealth needs.With Baby Boomers pulled in different directions, employers should consider how to address the issues faced by this sandwich generation. Employers have the opportunity to maximise employee productivity and engagement while gaining a competitive edge, by offering benefits to meet the full spectrum of an employee’s needs, including aged care benefits and flexible schedules. Taking a proactive stance to help Baby Boomers make informed caregiving decisions could have a positive residual impact on an entire workforce.
It’s difficult to calculate how the stress of caring for an ageing parent affects a Baby Boomer’s job performance. But data is available on the health disparities of working Baby Boomers who also have caregiving responsibilities.
Assessing Their Value
It’s definitely worth a corporation’s time and capital to address the needs of the Baby Boomers, Adams said.
“It starts with the premise that there is a growing shortage of qualified talent. As organisations struggle to fill holes, they will look to so-called silver talent pools where job seekers are over age 55 and looking to work well into their 70s,” Adams said.
Hiring Baby Boomers comes with some key advantages for the corporation. Perhaps better than the generations following them, they’ll understand corporate culture and workplace dynamics. “But in many cases, these retirees who re-enter the workforce are coming back in midlevel roles, not as VPs or CEOs as they had been at the end of their first careers,” Adams said.
Assessing Baby Boomers’ abilities for particular jobs involves evaluating their technical capabilities and also their mindset.
“Would someone who had a 30-year career as a senior leader in another job be comfortable working for someone else, or as a mid-level or entry-level person?” Adams asked. “Does someone with skills in one industry have the ability to shift to an adjacent industry and develop a new set of skills?”
The ability to tap into that demographic and selectively pluck out the workers who can be applied and redirected in a different way will be a skill that corporations will need, Adams said. Just as important will be a company’s ability to offer appropriate training to those repositioned employees.
Those corporations that can successfully achieve both will have the advantage of a willing and able labour pool of silver talent.
*The research findings are based on an online survey of more than 1,500 Australians who were the sole or joint household finance decision makers, aged 50-80 years, and not receiving a full aged pension. It was conducted for Mercer in July 2014 by market research company Nature.
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