With the baby boomers’ retirement looming in the near future, many fear about the strain it will place on the United States economy. In a New York Times article “For Good Retirement, Find Work. Good Luck,” Steve Lohr gives an overview of the negative effects of early retirement on the economy and offers some helpful insights regarding what can be done to lessen the financial blow.
And this isn’t just an issue involving individuals. It’s an issue that is important from the standpoint of workforce readiness today — and will be even more so in the years ahead.
Lohr explains that if the age of retirement is postponed three to four years, there will be a significant difference in the lifestyles of the retirees and the economy. For instance, currently the average age of retirement for women and men is 63 and 62 respectively. However, if the baby boomers pushed pack their retirement to 66 rather than 63, it would add approximately, “$13 trillion to the economy by 2025, or about a year’s total output of goods and services today.”
While it is not possible for every senior to stay in the workforce until age 66, it is a viable possibility for many. However, they are often not given the chance to continue working.
Unfortunately many companies do not actively recruit older workers or make an effort to retain them. According to Joanna Lahey, an economist at Texas A. & M. University, “If there is a failure in the market for older workers, it is the result of ‘“statistical discrimination.”’
Statistics show that companies are hesitant when it comes to hiring and retaining older workers because they believe that older workers are “less energetic, less productive, adaptable and more likely to have outdated skills than younger workers.”
However, a report by Corporate Voices for Working Families found that:
“While mature workers are valued for their knowledge, reliability, and dedication (74 percent), only half of the responding organizations reported that they actively recruit mature workers. Those that do report that they attempt to rehire retired workers (25 percent) and turn to non-traditional recruiting sources, such as community networks (20 percent).”
According to Lohr, other statistics show that times have changed and being 65 today is radically different than being 65, 40 years ago. Therefore, while retiring at 60 was normal for those in the workforce in the past, today the baby-boomer generation is capable of a remaining in the workforce longer.
One suggestion Lohr makes to facilitate the retention of older workers is to no longer take money out of workers salaries for Social Security and Medicare after a certain age and not longer require companies to contribute on behalf of workers past a certain age. With this “paid up” incentive, and other obvious benefits to the economy, it seems as if working longer can lead to living better.
And it’s an issue that has implications for individual retirees, our economy and our nation’s future workforce.