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Older Workers Would Delay Retirement If
Employers Offered Phasing
Aging Baby Boomers, Worker Preferences
Driving More Employers to Explore Phased Retirement Programs
(Note:
Click here to story on AARP Research saying seniors turning to
self-employment)
March 22, 2004 - On the heels of AARP
research saying older workers are turning to self-employment, a new
study says one out of three older workers would continue working longer
if their employer offered a phased retirement program. Many employers,
however, have yet to establish formal or informal arrangements -- such
as shorter work weeks, flexible hours or the opportunity to try
something new -- that would encourage older workers to delay full
retirement, according to Watson Wyatt Worldwide.
In a recent survey of 1,000 workers and
retirees at or near retirement age, Watson Wyatt sought to further
understand why and how workers phase into retirement, how phasing
affects the age at which workers fully retire and the implications for
employers. It is one of the most in-depth surveys to date on worker
attitudes toward phased retirement.
"Worker attitudes about retirement are
changing dramatically, and employers have some catching up to do," said
Janemarie Mulvey, assistant director of Watson Wyatt's Research &
Information Center and one of the study's authors. "We found that a
significant gap exists between what older workers are looking for and
the opportunities employers provide. For example, a majority of survey
participants would like to work fewer hours late in their careers, but
less than half of them expect their employer to offer this opportunity."
Why phased retirement?
According to the survey, more than half
(57 percent) of current workers in phased retirement entered into the
arrangement voluntarily to have more leisure time. When asked their
primary reason for choosing phased retirement instead of full
retirement, 42 percent of these workers indicated they enjoyed their
work, while 28 percent said they needed the income.
One-third (32 percent) of workers in
phased retirement arrangements retired completely from their career jobs
but later re-entered the workforce after becoming disillusioned with
retirement. In contrast to voluntary phasers, 40 percent of this group
said they returned to work primarily because they need the income, while
only 34 percent said they work because they enjoy it.
Approximately 10 percent of workers
currently in a phased status were forced into phased retirement when
their career jobs were eliminated. A majority of these workers (58
percent) said they are working in retirement primarily for the income.
"What was once a three-legged stool of
individual retirement income is quickly becoming a four-legged stool,
with income from wages constituting the fourth leg," noted Mulvey. "But
it is important to note that extra income is not always the key
motivator for phasers - many work because they enjoy it."
How do workers phase?
When asked how they would like to phase,
many older workers said they hope to work part-time (63 percent) or work
more flexible hours (48 percent) before retiring completely. Nearly
two-thirds (63 percent) of current workers aged 50 and older indicated
that they would like to phase in an entirely different career. Among
current phasers, 80 percent work flexible hours and 79 percent work
part-time. Two-thirds (67 percent) have less responsibility in their
current job compared with their career job.
"Although some phasers leave their career
employers to pursue an entirely different line of work, many leave to
perform similar work with a competitor, but with more job flexibility,"
said Valerie Paganelli, a senior consultant with Watson Wyatt and
leading authority on phased retirement programs. "This survey reveals
that employers can still do a lot more to preserve the hard-won talent
and experience of their career employees."
According to the survey, even an informal
phased retirement program can go a long way toward retaining experienced
workers. Among workers currently in a phased retirement arrangement with
their career employers, 82 percent had been offered the opportunity to
work part-time and 71 percent had the opportunity to work a more
flexible schedule. On the other hand, among those who left their career
employer to phase elsewhere, only 16 percent would have been allowed to
work part-time for their career employer and only 20 percent would have
been offered a more flexible work schedule.
Delaying full retirement
The opportunity to phase has significant
implications for the timing of workers' retirement. Nearly one-fourth of
survey participants already in phased retirement programs expect to work
past age 65, while another 20 percent do not plan to retire at all. In
addition, one out of three older workers said they would continue
working longer than otherwise planned if their employer offered a phased
retirement program.
"As the economy recovers and baby boomers
reach traditional retirement ages, labor shortages will re-emerge as an
important issue," said Paganelli. "Employers would be wise to consider
phased retirement strategies that address older workers' needs and that
will help maintain an adequate supply of talent and experience in the
years to come."
The survey report, "Phased Retirement:
Aligning Employer Programs with Worker Preferences," is based on the
responses of a unique cross-section of Americans between the ages of 50
and 70. They include full-time workers who are approaching retirement,
workers currently in a phased retirement arrangement and those who are
fully retired. Copies of the report are available at
www.watsonwyatt.com.
About Watson Wyatt Worldwide
Watson Wyatt & Company, the primary
subsidiary of Watson Wyatt & Company Holdings (NYSE:
WW -
News), is an international human capital consulting firm that
provides services in the areas of employee benefits, human capital
strategies and related technology solutions.
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