Published Date: 01/20/2014
By Reneé Watkins
Many employees approaching retirement age have already decided they will need to work into their retirement years in order to make ends meet financially. Despite this decision, employers are still very concerned over the potential number of skilled, experienced employees they may lose over the next several years.
Challenger, Gray & Christmas, an outplacement firm in Chicago, reports many of their clients are focused on how to best determine and prepare for the impact of “mass retirement” within their company.
Even though employees have indicated they will remain at work well into their retirement years, there are still no guarantees they will fulfill this verbal commitment. The economic downturn has had a dramatic negative impact on retirement savings and investments for many workers. Just as quickly, however unlikely, an economic surge in the stock market over several quarters could restore financial stability to many existing retirement accounts and provide workers with the funds they need to begin their retirement years.
Employers are keenly aware of this and are taking stock of just how many employees are reaching “retirement age,” their positions within the company and the void that will remain should those employees suddenly find themselves able to retire. The very first Baby Boomers will reach age 68 in 2014. Twenty percent of employers report that more than 50 percent of their current employees are age 55 and over. Thirty percent of employers report that 20 percent of their workforce are over age 55.
The Bureau of Labor Statistics reports on average 366,000 workers leave their current positions each month due to retirement, disability or death. Regardless of the reason, employers are realizing they will not be able to count on their most experienced employees to be around five to 10 years from now. When these employees leave, so does their knowledge and expertise. Employers need to begin preparing for this eventuality.
Of the employers that track retirement numbers and their impact, 25 percent expect 10 percent of their current employees to retire within the next three years. Their biggest concern is not so much the number of workers retiring, but the skills that many view as irreplaceable. Large employers have a large employee base from which to promote or re-allocate employees to cover internal vacancies as they occur. However, it is almost impossible to train an employee to the level of knowledge, skill, expertise and intuitive judgment that results from the more than 20 years of on-the-job experience currently possessed by workers nearing retirement age. This type of training and job shadowing needs to begin sooner than later if employers want to prepare for such a scenario.
Some employers are implementing creative ways of retaining employees who are preparing to retire. For example, some employers are providing these employees with shorter work hours and fewer responsibilities. This provides the employee with many of the “free time” benefits of retirement, while continuing to have the knowledge base and experience available to the organization. Many employees would like to “stay involved” in the role they have held for so many years and this option provides them with the opportunity to do that. Meanwhile, they can continue to mentor and train their eventual replacement, ensuring a smooth transition.
Employers who have not already done so, should begin to examine their own potential retirement impact over the immediate future, looking at five, 10 and 15 years ahead. Begin putting a plan together now so you will be prepared when the time comes.