Musings

The Looming Retirement Crisis

MusingsNowadays, it's much easier to imagine retirement than it is to actually retire. You've probably seen the sobering statistics about Boomers who have no choice but to continue to work for years beyond the traditional retirement age. Many Boomers have not saved enough to comfortably support themselves into their 80s or even 90s. Life expectancy is increasing, even as vehicles for retirement savings have either dried up or remained stagnant.

A recent survey by Lexington Law indicated that 24 percent of seniors said their biggest regret was not saving and investing sooner. The other most common regret is taking on too much credit card debt. A separate poll by the firm revealed two shocking statistics: 70 percent of respondents did not know the age at which Social Security benefits begin, and less than half know how much of their earnings they should be contributing to retirement savings.

In the past, pensions were a legitimate source of retirement savings. In 1998, for example, an estimated 60 percent of employees were covered by company pension plans. Today, pension plans barely exist. Instead, Boomers have had to self-fund retirement savings, and they do receive help from their employers through matching contributions to 401(k) plans. Thankfully, the majority of companies do offer some type of defined benefit retirement plan such as a 401(k), but it is the employee who shoulders the bulk of the financial responsibility.

Typically, the other main source of retirement income is attributed to Social Security. The money you put into Social Security over your employed years does come back to you in some form, of course. Most financial experts agree, however, that it is best to hold off on collecting as long as possible, certainly until your full retirement age (which varies based on your birth year), if not until age 70, when you collect the maximum amount. Some Boomers are sorely disappointed when they realize that Social Security payments are not nearly what they need to live on in retirement.

With no pensions, modest 401(k)s or other retirement savings plans, and Social Security that barely keeps up with living expenses, there is a looming retirement crisis in our country. Boomers who have not by now set aside sufficient retirement funds will be thrown head first into this crisis when they stop earning income. There is a glimmer of hope that the job market will continue to be favorable toward Boomers, at least on a part-time basis, but there is no long-term guarantee that jobs will be available to aging Americans. This may be one reason a fairly high percentage of Boomers start their own businesses or find freelance work rather than compete in the traditional job market.

The oldest Boomers are already approaching their mid-70s. How financially secure are they? The youngest Boomers will be 60 in just five years. Do they have a financial plan for retirement? These are challenging questions to ponder. 

Have you heard about the new book, Boomer Brands?


The Failure of Knowledge Transfer in American Business

MusingsIf the headline of this post sounds ominous, it is meant to be just that. It's a sad fact that American business in general is failing at the transfer of knowledge from its departing employees. Writing for Next Avenue, Richard Eisenberg puts the situation into perspective: "4 million boomers a year leave the workforce and boomers comprise 31 percent of workers; 56 percent of retiring boomers are in leadership positions. That’s a lot of knowledge to go pfffft."

A survey of workers between the ages of 54 and 72, conducted by The Harris Poll for recruiting firm Express Employment Professionals, tells a dreary story. The majority of boomer workers (57 percent) "say they have shared half or less of the knowledge needed to perform their job responsibilities with those who will assume those responsibilities after they retire," even though 81 percent of boomer workers "are overwhelmingly willing to mentor the next generation." In addition, "only 44 percent say their company has an adequate successor in place for when they retire, and 30 percent feel their companies may lose key client relationships if they retire." While employers might greatly benefit from retaining boomer workers on a part-time basis, "only 20 percent of working boomers say their employer offers 'semi-retirement' options."

Bill Stoller, CEO of Express Employment Professionals, told Richard Eisenberg, “Such a poor transfer of knowledge was surprising to us. You’ve got to have a process in place to have someone follow in the footsteps of someone retiring. It doesn’t appear companies are thinking about that.” Paul Rupert, founder of Respectful Exits, added, “What is described as the systematic failure of companies to mine their pre-retirees for critical knowledge and intellectual property is part of a general failure to appreciate the value of who and what is walking out the door of today’s knowledge-based employers.”

Results from another survey conducted by Transamerica Center for Retirement Studies indicated that "only 4 percent of retirees said their employers encouraged employees to participate in succession planning, training and mentoring," according to Eisenberg.

Many American companies are literally throwing out valuable knowledge when boomer employees retire. In fairness, not all businesses are so short-sighted; a handful of them have knowledge transfer programs of some sort, such as phased retirement or mentoring. Still, the vast majority of firms simply don't have a mechanism for retiring employees to impart what they know to the employees who replace them.

Why? Is this part of the age discrimination that we all know impacts boomers? Would employers just like to have boomers exit as quickly and quietly as possible? Are they really so obtuse as to not realize that retiring boomers have a wealth of knowledge that would help facilitate a transition to a successor?

Whatever the reasons, it really makes no sense to discard intellectual capital that a company invested in over many years.

Have you heard about the new book, Boomer Brands?


How Boomers Impact the Job Market

MusingsStatistically, Boomers are about to lose their position as the generation with the highest U.S. population, according to the Pew Research Center. In 2019, Millennials are expected to reach 73 million in number while Boomers will top out at 72 million.

Still, the number of Boomers in the job market is significant. According to an article in Forbes, workers age 55-plus accounted for around 23 percent of the labor market in 2018, up from about 18 percent in 2008, ten years earlier. In terms of the labor force participation rate, younger workers have either remained flat or declined from 1998 to 2018, while the 55-64 and 65-plus age groups have steadily increased.

Aparna Mathur, who authored the article, sees a number of reasons for this phenomenon. For one thing, many older workers need to work longer for financial reasons. For another, older workers are healthier and living longer, so they have the ability to remain in the work force longer than previous generations. Just as important, older workers want to remain in the workforce because work is rewarding for them.

The interesting side effect is that the current economy boasts a very low unemployment rate, which means it is more challenging for companies to find skilled workers. Guess what -- Boomers are skilled workers! Boomers can also offer employers flexibility in that they are willing and often want to work part-time, which turns out to be more cost-effective for the hiring companies.

So let's hope we are nearing a point at which the continuing desire of Boomers to work, and their resiliency in the labor market, intersects with the employment needs of companies. Only then will our society conquer age discrimination and realize the value that Boomers continue to bring to the table.

Have you heard about the new book, Boomer Brands?

 


Age Discrimination is Alive and Well

MusingsAge discrimination in the American workplace remains problematic for anyone over the age of 50. An ongoing study by Pro Publica and the Urban Institute, has followed since 1992 a nationally representative sample of about 20,000 people from the time they turn 50 through the rest of their lives. Through 2016, the study found that 56 percent of this sample were laid off at least once or left jobs under financially damaging circumstances. The analysis further showed that only 10 percent of these workers ever again earn as much as they did before their employment setbacks. Richard Johnson, an urban economist from the Urban Institute who worked on the study, concluded, “For the majority of older Americans, working after 50 is considerably riskier and more turbulent than we previously thought.”

There is strong evidence from the study that a majority of Americans over 50 with stable jobs are pushed out of work. The study showed that "28 percent of stable, longtime employees sustain at least one damaging layoff by their employers between turning 50 and leaving work for retirement... An additional 13 percent of workers who start their 50s in long-held positions unexpectedly retire under conditions that suggest they were forced out."

The bottom line: The data analysis conducted suggests "as many as 22 million of these people have or will suffer a layoff, forced retirement or other involuntary job separation. Of these, only a little over 2 million have recovered or will." In an excellent article on Pro Publica about age discrimination and the results of the study, Carl Van Horn, a Rutgers University professor and director of the Heldrich Center for Workforce Development, commented, “There’s no safe haven in today’s labor market. Even older workers who have held jobs with the same employer for decades may be laid off without warning.”

This is not the first time I have reported on age discrimination in this blog. The more I read about age discrimination, the more I wonder if it is representative of a broader societal attitude toward aging. Employers routinely discriminate against older employees, hiring younger (i.e. less expensive) employees to take their place -- making the federal age discrimination law nothing more than a paper tiger. It is true that a few companies boast hiring older employees, but it is comparatively only a handful. 

Are we really at the stage where people over 50 can be thrown out of the workforce simply because of their age? Apparently, the answer is yes. Imagine the experience and knowledge base that is being tossed out as well. It's a sad commentary with no end in sight.


How Do You Define "Old"?

MusingsAs Boomers age, they are likely to redefine old age based on their own lives and perceptions. In a recent article for The New York Times, Steven Petrow asks the provocative question, "Am I 'Old'?" and discovers that the answer is entirely different based on who is being asked. Sergei Scherbov, a researcher on aging, answers the question with a broader definition, telling Petrow that "an old age threshold should not be fixed but depend on the characteristics of people.” He sees such factors as life expectancy, disability rates, cognitive function, and personal health as contributing to the definition of old age. Thankfully, says Scherbov, a 65-year old today is generally equivalent to a 55-year old from forty-five years ago.

It turns out that different generations define "old age" differently, too. According to Petrow, we Boomers generally regard 73 as the start of old age, while Gen Xers think it is more like 65 years of age. Meanwhile, Millennials believe 59 is "old."

Sadly, the negative perceptions of elders is a universal phenomenon: Well over half (almost two-thirds) of respondents to an international survey by the World Health Organization "did not respect older people," writes Petrow. In high-income countries such as the U.S., the lack of respect for older people was highest.

Ultimately, we all define old age in personal, subjective terms. Those of us who are spry, active and healthy at 65 or 70 probably perceive old age as far in the future, while Boomers afflicted with health issues or limited mobility may feel differently. Being engaged and vital, having a full and rich life, and feeling useful may all contribute to seeing aging in a positive light.

How do you define "old"? Maybe the best way to look at it is simply, "You're only as old as you think you are."


The Work Dilemma of the "Tweener"

MusingsI've noticed more and more reporting on the work dilemma of the "tweener" -- the 50s-something Boomer who finds himself or herself in that strange transitional role somewhere between full-time work and retirement. Many of these younger Boomers have come to the realization that they will need to work longer than they may have anticipated simply because they need to fund living longer. Others, even if financially secure, recognize that they need to work to feel fulfilled.

A recent article in The New York Times characterizes this time of life as one in which the Boomer needs to become a "modern elder," says Chip Conley who, after running his own company for twenty-four years, was asked to mentor executives in a technology company. It put him in the unusual position of an industry expert with very little in the way of technology experience or, as the article states, "he was often the oldest person in the room, learning from colleagues who were young enough to be his children."

In his new book, Wisdom at Work: The Making of a Modern Elder, Conley further details his own experience and explores the concept of the modern elder. He believes the modern elder 's role is "simultaneously sharing wisdom while embracing fresh ideas and ways of thinking." The article's author, Marci Alboher, was inspired by Conley to seek out other role models for the modern elder, and she says she found a lot of them, all in their 50s. She admits that she also learned, however, that "it helps to have a financial safety net" if you are going to consider a more non-traditional work role such as Conley discovered.

Boomers in their 50s are often faced with this kind of dilemma, either because they are summarily dismissed from the full-time job they had for decades, or they tire of it and want a new challenge. The fundamental problem in our society is people in their 50s, 60s and 70s are thrown on the scrapheap rather than offered employment opportunities that take advantage of their years of experience. Thankfully, some companies are enlightened and work with older employees to transition them out of a full-time job to a part-time or consultative role, but that is rare. Instead, Boomer employees are discriminated against because of age. They lose the jobs they have and then cannot get another position because they are overlooked in favor of younger employees. The sad fact is that a company that terminates a Boomer employee due to age is often losing the value of the employee's considerable knowledge base.

Perhaps the "modern elder" model will take hold, but in order for that to happen, employers have to acknowledge the value of contracting with Boomers, and Boomers have to be in a position to risk taking on non-traditional employment. Still, being a modern elder presents another novel option for Boomers who need to or want to work and are excluded from the job market.


Freeing Yourself with Creativity in Retirement

MusingsOne of the more intriguing avenues open to retirees is to find your creative self. I have personally witnessed creative transformations occur when Boomers retire. I know one business executive who turned his attention to working with wood and has created exceptional pieces as a result. I know another professional who took up jewelry making, and yet another who pursued a love of art and has become a successful water colorist. I myself have followed my muse and become a freelance writer.

Patricia Corrigan, writing for NextAvenue.org, reports on four retirees who were unafraid to pursue their passions: a doctor who became a sculptor, an aeronautics engineer who began to make chocolate, a retired CEO who took up photography, and a retired buyer at a manufacturing firm who knits scarves. Their stories are well worth reading.

Chocolate maker Doug Cale had this to say about his second act: “For me, life is all about engagement. Coming up with new ways to do things day in and day out, what I get out of this job is the creativity. And being creative is a form of relaxation for me.”

Like so many other things in life, and especially as we face retirement, a positive attitude is everything. The four people Corrigan writes about are no more or less unique than any of us -- they just had a passion and the courage to follow it. They freed themselves and found their own creativity in completely different ways.

Your second act should be a time when you pursue what you love. Perhaps it is something you remember from your childhood, something you always wanted to do but never had the time to do. Or maybe it is a new-found interest. Whether it is for fun or profit, creativity can bring a lot of joy and fulfillment to retirement. Try it!


Learning from Other Retirees About Retirement

MusingsOne of the best ways to meet the challenges of retirement is to learn how others handle it. My colleague Nancy Collamer, career and retirement coach and author of Second-Act Careers, recently chatted with a group of retired United Way executives and summarized what she learned in an excellent article for NextAvenue.org. I highly recommend you read the complete article here:  https://www.nextavenue.org/retirement-lessons/ 

Nancy's six key takeaways from the article are listed below:

  1. Embrace "productive" leisure activities.
  2. Set goals.
  3. Share your professional expertise (on a flexible basis).
  4. Keep learning.
  5. Cultivate your creativity.
  6. Pass it down.

I'm always struck by the good advice retirees willingly share. They are the first to recognize that the road to retirement has twists, turns, and bumps along the way, but most of them are unfailingly confident of their ability to overcome the challenges of retirement. One thing I have noticed about the people who are most successful in retirement is that they always seem to have a positive attitude, whatever life throws their way. That is a good lesson for all of us!


There's a Right Way to Retire from Your Job

MusingsMany Boomers don't have the luxury of retiring from their job. Others are forced out because of age discrimination. Still others decide that it really is time to retire.

There's a right way to retire from your job. In the best of all scenarios, leaving a job will be on your timeframe and will cause no ill will between you and your employer. A truly enlightened employer might even work with you on a phased retirement or a creative arrangement, such as rehiring you as a part-time contractor after you leave your full-time position.

Writing for The Balance, retirement book author and financial writer Melissa Phipps offers ten valuable tips for retiring from your job, among them, "Be sure you really want to retire," "Check out alternative careers," and "Consider phasing in retirement." Phipps points out that some early retirees make the decision to retire because they face an undesirable job situation. This may not be the best reason to retire; instead, you may want to try to work with your employer to improve your job or change it within the same organization. Or, if that doesn't work, maybe it's time to consider pursuing an alternative career instead of retiring.

Before you decide to retire, advises Phipps, make sure you are financially secure and that you have health insurance. It also makes sense to consult with a financial adviser. In addition, anticipate the fact that, even if you retire now, you may want to (or have to) return to the workforce. That means you should get references when you retire and be sure to leave your position on a positive note. Another interesting idea is to "test drive" retirement: If you have the type of job that allows you to take some time off, experiment with the kinds of things you would like to do in retirement and see if it's a lifestyle you would enjoy.


What the CVS-Aetna Merger Could Mean for Retirees

MusingsThe federal government's approval of the CVS-Aetna merger has vast implications for health care in the U.S. It could also have a direct impact on retirees, the most immediate being that Aetna must sell its Medicare Part D prescription drug plans to WellCare Health Plans. CVS already has the largest market share of Medicare Part D prescription drug plans through SilverScript, which is operated by CVS Caremark.

So what does this really mean for retirees? In the short term, if you have a Medicare Part D plan through SilverScript, nothing changes, but if you have a Medicare Part D plan through Aetna, it will be transferred to WellCare Health. Longer term, the merger of the nation's leading retail pharmacy with one of the nation's largest health insurers is a major development in the health insurance industry. According to Washington Post journalist Brian Fung, “The tie-up will allow CVS -- whose retail pharmacy business serves 5 million customers a day -- to turn more of its brick-and-mortar locations into front-line clinics for basic medical services and patient monitoring. By deepening its knowledge of and relationships with patients, CVS has said the combination could help Americans stick with medication regimens and stay out of the hospital."

The advocacy group Consumers Union, a division of Consumer Reports, is skeptical about the merger. A statement issued by its senior policy counsel, George, Slover, reads in part, "This type of consolidation in a market already dominated by a few, powerful players, presents the very real possibility of reduced competition that harms consumer choice and quality. We are concerned that the limited conditions the Department of Justice put on this deal simply are not enough to ensure that CVS-Aetna doesn’t use its outsized resources in ways that stifle true competition and reduce choice at all levels up and down the chain – ultimately leaving consumers with fewer options and higher costs.”

The merger sheds light on the connection between prescription drug providers and insurance companies. OptumRx, for example, is owned by UnitedHealth Group, and Anthem, a Blue Cross operator with a presence in a number of states, plans to open its own pharmacy. Industry watchers are also keeping an eye on the e-commerce giant, Amazon, which has acquired prescription drug provider PillPack.

The CVS-Aetna merger is expected to be finalized before the end of 2018.