San Antonio Express-News

May 19, 2005

 

Companies may have to oblige a new style of retirement

By David Hendricks

Financial services companies are fond of retirement surveys. They know most people are not prepared for retirement, and surveys are good ways to remind potential customers.

One such company is London-based HSBC Bank, which recently completed one such survey that produced the usual result of not enough people planning correctly to fund their retirements.

But an unexpected finding materialized as well. Most people in the United States and nine other countries foresee work as part of their retirement years after age 60, 65 or any other mandatory retirement age.

Life spans have increased so much that many people — 75 percent in the survey of 11,500 people — see their retirement years as a chance to reinvent themselves.

They want to work, say, half a year or eight months and use the remainder of the year for travel and other retirement recreation, even more than wanting to work full or part time.

Count the baby boomers into that group. The following generations are smaller, and birth rates are low. The U.S. fertility rate per couple is 2.1, right at the population replacement rate and is higher than in the United Kingdom, Italy and even Hong Kong.

If baby boomers retired to lives of leisure, many U.S. companies would be faced with a worker and talent shortage.

"The average employer is not in alignment with this preference," said Ken Dychtwald, chief executive of Age Wave, which helped conduct the survey. "Our politicians and human resources executives are out of touch with this revolution."

Supporting this view was another survey question: Should there be mandatory retirement ages? The response was an overwhelming "no." Workers should be given the option to continue working as long as they are willing and able, survey respondents said.

In other words, governments and employers should not be able to tell workers they must retire only because they had a birthday.

"Yet government benefits and company pensions are tied to age, not ability," Dychtwald observed. "A labor and talent shortage is coming, so we may well see employers open to 60-year-old workers and older to fill the ranks."

Some already do.

Home Depot hires seniors who put in only four or five hours per day. Borders bookstores employs workers who want to work one day per week, and they get benefits, too. McDonald's is hiring older workers for four-hour shifts, Dychtwald said.

The nursing profession is so short of qualified nurses that it can dictate flex scheduling at hospitals.

"Boomers call this downshifting," Dychtwald said. "They want to work, just not as hard."

Companies need to change the terms of their pension plans to conform to this trend. Most pensions plans now would reduce benefits if workers scaled back their hours at the end of their careers beyond normal retirement ages.

The companies that do not alter their pension terms will face a dilemma, Dychtwald said. Their workers will retire to receive their vested pension plans and cross the street to competitors to work on their own terms.

While HSBC Bank initially wanted to demonstrate the need for people to plan and fund their retirements better, its survey in actuality demonstrated the heightened need for a service industry: Companies that help employers design flex schedules and pension plans so companies can keep the talent they need longer.