Baby Boomers and the Changing Workforce Landscape

The American labor force is undergoing a significant transition, and baby boomers stand to benefit from this change. Employers increasingly rely on older workers to cover employment gaps as the unemployment rate and number of unemployed remain relatively stable. This trend, known as "employment extension," results from personal choice and economic necessity. As a result of insufficient savings, many older employees are extending their careers beyond the traditional retirement age of 65. This article examines the causes of this transition, the opportunities it presents for employers and employees, and the significance of retirement planning.

A recent report from Voya Financial, a retirement, investment, and insurance company, reveals that up to sixty percent of older employees have less than half a million dollars in savings. This financial reality is causing many people to reconsider their retirement plans and continue working. John Tarnoff, a career coach for regeneration, correctly notes that "retirement is a misnomer; there is no longer retirement." This sentiment is shared by an increasing number of older workers extending their careers or returning to the workforce after retirement.

Influencing factors of the trend:

The phenomenon of "unretirement" is rising, in which retirees return to work. The COVID-19 pandemic played a significant role in temporarily displacing older employees from the labor force. As the crisis subsides, however, many of these individuals are rejoining the labor force. In addition, a constrained labor market has increased the bargaining power of older workers, as employers face a shortage of experienced workers. Employers can capitalize on older workers' institutional knowledge and mentoring skills, while employees benefit from financial security and a sense of purpose for continued employment.

Employers increasingly rely on retaining older workers due to the challenges an aging workforce presents. More senior employees' skills and expertise are indispensable for maintaining organizational continuity and fostering the growth of younger talent. Employers can reduce their recruitment and training costs by retaining experienced employees. Additionally, older employees can adapt to shifting workplace trends, acquire new skills, and effectively compete with their younger counterparts. This adaptability is essential for staying pertinent in today's rapidly changing workplace.

Supporting Older Workers:

Employers must take proactive measures to assure older workers' health and retirement success. It is essential to provide employees with support and education to manage their finances. Companies may provide 401(k) plans, catch-up contributions, and access to financial advisors as employee benefits. Estimating income requirements can give employees a holistic view of their retirement plans. Early engagement with financial advisors is advised, and promoting emergency savings accounts, health care spending plans, insurance, and student debt relief programs can alleviate financial burdens.

Implications for the Target Audience:

Understanding these trends and opportunities is crucial for individuals approaching retirement. Due to financial constraints, many Americans are working longer to maintain their current standard of living, address inflation and cost-of-living concerns, and secure a retirement safety net. Planning for retirement should include strategies to maximize retirement savings, investigate catch-up contributions, and seek professional counsel. In addition, utilizing health and wellness benefits and requesting flexible work arrangements can contribute to a satisfying and enduring work-life balance.

The changing dynamics of the labor force present challenges and opportunities for older workers and employers. The trend of more senior employees extending their employment provides valuable experience, mentorship, and workplace stability. However, financial realities frequently dictate this decision, highlighting the significance of retirement planning. To ensure a seamless transition into retirement, employers must provide tailored benefits and financial guidance to their aging employees. By understanding and embracing these changes, individuals in their sixties can navigate the evolving employment landscape and experience a financially secure and fulfilling retirement.

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Lynch Retirement Investment Group 2016, 2017, 2018, and 2019

John M. Lynch, CIMA®, CPWA®

John M. Lynch, CIMA®, CPWA® Managing Director – LRIG, Financial Advisor – RJFS

Andrew Fentress, CFP® Financial Advisor

Adam Tobin, CFP®, CRPC Customer Relationship Manager

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