Phased Retirement Demands Legislative Changes
Forman, Jon, THE JOURNAL RECORD
As America ages, the work force will need to change. Because of the lower birth rates that followed the baby boom, the number of young workers declined by 14 percent in the 1990s, and there will be a shortage of talented young workers for decades to come.
There were seven working-age people for every elderly person in the United States in 1950, but that ratio will drop to less than three-to-one by 2030. Consequently, employers will want to find ways to retain their productive older workers.
One approach that enables employers to utilize the skills of productive older workers is known as "phased retirement." Phased retirement generally refers to two situations:
* A person is working part-time after retiring from a full-time, career job. The part-time job is often unrelated to the career job, and it is referred to as a bridge job.
* A person works a reduced work schedule on the career job before full retirement from that job.
In short, phased retirement is a way for workers to ease into retirement rather than going from full-time work to full-time retirement.
In recent years, phased retirement has started to replace the traditional cliff retirement pattern in which older workers left the work force suddenly and never came back. Now, many older Americans are staying in or re-entering the work force, especially in part- time work situations. For example, the Employee Benefit Research Institute's 2001 Retirement Confidence Survey found that 26 percent of current retirees say they have worked either full-time or part- time since they retired. Also, according to a recent survey by Watson Wyatt, 16 percent of the companies they surveyed offer phased retirement programs. Watson Wyatt found that phased retirement was most prevalent at firms in which workers have an average age of 45 or higher.
Phased retirement will become even more important for the economy as the large cohort of baby boomers begins to reach retirement age. The baby-boom generation is often defined as those born from 1946 through 1964. The oldest of these baby boomers have already reached age 55 -- a common age for early retirement eligibility in traditional pension plans. And the oldest baby boomers will reach age 65 in 2011. With increased longevity and more healthy years, most baby boomers will have an active life well beyond age 65, but will they be working?
Since our economy is more dependent on knowledge and less dependent on manufacturing, the physical strength of workers has become less important. As a result, it is possible to remain highly productive even as physical strength declines. …