Seniors in the Workforce

March 06, 2019| By Jean-Marc Fix, FSA, MAAA 

The bane of the writer is the trite cliché, and yet I cannot avoid the temptation: “When life gives you lemons, make lemonade” strongly comes to my mind as I think about seniors in the workforce. As boomers, we are almost certainly living longer than the generations that preceded us, and I am optimistic that this will be the case for the generations following us, at least in developed countries. Yet to quote from a Sightlines Project report co-sponsored by the SOA, “At age 55, boomers had less wealth, home equity, and income but more debt than previous generations measured at the same age.”¹ The Great Recession is partly to blame but changing lifestyles and life expectancy also play a part. The fact remains that living longer with fewer assets, as the table demonstrates, is an issue both at the individual and societal level.

Retirement as we know it today is not sustainable. One way to rebalance the ratio of workers to retirees is working longer and delaying retirement. However, changing the retirement age is not a magic bullet. For one, it penalizes those who don’t live as long, who also tend to be the poorest.

For the worker, the solution to the retirement dilemma depends on a variety of factors. On the one hand, delaying use of sparse retirement assets is valuable, but what about continuing a possibly physically demanding job with little intellectual or emotional satisfaction? For the employer, there is the value of retaining a trained workforce, but it may be at the cost of clogging the promotional pipeline. The one uncontested winner though is society: more tax revenue, potentially fewer benefits paid out, and more productivity.

During the 2014 Living to 100 Symposium, Sandra Timmerman suggested that we need to recognize what she calls “Adulthood 2.0” for people ages 55 to 75.² Should being in the workforce mean the same thing for that age group as it does for a new entrant into the job market? We know that the need for health insurance keeps many workers tied to a job or an employer they do not like. We also know that many older workers would prefer a career direction that, although more satisfying, may not pay the bills or provide financial safety.

We live in a time where there is a magic age – retirement age – where everything changes. This has been reinforced by regulations like Medicare and Social Security. But the fortunate, literally as well as figuratively, often don’t truly retire. They still belong to the workforce but in a different way, maybe in another job with more flexibility.

So what is that magic bullet? Flexibility.

In an attempt to be controversial in order to spark discussion, Anna Rappaport, during the same 2014 Symposium, suggested that the regulations meant to protect older workers had the side effect of preventing retirement innovation by employers.³

Perhaps we need to be more open-minded in the way we think about career options for an older worker. Employers need to move away from the notion of “full time” worker into alternative work arrangements. This approach would benefit parents and caregivers as well as older employees, and maybe even suit the lifestyle of millennials better as well. Flexibility of regulations to protect without dictating or stymieing innovation should also be examined.

The role of technology in facilitating aging has been discussed, but technology does not come cheap and sufficient assets are required to ensure access to that technology. But along with the costs come many benefits. As Tamara Burden highlighted in her presentation in 2017, there are unprecedented opportunities to monetize dormant assets and share resources in this gig economy.⁴ For example, sharing your home or a room in your home (using a resource like Airbnb) or driving your car for Uber can bring extra revenue at minimal cost. But other assets that have been harder to monetize, like time and skills, can also bring financial rewards thanks to various app platforms.

So here’s to us, older people of today and soon to be older people of tomorrow, and as a participant in an industry whose business is to “make the future easier.” To quote Fiddler on the Roof, “To life!”

Endnotes

1.    2018 The Sightlines Project, "Seeing Our Way to Financial Security in the Age of Increasing Longevity," Special Report, Sightlines Project, October 2018, Stanford Center on Longevity research sponsored in part by SOA.

2.    2014 Living to 100 Monograph,"1C: Panel: Perspectives and Implications to Stakeholders of Increasing Longevity," Moderator: Timothy F. Harris; Panelists: Robert L. Brown, Jennifer A. Haid, Sally Hass, Sandra Timmermann.

3.    2014 Living to 100 Monograph, "2C: Panel: Developing a Winning Strategy to Address the Good, the Bad and the Wrinkled of Our Aging Workforce," Moderator: Anna M. Rappaport; Panelists: Donald Fuerst, Sally Hass, Haig Nalbantian.

4.    2017 Living to 100 Symposium, "Session 5B: What is Different Today for Post-Retirement Financial Planning?" Moderator: Jean-Marc Fix; Presenter: Tamara Burden.

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