Discusses retention of older workers and the factors that influence an older worker's decision to retire

1. Retirement Decision Making and
Strategies for Retaining Older Workers
Cheryl Paullin
HumRRO
In J.W. Hedge (Chair). Understanding the impact of an aging workforce on
employees/organizations. Panel discussion conducted at the 26th Annual Conference
of the Society for Industrial and Organizational Psychology, Chicago, IL
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2. Question
• As employees approach retirement eligibility, what
are some of the issues that affect their retirement
decision?
2

3. Context
• Many people at or near the age of retirement
eligibility (at least by current social norms)
– But will they? And when?
– 36% expect to retire after age 65
EBRI 2011 Retirement Confidence Survey; N=1,000 U.S. adults age 25+
• Key Qs for many I-O’s
– How do we entice key/productive older workers to
continue working for our organization?
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4. Theories of Retirement
• To retain older workers, we must understand and address
the factors that motivate them to stay versus leave
• American Psychologist (April 2011, Vol 66)
– Retirement theories from Psychology and other fields
– I-O Psychology has contributed by examining impact of work and
organizational practices on retirement decisions 4

5. Retirement is a Process
• Unfolds over time
• Not an all-or-none decision
– Phased retirement
– Bridge employment
– Re-employment
– Volunteer work
• Not an entirely rational decision
• Impacted by factors beyond individual or employer control
– Health of self or loved ones
– The economy and job market
– Changes in laws or government regulations
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6. The Retirement Decision
• Am I able to continue working (physically, mentally, emotionally)?
– Average retirement age is low-mid 60’s, even lower in some European countries
– Average life expectancy in developed countries is mid-70’s
• Do I want or expect to continue working?
– 18% - 74% say “yes,” depending on country and survey
2007 AARP-sponsored study conducted by Towers Perrin of 8,200 workers of all ages in 7 developed countries; 2008 AARP
survey of 1,500 U.S. workers age 45-74; 2011 EBRI Retirement Confidence Survey of 1,000 U.S. adults age 25+
– Full time? About half of those who want to continue working say “no”
2008 AARP survey of 1,500 U.S. workers age 45-74 ; 2000 Cornell University longitudinal survey of 600+ workers
age 54-72 in upstate New York
– For this employer?
• Are there strong external reasons to retire?
– To provide care for loved ones
• Elder care as well as dependent care, more often for women than men
– To join a significant other upon his/her retirement
• Many two-earner couples plan or hope to retire at about the same time
– To pursue a dream
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7. The Retirement Decision (cont.)
• Is it possible for me to continue working?
– Without incurring financial penalties?
• Reduction in benefits for working beyond retirement eligibility or a particular age
– Do I have skills/accreditations that an employer needs?
• Both younger and older workers believe skills decline with age and that older
people can’t learn well
– Some skills do decline, but may be offset by advantages in other areas
(e.g., accumulated knowledge)
– Older workers are very capable of learning, though some accommodation in
the speed or type of training may by required
• Older workers are more likely to stay with their employing organization than
younger workers, so training ROI may be higher for older workers
• Can I afford to retire?
– Do I have sufficient retirement savings or other sources of income to maintain a
reasonable standard of living and to cover rising medical costs?
• Many people don’t, nor do they understand what it will take to support their
preferred lifestyle during retirement
– How would a downturn in the economy impact my savings?
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8. What Should an Organization Do?
• Conduct workforce audits and track data over time (e.g.,
employee age, key knowledge/skills, attitudes toward older
workers)
– Identify and address key vulnerabilities
• Train managers
– To think of retirement as a process that occurs over time
– To work with older workers who want to stay but need some
assistance to do so
• Create an age-positive organizational climate
– Ask older workers to stay; help them feel valued
– Help younger workers understand that older workers provide value
– Make good use of older worker’s talents and knowledge
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9. Questions
• Have specific organizational strategies been
identified as particularly effective for retaining
older employees?
• Are there certain organizational policies that are
particularly detrimental to those same goals?
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10. Why Retain Older Workers?
Benefits for older workers
 Accrual of greater lifetime income
 Potential increase in retirement benefits
upon retirement
 Access to employer-provided health care
benefits (in some cases)
 Enhanced physical and emotional well-being
 Opportunity to continue doing meaningful
work
Benefits for younger workers
 Access to senior employees’ institutional
knowledge and networks
 Assess to mentors
 More hands to do the work
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Benefits for employers
 Fewer unfilled positions
 Continued access to key institutional
knowledge and contacts
 Workers who are motivated and engaged
 Workers who are productive and reliable
 Workers who can apply life and job
experience
 Avoid the need to hire and train
replacements (although older workers may
need training to upgrade skills)
Benefits for society
 Less extensive labor shortages
 More goods and services can be produced
 More taxable income available to support
government-provided programs
 Larger pool of workers contributing to
government-provided retirement programs;
smaller pool drawing benefits
 Fewer people using government-provided
health care benefits (if employers provide
coverage)

11. Decision to Stay with Current Employer
• Top 5 factors older workers considered
– Competitive health care benefits package (61%)
– Competitive retirement benefits package (54%)
– Work/Life balance (35%)
– Caliber of the people with whom I work (28%)
– Recognition for work (27%)
AARP-sponsored study conducted by Towers Perrin (2005), N=1,500 randomly selected
employees 50+ currently working for large U.S. companies
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12. Decision to Stay with Current Employer (cont.)
• Reasons workers in a phased retirement program
continued working for their career employer
– Enjoyed working (42%)
– Needed the income (28%)
– Needed medical benefits (15%)
– Not yet eligible for pension benefits (5%)
– Other reasons (9%)
Watson Wyatt Worldwide (2004), N=330 U.S. workers age 50-70 currently in a phased
retirement program in several different organizations
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13. “Helpful” Retention Strategies
1313
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ork
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ork
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ork
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ontractor
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evelopm
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entor
Retention Strategies
Percentageofemployeesmentioningstrategyas
helpful
N=8,200 workers of all ages in 7 developed countries. Given a list of practices, indicated
which ones would be helpful in convincing them to continue working.
AARP. (2007). Perspectives of employers, workers and policymakers in the G7 countries on the new demographic
realities. Washington, DC: Author. Retrieved July 25, 2009, from
http://assets.aarp.org/rgcenter/econ/intl_older_worker.pdf

14. Management Practices Used to Retain Older Workers
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evelopm
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orking
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ecruitim
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ealth
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PercentofEmployers
Initial Study
Follow-up Study
N=117 organizations from 11 European Union member nations. Most were private-sector,
had more than 500 employees, and in the manufacturing and service industries.
From Taylor, P. (2006). Employment initiatives for an ageing workforce in the EU 15. Luxembourg: Office for Official
Publications of the European Communities. Retrieved July 9, 2009, from
http://www.eurofound.europa.eu/publications/htmlfiles/ef0639.htm

15. Best Practices: Retention of Older Workers
1. Create an age-positive organizational culture.
2. Provide training to upgrade existing skills or learn new ones.
3. Design or redesign work to make it easier for older workers.
4. Allow for reductions in work hours (e.g., phased retirement).
5. Provide flexibility in work schedules and location.
6. Provide health and wellness programs.
7. Provide health care benefits.
8. Provide opportunities for career or personal growth.
9. Address financial disincentives for continued employment (e.g., partial
or deferred pension payments).
10.Rehire retirees.
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Compilation of strategies across sources. All are supported by more than one
commentator and by survey or research study data.

16. Particularly Effective Strategies
• Ones that allow individual flexibility
• Most are just as effective for
attracting and retaining younger workers
– Evidence that the organization values their contributions
– Flexibility, flexibility, flexibility
– Health insurance
– Opportunity to do meaningful work and continue to grow
– Less stress
• Shift to a less stressful or less physically-demanding role, e.g.,
trainer or coach
• Work on meaningful special projects
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17. Detrimental Policies or Practices
• Allowing or failing to address age
discrimination
• Failing to value older workers
– Putting them “out to pasture”
– Discouraging them from participating in skills training
– Making them feel their only role is to transfer their
knowledge to someone younger
• Retirement plans with financial penalties for
working past retirement eligibility
– Government laws and regulations may limit an
organization’s ability to revise or replace such plans
• No health insurance 17

18. References
• American Association of Retired Persons. (2004). Staying ahead of the curve 2004: Employer best practices for mature
workers. Washington, DC: Author. Retrieved February 19, 2009, from
http://assets.aarp.org/rgcenter/econ/multiwork_2004.pdf
• American Association of Retired Persons. (2005). The business case for workers 50+. Washington, DC: Author.
Retrieved June 24, 2009, from http://assets.aarp.org/rgcenter/econ/workers_fifty_plus.pdf
• American Association of Retired Persons. (2007). Perspectives of employers, workers and policymakers in the G7
countries on the new demographic realities. Washington, DC: Author. Retrieved July 25, 2009, from
http://assets.aarp.org/rgcenter/econ/intl_older_worker.pdf
• American Association of Retired Persons. (2008). Staying ahead of the curve 2007: The AARP work and career study.
Washington, DC: Author. Retrieved July 25, 2009, from http://assets.aarp.org/rgcenter/econ/work_career_08.pdf
• American Psychologist (2011). Special Section on Retirement. Vol 66 (April).
• Byham, W.C. (2007). 70: The new 50. Pittsburgh, PA: DDI Press.
• Employee Benefit Research Organization. (2011). The 2011 Retirement Confidence Survey. Retrieved April 10, 2011,
from ww.ebri.org/surveys/rcs
• DeLong, D. W. (2004). Lost knowledge: Confronting the threat of an aging workforce. Oxford, England: Oxford
University Press.
• Eyster, L., Johnson, R.W., & Toder, E. (2008, January). Current strategies to employ and retain older workers.
Washington, DC: Urban Institute. Retrieved April 24, 2009, from http://www.urban.org/publications/411626.html
• Hedge, J.W., Borman, W.C., & Lammlein, S.E. (2006). The aging workforce: Realities, myths, and implications for
organizations. Washington, DC: American Psychological Association.
• Goldberg, B. (2000). Age works: What corporate America must do to survive the graying of the workforce. New York:
The Free Press.
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19. References (continued)
• Mermin, G.B.T., Johnson, R.W., & Toder, E.J. (2008, July). Will Employers Want Aging Boomers? (Discussion paper
08-04). Washington, DC: Urban Institute. Retrieved April 24, 2009, from http://www.urban.org/publications/411705.html
• Naegele, G., & Walker, A. (2006). A guide to good practice in age management. Luxembourg: Office for Official
Publications of the European Communities. Retrieved July 9, 2009, from
http://www.eurofound.europa.eu/pubdocs/2005/137/en/1/ef05137en.pdf
• Rappaport, A, Bancroft, E., & Okum, L. (2003). The aging workforce raises new talent management issues for
employers. Journal of Organizational Excellence (Winter), 55-66.
• Shultz, K.S., & Adams, G.A. (Eds.) (2007). Aging and work in the 21st century. Mahwah, NJ: Lawrence Erlbaum &
Associates.
• Taylor, P. (2006). Employment initiatives for an ageing workforce in the EU 15. Luxembourg: Office for Official
Publications of the European Communities. Retrieved July 9, 2009, from
http://www.eurofound.europa.eu/publications/htmlfiles/ef0639.htm
• US General Accountability Office (2007). Older workers: Some best practices and strategies for engaging and retaining
older workers (Statement of David M. Walker, Comptroller General of the United States, Testimony before the U.S.
Senate Special Committee on Aging; GAO-07-433T). Washington, DC: Author. Retrieved January 15, 2009, from
http://www.gao.gov/new.items/d07433t.pdf
• US General Accounting Office. (2001). Older workers: Demographic trends pose challenges for employers and workers
(Report to the Ranking Minority Member, Subcommittee on Employer-Employee Relations, Committee on Education
and the Workforce, House of Representatives; GAO Report No. GAO-02-85). Washington, DC: US Government
Accountability Office. Retrieved January 15, 2009, from http://www.gao.gov/new.items/d0285.pdf
• US National Institute on Aging. (2007). Growing older in America: The Health & Retirement Study (NIH Publication No.
07-5757). Washington, DC: Author. Retrieved July 25, 2009, from http://www.nia.nih.gov/ResearchInformation/
ExtramuralPrograms/BehavioralAndSocialResearch/HRS.htm
• Villosio, C, DiPierro, D., Giordanengo, A., Pasqua, P., & Richiardi, M. (2008). Working conditions of an ageing
workforce. Luxembourg: Office for Official Publications of the European Communities. Retrieved July 9, 2009,
http://www.eurofound.europa.eu/pubdocs/2008/17/en/2/EF0817EN.pdf
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