A ‘massive brain drain’ is looming as boomers and Gen X-ers retire. Can flextirement help workers and businesses?

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I spoke to some experts on the topic: Neil Costa, the writer of the Fast Company article and the one who coined the term flextirement; Cheryl Evans, director of the Milken Institute and co-author of a paper titled “Shifting the Retirement Paradigm”; and Jack Towarnicky, an employee-benefits specialist and author of a Benefits Quarterly article titled “Aiming at the Wrong Target: What’s Holding Employers Back When It Comes to Older Workers?

The benefits of flextirement

Costa, who is the chief executive of a digital recruitment marketing agency, says a flextirement program can be enticing to both employers and to older workers. He came up with the term when he and some colleagues were talking about how to make jobs at their 50-person company more feasible for workers nearing retirement. One of those workers has now begun a flextirement, and another is in the process of starting one.

Read: Working longer won’t solve the retirement crisis — seniors need a ‘Gray New Deal’ to retire with dignity, this economist says

“When we think of normal retirement, it’s an on/off switch, and it’s someone checking out and going off into the sunset,” Costa told me. “We’re trying to define a new employment status where you’re still an employee and can still take advantage of the benefits and still have a more intimate relationship with the company.”

For employees, flextirement would let them continue working part-time, perhaps on one of their employer’s key initiatives or as a mentor — possibly remotely. For businesses (or nonprofits or government agencies), the benefit would be that they could keep their valuable experienced workers longer, “mitigating catastrophic knowledge gaps and empowering the younger generation of workers,” Costa wrote.

Read: My wife and I plan to retire at different times. How do we find our ‘magic’ retirement number?

A retirement paradigm shift

“A lot of people aren’t necessarily going to retire in the traditional sense going forward,” the Milken Institute’s Evans said. “The notion of retirement, we feel, is changing. That’s sort of a paradigm shift.”

With flextirement, an employee’s salary and benefits — health insurance, 401(k)s and the like — continue on a prorated basis, depending on how many hours or days the person is working.

“If someone’s working 40% of the time, we’re willing to cover 40% of their benefits, but they could still be an employee,” Costa said of his company.

From the archives: You’re probably not ready to retire — psychologically

Flextirement vs. phased retirement

The flextirement idea may sound similar to phased retirement, but there are differences.

For one thing, the small number of employers that currently offer phased retirement — in which employees gradually go from full-time work to working fewer hours — typically only do so on an ad hoc basis, providing this option to a select number of older workers who have the gumption to ask for it.

The latest Principal Financial Well-Being Index survey found that only 16% of U.S. companies work with employees on a regular basis to create a phased retirement plan. Yet 52% of employees said they want to gradually decrease the amount of time they spend working in their field and to eventually stop working.

Similarly, about half of older workers in a Transamerica Center for Retirement Studies survey said they expected to transition into retirement by gradually reducing their hours or taking on less demanding jobs.

Unlike phased retirement, flextirement would be open to all an employer’s older workers, letting those who want to pursue this option start a conversation with their bosses and come up with arrangements that work for both sides.

Will employers offer flextirement?

I can see why many older workers would want flextirement. But the big question is: Will employers go for it?

HR benefits consultant Towarnicky, a proponent of what he calls “cost-effective, age-neutral, flexible employment,” is doubtful that many employers will offer the kinds of arrangements he and Costa favor.

He’s not being dour, he said — he’s just a realist.

“The human resources departments with legal counsel and the like, they’ve already decided what’s optimal. And that’s what they have in place today,” Towarnicky said. “Until something disrupts that, it’s hard for me to see how they’re going to change the status quo.”

But, he asked, “Wouldn’t it be more interesting, and perhaps achieve a better outcome, if worker and employer objectives and goals intersected and matched?”

Which employers might try it first

Certain types of employers may be more likely to consider adapting in order to meet older workers where they want to be.

“I think to the extent the employer is smaller, your chances are greater of people identifying your individual performance and accommodating things that would keep you employed,” Towarnicky said.

Costa expects flextirement programs will appeal first to employers with workers who are engineers, accountants and in creative services — “technical types of roles you can do from anywhere.”

By contrast, jobs like sales might be more challenging, because for those roles, someone would still need to manage the clients, Costa said.

The push for change

Although his flextirement idea is new, Costa is optimistic.

“There’s nothing about it that’s super scary for employers, and we’re looking at a massive brain drain of boomers and Gen X-ers getting close to retirement,” he said. “I think flextirement is a great opportunity to retain people and to bring in talent from competitors who aren’t offering it.”

The World Economic Forum agrees.

In its January 2024 Insight Report on longevity economy principles, the organization said: “Companies need to evolve their job designs for flexibility to provide older individuals who wish to continue working with the ability to remain employed for longer.”

One company that’s been doing this, the report noted, is the insurer Swiss Re, whose Flex+ program lets older workers flexibly reduce working time before entering “regular retirement.”

In a LinkedIn article by Janine Vanderburg, a consultant and writer focused on ageism, influencers in the older-worker space offered their predictions for 2024. Transamerica Institute CEO and President Catherine Collinson said she believes “employers will increasingly adopt flexible retirement options to facilitate smoother transitions for themselves and their retiring employees.”

Since his Fast Company article came out, Costa has received a lot of positive reaction from his professional and personal networks. “People love this concept,” he said.

The Milken Institute, which frequently helps its older workers move into advisory roles, hopes more employers will be receptive to ideas like flextirement.

“We want employers to recognize that our population is aging and that people should not be quietly pushed out of the workforce,” Evans said. “We really encourage employers to think about how they can use people in a different way and recognize and value what [workers] bring to the workforce.”

Unfortunately, she added, these days “the onus seems to be on individuals.”

What do you think of flextirement? Has your employer offered anything like it? Let us know in the comments. 

Check out On Watch by MarketWatch, a weekly podcast about the financial news we’re all watching — and how that’s affecting the economy and your wallet. MarketWatch’s Jeremy Owens trains his eye on what’s driving markets and offers insights that will help you make more informed money decisions. Subscribe on Spotify and Apple.  



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