Pushing Back Retirement

A recent issue brief from the Center for Retirement Research at Boston College highlights an increasingly important issue for employers: older workers who are putting off retirement in favor of longer careers.

The brief, available here, cites several factors causing the increasing average retirement age.  Among them, improved health and longevity, more highly educated workers, less physically demanding jobs, and two-income households have led to later retirement, but the brief flags important employee benefits factors too: Social Security’s incentives to work longer; the reduction of employer-provided retiree health insurance; Medicare eligibility at 65; and the shift from pension plans to defined contribution retirement plans.  The pension to defined contribution plan shift is particularly important, especially in light of the current recession and stock market volatility that drastically reduced many older workers’ 401(k) balances.

With no foreseeable reversal of these forces, employers need to be prepared to deal with an older workforce.  This trend combined with the Age Discrimination in Employment Act and its interplay with related issues–COBRA, health plans, retirement plan contributions, reductions in force, mandatory retirement ages–can easily converge into a potentially costly trap for the unprepared employer.

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