So Much for Those Early Retirement Plans

Until recently, Jonathan Bernstein, a baby boomer and small-business owner in the Los Angeles area, had plans to “semi-retire.” On turning 60 in 2011, Bernstein had hoped to cut his workload in half, and he and his wife were contemplating purchasing a home in a state with a lower cost of living than California. But those plans have been scuttled now that the couple has seen values dwindle on both their home and Bernstein’s self-employed pension plan. Bernstein says his pension plan has dropped about 25 to 30 percent.

“In pretty much all ways, we’re belt-tightening just in case things get worse and also to eliminate the credit debt we’ve carried,” Bernstein says. “Despite all that, we’re very optimistic about a turnaround, perhaps still in time for us to pursue our previous plans – but we’re not counting on it.”

Ellen Naylor, 52, says she and her husband, 54, are also being squeezed by the recession. “Like many our portfolio took a beating this year since we did not see this coming,” she says. “We are pretty angry in a way since we have always been fiscally conservative and feel like we’re paying for others’ indulgences, not the least of which is the financial industry which lent people money who had no business ever assuming a mortgage.”

Naylor, who is based in Colorado, says they’re “belt-tightening like crazy” to cope, and that she and her husband are continuing to work, doing what they love – he is an artist, and she is writing a book on cooperative intelligence. “I have noticed that many who retire lose their minds and their spirit, so passionate working could well be a solution, and on lower speed as we get older,” she says.

Bernstein, Naylor and their spouses aren’t the only ones altering their retirement plans – but sources offer differing opinions as to why boomers and older Americans are doing so. Some say it’s due to the dismal economy, but others chalk it up to an innate drive to keep working, one that existed before the recession. (Baby boomers include approximately 78 million individuals born between 1946 and 1964.)

Retirement: “No, thanks” or “No can do”?

“There is no question that fewer boomers will be retiring. All research and studies point to this,” says Arthur Koff, CEO/founder of RetiredBrains.com, a web site that links boomers, seniors and retirees with employers.  “It is not only because of losses they’ve suffered in their retirement portfolios, but also because of the decreasing value of their homes and the huge unexepcted costs for health care even after they are eligible for Medicare.”

An October 2008 report by AARP shows that among workers 45 and older, nearly two-thirds say they’re likely to delay retirement and work longer if the economy doesn’t “improve significantly.” Older Americans are also concerned. Golden Gateway Financial recently conducted a survey of individuals 65 and older and found that in response to the fiscal crisis, 31 percent are delaying retirement, and 22 percent are returning to work.

“Speaking as a member of the boomer generation, the answer is – if you’re still working don’t give up your day job,” says Sally Haver, SVP of business development at The Ayers Group/Career Partners International in New York. “There isn’t anyone I know whose retirement portfolio hasn’t been adversely affected by the economic downturn – not to mention those who chose to invest with [Bernard] Madoff, who will be working for 10 years after they’re dead.”

But others say current financial woes won’t make much difference, because of a number of boomers weren’t planning to retire anyway. Phyllis Weiss Haserot, president of Practice Development Counsel, a consulting and coaching firm, says even before the recession, fewer boomers were planning to retire than in previous generations. “They want to continue to contribute and feel healthy, fit and intellectually stimulated to do so. The economic downturn and financial losses are making many boomers even more determined to keep working,” she explains.

Other evidence supports Haserot’s view. A 2005 survey by the MetLife Foundation and Civic Ventures found half of all adults 50 to 70 saying they were interested in taking jobs now or in the future to help improve the quality of life in their communities. Meanwhile, Harvard University recently launched a fellowship program to help students mostly in their 50s and early 60s with “a second-act career in a new stage in life,” according to the New York Times.

Whether it’s due to the recession or other motivations, some boomers and older Americans seem to be staying put or resurfacing in the job market. What might this mean for the workforce?

Labor-Market Impact

Experts offer different takes on what could happen.

Ira Wolfe, president of Success Performance Solutions, says the good news is that with fewer older workers leaving, the brain drain will slow down. “The very, very bad news is that management doesn’t have their pulse on what’s really happening in the workforce. The Gen Xers have been patiently waiting for 10 to 15 years for the boomers to get out of their way so they can move up. If the boomers stay longer, the Gen X frustration level will likely boil over as they are getting squeezed by the gray ceiling and Millennial surge,” Wolfe explains.

(Generation X is roughly the group born between 1965 and 1980, and the Millennials/Gen Y followed.*)

A mass exodus of Gen X could leave a gap in companies’ succession plans, he says, leading to an even larger brain drain and skills gap. “It is evident from the pattern of layoffs that workforce planning is completely off the radar. Many companies will come to regret those decisions – my guess beginning in 2010 and full force by 2012,” Wolfe says.

Haver points to another upside: more knowledgeable workers will be available for part-time and consulting work in their areas of expertise. Or, as Haserot says, intergenerational tensions may flare up: Boomers might be reluctant to share their knowledge with younger workers, so as to protect their own job security.

But some say Generations X and Y shouldn’t despair.

“Even if fewer boomers retire than originally expected, I don’t believe this will leave the Gen Xers and Gen Yers struggling to get ahead. If you recalll, just a few years ago the concern was that there weren’t nearly enough younger workers to replace the ones projected to retire. Perhaps the recent shift in the economy will actually create more of a workforce balance in the years ahead,” says Barbara Safani, president of New York-based Career Solvers, a career-management firm.

*Parameters for defining generations vary.

Here are some links to explore this topic further:

Kristina Cowan is a Chicago-based freelance writer who specializes in education and workforce issues, but she’s covered everything from Barcelona’s polyglot culture to teen pregnancy to senior citizens’ lifestyles.