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Sent: 02-06-2009 10:54:01
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Email Marketing Business Opportunity - Helen BairstowWorking Longer - Part 2The Easiest way to do a Client NewsletterWhy Warren Buffett won't buy a NewspaperWe Need Higher Taxes
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Working Longer - Part 2

Click here to buy - A How To Book of SMSF's by Tony Negline
Lester Wills

Last time I started reviewing a new book about working longer by Alicia Munnell and Steven Sass from the Center for Retirement Research at Boston College. I ended by stating that poor health is something that is definitely NOT an obstacle to working longer and asking what the problem was that was preventing people from working longer.

The problem is in fact the labour market. But once again things are not simple as there are two aspects to the issue:

First, the temptation to retire once benefits can be claimed seems irresistible for many meaning that significant numbers are retiring at the earliest possible opportunity. Second, employers are reluctant to retain or hire older people, mainly because they find it hard to lower their wages if their productivity slips. Munnell & Sass doubt that companies will look on older folk more favourably as younger workers become scarcer, not least since many companies can tap into global labour sources.

Consequently, if people are to retire later, they will need some persuading. Things like increasing the minimum age when they can receive benefits along with a change in employers' attitudes would certainly help. But much will depend on individuals' own efforts. Middle-aged people can improve their chances of staying employed by updating skills so that they remain productive. Working longer may be the answer, but hard work is needed to make it happen.

This approach relies on the demographic fact that the ranks of prime-age workers will shrink as the huge baby boom generation ages and on the logic that employers will have no alternative to older workers. There are a number of factors that will assist this change, such as the fact that many of today's jobs require less of the physical stamina that led to mandatory retirement ages in the first place. Changes in pension plans have also diluted economic incentives for employers to encourage retirement and age discrimination has been banned in many countries.

In fact there are numerous examples of companies that have faced up to the new reality.

CVS Caremark, a drugstore chain in the US, advertises for older workers with the slogan: "Abilities are ageless." Of its 190,000 employees, 18% are over 50, up from 7% in the early 1990s. More than 1,200, mainly older workers, work at CVS in the north in the summer and in Florida in the winter.

Bookstore chain Borders Group says it finds "mature workers" appealing because half its customers are over 45 and turnover among older workers is one-sixth that of under-30 workers. About 18% of Borders' 30,000 workers are over 50, double the fraction six years ago, and the company anticipates by 2010 one in four will be.

At the Blue Cross Blue Shield Association in Chicago, 40% of 1,000 mainly professional employees are 50 or older and 25% are 55 or older. "We want to keep these people as long as we can. They know the business, the values, and the customs. And recruitment is becoming more difficult," says William Colbourne, senior vice president for human resources. The trade association has sweetened benefits for older workers, paying half the cost of financial planning and awarding extra days off to those 62 and over. It soon will offer part-time work at full-time pay to selected workers who agree to defer retirement and mentor successors.

As I noted in an earlier piece on this issue, such efforts appear to be exceptions. According to a 2005 Towers Perrin report "Relatively few companies thus far have fully positioned themselves for the coming work-force demographic shifts". Surveys by Boston College's Center for Retirement Research found that employers expect about a quarter of employees currently in their 50s will want to work two to four years longer than past workers. Then employers were asked if they would accommodate half those who wanted to work later. "On a scale of 1 (unlikely) to 10 (likely), the median response was a lukewarm 6," the researchers say.

While employers are "reasonably comfortable" with the older workers they currently employ, "they are not keen on retaining even half who want to stay on to age 67 or 69," the Boston researchers concluded. They predict "a messy and uncomfortable mismatch with large numbers of older workers wanting to stay on while employers prefer that they do not."

The question is of course why? The answer will form the basis of the final installment in this series.

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