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Oil Prices: Facing the Pressures of HistoryEmail Marketing Business Opportunity - Helen BairstowWorking Longer - Part 3The Easiest way to do a Client NewsletterWhy Warren Buffett won't buy a NewspaperLower income earners: DIY financial advice
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Working Longer - Part 3

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

This is the last in the series that is looking at a new book that examines the problem of ageing populations and suggests the solution if for people to work longer. However, it is not as simple as it may seem.

According to Munnell & Sass, employers fear older workers cost too much, lack current skills and don't stick around long, Wages tend to rise with seniority. Health costs for older workers are higher. Older workers are viewed, rightly or not, as less supple in dealing with new technologies. And old workers tend to be in older industries and occupations in which employment is growing slowly if at all.

What's more, the image of companies loyally retaining scarce, seasoned workers is at odds with reality. They found that among male workers between 58 and 62, only 44% still work for the outfit that employed them at 50, down from 70% two decades ago. And even if labour shortages emerge, Munnell & Sass argue, many employers will simply hire younger immigrants, shift work overseas or deploy labour-saving technology (like the cashier-less grocery-store checkout) instead of hiring older workers.

So, as I stated in a previous piece, there needs to be a significant change I attitude by employers and I suspect employees (including unions). Whether that will happen without some form of legislative coercion remains to be seen.

Munnell and Sass also undertake some myth busting about people working longer:

Myth: Given the growing retirement income challenge, people will have to work forever.

Reality: If individuals worked full time until at least 66, they could enjoy a long and financially secure retirement, with incomes one-third higher than if they retired at 62.

Myth: Older workers will choose to work longer on their own.

Reality: Most people retire as soon as benefits are available.

Myth: As baby boomers approach retirement, employers will embrace older workers.

Reality: Many employers are lukewarm toward retaining older workers due to concerns that they cost too much, lack current skills, and don't plan to stick around long.

Myth: Employers will quickly change their tune in response to labour shortages.

Reality: Many employers with a high proportion of older workers are in declining industries. Others can tap global labour markets.

Myth: Older workers have little to offer employers.

Reality: Older workers often have advantages over younger workers, including higher productivity, better judgment, a stronger work ethic, and better people skills.

Myth: Phased retirement, shifting to part-time employment with a career employer, is the solution for keeping people in the workforce longer.

Reality: Many firms are reluctant to offer phased retirement due to concerns over which workers would be eligible, health insurance costs, and part-time schedules.

Myth: Most workers can work longer by remaining with their career employer.

Reality: Career employment is declining rapidly. Only 44% of male workers age 58 - 62 are still with the same employer as when they were 50, down from 70% two decades ago.

Myth: The working longer prescription is the answer for everyone.

Reality: While today's older workers are generally healthier and better educated, up to a third could be hard pressed to work into their mid-60s due to poor health or job prospects.

Myth: Government cannot do much to encourage longer work lives.

Reality: Increasing the age at which workers become eligible for benefits could push back the work/retirement divide by changing the mindset of both workers and employers.

Myth: Eliminating mandatory retirement removed a major barrier to working longer. Reality: Mandatory retirement could actually promote longer work lives by providing both employers and workers clear expectations about when careers end.

As always, some of these answers are obvious, when you think about them. But, they seem to be prevalent myths in the workplace. Getting people to understand the reality rather than them just blindly accepting the myth, may be a start.

As this series started with an except from the book, I will finish with another:

"Working longer will not be simple. It requires thought and planning on the part of individuals. It also requires employers to retain, train, and even hire older workers. Government also has a role to play. And the sooner everybody realizes that staying in the labour force is the best way to ensure a secure retirement, the better."

Couldn't have put it more succinctly myself.

The book in question is:

Working Longer: The Solution to the Retirement Income Challenge

By Alicia H. Munnell and Steven A. Sass

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