Employees who fall within the Baby Boomer generation (born 1946–1964) are extending their working lives past age 65 and seeking a more flexible, phased transition into retirement. They are currently also the biggest group of retirees. Employers have to both prepare to satisfy needs of employees in this age bracket and to replace them. In May 2016, IMA® (Institute of Management Accountants) conducted a survey of senior finance professionals to find out how their companies are handling Baby Boomer retirement.
Of the 113 survey respondents:
- 36% say their organization is managing Baby Boomer retirement well
- 29% say not so well
- 35% aren’t sure or don’t know
Respondents at companies with 200 employees or fewer were somewhat more likely to feel their companies were successful in handling Baby Boomer retirement than at companies with over 200 employees (44% vs. 30%).
As the age of the respondents increased, so did the percentage of those saying their companies were handling Baby Boomer retirement well:
- 29% of those aged 50 or younger
- 38% of those aged 51-60
- 48% of those older than 60
One potential reason for this is that younger employees have to deal with replacing the retirees and transferring their knowledge.
Fifty-nine percent of the respondents’ firms have more than 30% of their workforce planning to retire in the next 5-10 years. And 42% have more than 50% planning retirement in the next 5-10 years.
By far the top challenge facing companies regarding their Baby Boomer employees is replacing them when they retire (70% of respondents). Some examples mentioned were “adjusting positions to needs of staff while retaining expertise” and “knowledge transfer to those below them.” Other challenges mentioned were lower productivity (29%), stereotyping people based on their age (28%), and meeting healthcare obligations after retirement (22%).
Only 7% said that meeting pension obligations was a significant challenge. This could be due to the overwhelming majority of firms providing contributory pension (e.g., 401(k)) plans (72%) or no pension plan at all (12%) vs. defined benefit plans (16%).
For those respondents who said their firms were successful in planning for Baby Boomer retirement, the practices identified as most helpful were:
- Providing succession planning specifically aimed at Baby Boomers (50%)
- Offering part-time opportunities for retirees (42%)
- Paying competitive salaries and benefits for new hires (42%)
- Providing financial-planning services (40%)
- Giving them opportunities to work as consultants after retirement (34%)
The great majority of companies have Baby Boomer employees who plan to retire in the next 5-10 years, yet fewer than half feel they are planning satisfactorily for these retirements. The biggest challenge appears to be replacing them when they retire. Best practices to address this issue include succession planning with Baby Boomers in mind, offering them part-time and consulting opportunities, and paying competitive salaries to new hires. At one respondent’s company, they “encourage employees to work as long as they want.”