Gen Xers are changing the face of retirement

By Stephen Tarnoff

Like it or not, American workers in the future will be working into their 70s and taking an entirely different approach to retirement than they do today. Those are among the predictions of Rick Garnitz, president of Lifespan Services Inc., a Decatur, Ga.-based company that helps individuals plan for retirement.

Garnitz told those attending the 13th Annual Benefits Management Forum and Expo in Chicago on September 25 that a variety of forces will cause people to continue working past 65 and to look at numerous retirement alternatives. "We're all going to work longer for emotional, social and psychological as much as financial reasons," he said.

Garnitz said that those retiring today are facing a host of retirement issues. These include the effects of corporate paternalism being replaced by a partnership with employees, reflected by the creation of defined contribution plans where employees contribute to their retirement pensions.

Workers are also facing Social Security reform and more retirees are reentering the workforce even though the average retirement age is decreasing, Garnitz said. Moreover, what Garnitz calls a "huge potential retirement issue for baby boomers," is concern for aging parents. The growth in cash balance plans and defined contribution plans also mean that longevity in the workplace is no longer being rewarded like it once was.

Garnitz speculated that twenty years from now changing demographics will radically alter the economic and cultural retirement landscape. Thus, normal retirement age could be 72.5. In addition, employers will practice age-neutral hiring, employees could face a Social Security means test and there will likely be an increase in creative work/life retirement policies.

Looking to the future, Garnitz said that a permanent retirement will no longer be the destination for most of the workforce. Instead, "we'll work in and out of our lives," he said.

One reason for the change is the Gen Xers have a limited faith in government and business to provide them with a financially secure retirement. Instead, Gen Xers want the tools and education and then to be able to choose how they want to retire. In addition, they are more interested in work/life issues and how corporate benefits respond to those issues.

A "dumbing down" of the workforce?
One factor often unnoticed by companies is that by replacing defined benefit plans with cash balance and defined contribution alternatives, the portability of pensions and lack of reward for employee longevity could lead to mid-career "brain drains" from companies, Garnitz said.

These factors are making it easier for employees to leave employers and, with their higher skill sets, there is a greater allure to move to employers that can satisfy those needs. "The result can be a dumbing down of the workforce," he added. "A lot of organizations are not looking at this piece of the pie."

Garnitz noted, however, that the aging workforce coupled with a shortage of skilled labor will drive the development of creative retirement policies. Retirement options, such as the development of phased retirement for older workers or job sharing, when companies gradually reduce the workweek of older employees while encouraging them to share their skills and knowledge with younger employees, will become more common.