Leading the Workforce

Baby boomers will be the largest working-age block in the U.S. this year. How will this affect other generations?

By Deborah Jeanne Sergeant

If it seems like you have quite a few peers at your workplace, you’re not imagining things.

According to Glassdoor’s “Jobs and Hiring Trends for 2020” published in early November, the baby boomer generation —those at least 55 in 2020 — will be the largest working-age block in the U.S.

It seems counter intuitive that workers approaching retirement age or at retirement age should be the fastest growing; nonetheless, that’s what area financial planners have also observed.

“We definitely see clients working later and longer,” said Adam M. Mark, certified financial planner with Wealth Management Group, LLC in Rochester.

Multiple factors are causing the phenomenon of working later. Unlike previous generations, many people work in careers they truly enjoy, not just employment that brings home a paycheck. Their title and field of work becomes an integral part of their identity instead of remaining only as a means of survival because their work uses their skills and engages their interests.

“We’re seeing that people don’t work to go to a job anymore,” Mark said. “They tend to do it because they want to and they realize they don’t want to go from 40 hours a week to zero. They’re good at what they’re doing and enjoy it. They’re at their prime, but they don’t want to be on a 9-to-5 schedule. They want flexibility.”

It may be full- or part-time, but they keep on working.

Some workers want to get the highest fixed income they can during retirement. Retiring too soon can curtail how much they receive each month.

“One of the reasons they keep working might be because they want to maximize their Social Security benefits,” said Diana Apostolova, financial consultant and owner of Rochester Investments in Rochester. “A common mistake some people make is to start Social Security at 62 and continue to work not realizing that there is a limit on how much money they can make per year. That can be a problem and should be avoided as much as possible.”

By waiting to age 70, people can receive 8% per year delayed retirement credit once they begin to draw on their Social Security funds. Continuing to wait to draw on Social Security after this age doesn’t offer any additional benefit.

Bryce Carey, partner and certified financial planner with NorthLanding Financial Partners, LLC in Rochester, said that the newly enacted Setting Every Community Up For Retirement Enhancement (SECURE) Act allows people to contribute to their IRAs indefinitely, not the previous limit of 70.5 years.

“It’s indicative of an aging workforce,” said Carey, who has also observed people working longer.

Though some people work longer because they don’t have the funds they need to retire, that’s not the case among most of Carey’s client base.

“They’re mainly doing it for the enjoyment,” Carey said. “Working longer has been shown to lead to healthy longevity. Some want to work as hard as they can for as long as they can. In today’s economy, they can work longer in professions that are physically less demanding. They can use the skills they’ve built up without taxing themselves.”

For some people, working longer ensures they will have health insurance coverage through their employer until Medicare begins at age 65.

“The cost of health care grows faster than the inflation rate,” said Elizabeth A. Thorley, certified financial planner and CEO and president of Thorley Wealth Management in Pittsford. “Someone living longer in good health can experience higher health care costs.”

She noted that the average number of years spent in retirement is 20. Keeping a good health care plan provided by an employer for as long as possible makes sense for many people.

For those who continue working, Thorley believes they bring both value and also much needed help to many workforces.

“Having mature workers working longer or re-entering the workforce at older ages aids economic growth since it’s a source of either new labor or at the very least, less people exiting the labor force,” Thorley said.

According to the US Census Bureau, “between 2020 and 2050, the number of deaths is projected to rise substantially as the population ages and a significant share of the population, the baby boomers, age into older adulthood. As a result, the population will naturally grow very slowly.”

In 2018, the Census reported 11.6 births per 1,000 population. In 2000, it was 14.7; in 1990, 16.7. The birth rate is decreasing steadily over the decades and likely will continue to decline. That’s why older workers are so vital to the economy.

“We know that for economic growth, it’s very simple: we need productivity to grow and growth in the number of workers,” Thorley said. “The baby boomer generation isn’t being replaced by a greater number of workers. We have fewer numbers of younger workers coming into the workforce and a larger segment of the workforce is aging. We want to encourage older workers to stay in the economy.

“Economically, we are all going to be better off if we encourage and embrace the mature, experienced population and find ways for people to be engaged with their work life. It may not be in paying higher wages, but access to more vacation time or to be creative in value-added benefits.”