High Healthcare Costs Are Making It Harder For Baby Boomers To Retire

December 31, 2019

The U.S. workforce is increasingly going gray. According to Forbes, a growing number of older Americans are working later in life rather than going into retirement.

Up to 10,000 baby boomers per day will reach the age of retirement by 2029. But only 5,900 per day are expected to actually retire.

However, older Americans aren’t just working longer because they’re able to. They’re working longer because they have to.

Retirement savings aren’t keeping up

The Bureau of Labor Statistics estimates that 25% of the U.S. workforce will be composed of employees over the age of 55 by 2024. One-third of those workers will be older than 65.

About 70% of Americans turning 65 will need some form of long-term care during their lifetime due to chronic pain or other conditions. But long-term care can be incredibly expensive, averaging at $6,844 per month, and many Americans don’t have the retirement savings to cover such costs. Even worse, older Americans are more susceptible to identity theft with the average loss to health care fraud coming to more than $1 million.

Healthcare costs are stalling life milestones

It isn’t only long-term care that older Americans are concerned about. According to CNBC, rising healthcare costs are impacting many Americans’ abilities to save for houses, build families, and save for retirement. Even procedures as simple as braces, which one in four American adults have, often go postponed because of high costs.

“Health care is ridiculously expensive right now,” said Jonathan Wiik, principal of healthcare strategy at TransUnion Healthcare. “Being admitted to the hospital is like buying a house.”

It’s no wonder then that employees are increasingly unsure when they’ll be able to retire. In 2010, there were 160,000 Michiganders aged 65 and older in the state workforce. As of 2018, there are now 265,000.

Labor force participation expected to grow

Labor force participation is expected to increase the fastest through 2024 among employees between the ages of 65 and 74. A jump in labor force participation among employees aged 75 and older is also expected within the next five years.

Economic experts are urging that employers embrace the silver wave of workers as a way to boost the economy and reduce the risk of economic fallout. Mass retirement could put pressure on public services, economic growth, and the health care industry as experienced in Japan. Fortunately, many employers are embracing older employees.

Employers offer more flexible hours and work positions

With employees staying in the workforce well past the traditional retirement age, employers are beginning to change their attitudes towards aging workers. Rather than pushing employees out of the office once they’ve reached 65, employers have increasingly begun to offer flexible work hours and job positions to make aging at work that much easier.

“Wellbeing” benefits are also becoming popular alongside other health programs, which reduce conflict and create a more supportive organizational culture for the entire company. Company culture events that are great for all ages such as escape rooms, which have grown in popularity over the last five years, are also becoming common.

“Having an older workforce provides great opportunities for building institutional capital in the workplace,” said Marick Masters, the interim chair of the Department of Finance at Wayne State University. “Between great mentorship and the ability to experiment with working arrangements, productivity is boosted.”

Keeping older workers employed also reduces turnover rate. According to a study by AARP, workers older than 50 had a turnover rate of 29% compared to the 49% turnover rate of employees under 50.

Age discrimination remains a problem

Despite efforts by employers to make working conditions better for older employees, age discrimination still remains a major problem in the United States. In a 2016 Deloitte Consulting survey, approximately 41% of global companies said they considered the aging workforce a competitive disadvantage.

“Employers seem to be less willing to take the gamble on an older worker,” said Betsey Stevenson, an economist at the University of Michigan. “When [older workers] lose their job prematurely, their retirement is more of a struggle.”

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