Ageing of the general population including a greater proportion of the labor force is a global phenomenon (Kulik et al. 930). Due to the magnitude of the phenomenon, employers as well as the employees should be concerned with matters retirement. This is despite the fact that there has been a notable improvement of life expectancy both at birth and at the age of sixty years. However, this observation may differ worldwide with regard to development.
Along with the ageing phenomenon, the retirement of the “baby boom generation” has affected the global labor market. Therefore, the significant increase in longevity which is observable globally has a great influence for the labor force. The labor market is continuously faced with the challenge of optimizing the need to employ the newer age group in a cost effective manner. This challenge is due to the existence of a large group of experienced and healthy older workers or rather the employable retirees. Older workers may choose when to retire and demand any work-related pension they are entitled to. On the other hand, the employees can neither force the employees to retire nor set an age for their retirement unless it is justifiable by what the law refers to as a proportional means of attaining a legitimate aim.
In the modern labor market, the retirement age is no longer 65 for most workers. According to recent research, most workers plan to retire at or after the age of 65. Most people who are nearing 65 years project late retirement ages than the younger people. Many individuals tend to extend their retirement age because they perceive they require some more time to save and because they may be enjoying particular aspects of their jobs. Also, workers who earn high salaries are most likely to want to continue working. Another factor that may lure the employees to retire later than expected may be their medical eligibility. This factor plays a major role in many employees’ retirement decision. Employees who retire earlier before they are age 65 have the risk of paying high premiums to private health insurance companies or worse being denied health insurance coverage.
Among the major cost that retirees face regardless of whether they are healthy or not is the medical insurance and medical care. Therefore, no employee is ready to get out of a judicious health insurance position before the age of 65 years. This is because if one has a gap which is to be filled, it may turn out to be very expensive. With some insurance policies, medical coverage might start as early as the first month that one turns 65.
Discussion at the work place
Since there is no longer a default retirement age, the managers are recommended to integrate discussions on retirement within the yearly appraisal for all employees. These discussions should include what age the employee is planning to retire, plans to consider alternative employments options, when the employee is planning to retire and plans to work part time prior to retirement.
Regardless of what the age an employee is, their future goals and inspirations may help an employer to identify the necessary training or development requirements and make available an opportunity to deliberate on their future labor requirements. For most employees, such discussions may entail the question on where they visualize themselves in the foreseeable future and how they assess their input in the organization. During these discussions, the vital questions that should be asked are about the employees’ objectives and plans in the short-run, medium and long-term. Nevertheless, some employers may find asking these questions as part of their appraisal process.
The results of any work place discussions should be documented by the managers and be held as long as there is any need to hold such information. Also, employers should evaluate the ability of the employers to conduct fair and effective discussions. This is because work place discussions that are poorly done may be costly both to the organization and to them.
The Best Time to Retire
Making a decision when to retire may not be an easy decision. With this regard, there are three time frames which an employee may choose to retire. However, before delving into this matter it is important to assume that one is going to live a complete and rewarding life in retirement. Talking of the three timeframes we have:
Early retirement
For this particular time frame, the social security benefits are used as the criteria for placing the boundaries of early and late retirement. With this guideline in mind, early retirement can be termed as leaving the work force before the age of 62. The largest benefit for retiring early is that it allows the retiree ample time to pursue their hobbies and enjoy the fruits of their work. On the other hand, the demerits of early retirement outweigh its merits. Retiring early means less time to accumulate the retirement benefits and also retirement will have to last longer if an individual chooses early retirement. Moreover, social security and pensions may not be available instantly.
On time retirement
This is retirement when employees qualify for it or as agreed with the employer. It is mostly between age 62 and 67, at this time the employee qualifies for full social security benefits. On time retirements allows the retiree to have a fulfilling and a healthy retirement as well as create a significant retirement fund. Also, retiring on time one does not have to be concerned with the health care insurance expenses since it is an automatic qualification. The disadvantage of on time retirement is that there is less time to pursue hobbies and potentially rewarding careers.
Late retirement
This is simply remaining at the work place after age 67. The biggest advantage of this retirement period is that one has longer time saving for their retirement. Nonetheless, this may mean less years of enjoying the retirement income. Other benefits are that the retiree immediately qualifies for medical care as well as continuing to build their retirement pension plan which might lead to them qualifying for greater social security benefits.
Retirements and Pensions
After spending several years saving and paying taxes, the retirement period is the time to collect one’s social security and medical care and sometime qualify for other few extra tax incentives. However, to get the most out of these value benefits, the worker may need to meet certain deadlines. Failure to meet the required cutoffs, the employee could face higher penalties and fees, and taxes
The increase in social security age for retirement is an inspiring factor leading to people working for long. While employees may enroll for social security as soon as when they are 62 years, their payments are reduced unless they are patient enough to wait until they get to 65. For people born within 1937 or earlier, their full retirement age is age 65. However, the retirement age has moved to 66 with regard to many baby boomers. Consequently, it is likely to continue to increasing for people who are working and were born within 1960 and later. Employees do not tap into the complete potentials of their social security benefits if they choose to claim their social security earlier than age 66. This is because the benefits are significantly discounted.
The monthly social security payments increase if employees delay their beginning date past the retirement period up to age 70. Probably this is because most of them associate the date that they began receiving social security with the date that they retire. These two events should be decoupled. Deferring social security may be one of the smartest and savvy financial decisions that an employee could make. This is primarily because for each year one delays in taking the social security, their benefits get an 8% increase.
How long new hires work to obtain their pension benefits
It might take long time working for the younger generation of workers to reap their pension benefits. Recent research found that employees that were hired at the age of 25 had to work for twenty or more years before they could reap their pension benefits that are worth surpassing their contributions. In some places they may have to wait up to 30 years or longer.
Retirement eligibility is characteristically based on a blend of a person’s age and their years of service. According to most employment systems, the contributions of short tenured workers help to subsidize the benefits of long-term employees. Therefore, most short tenured workers lose their money because their interests from the pension plans are less than they could earn through individual investments.
Conclusion
In summary, many people nearing 65yrs pose a higher probability of later retirement ages than the younger people. Many workers, approximately above average are between the age 58 and 64, project to get their retirement after the age of 65. This is the case when the statistics are compared with the workers who are aged 50. Workers who are almost the retirement age and in their 50s and 60s look at their social security benefits, medical costs, their cost of living and food cost to determine their retirement age. They also have a better sense of how their affairs might be after they retire.
However, while the retirement age is continuously increasing, few retirees have managed to delay their retirement age past the age of 65. According to Gallup surveys, approximately 17 per cent have managed to leave workforce after 65. Generally, the popular retirement ages are 60 to 64 which translates to approximately 36%. Consequently, approximately 31 percent retire before age 60.
Works cited
Need, What Competencies Do HR Professionals. "Human resource management: Gaining a competitive advantage." (2006).
Kulik, Carol T., Susan Ryan, Sarah Harper, and Gerard George. "Aging populations and management." Academy of Management Journal 57.4 (2014): 929-935.
