Have you ever had 30+ years of experience walk out the door due to a Retirement?
Baby Boomers and the imminent “Brain Drain”
During the next few years, companies will be hit hard by “the largest occurrence of Brain Drain the U.S. workforce has ever seen,” according to Staffing Industry Analysts. What do we mean? Consider the following facts:
- Baby Boomers (the generation born between 1946 and 1954) make up only 24.3% of the total U.S. population, but they account for a disproportionate 31% of the workforce.
- 56% of Baby Boomers hold leadership positions in their companies.
- Full retirement age, as determined by the Social Security Administration (SSA), is 66 for this entire generation.
- By 2020, all Baby Boomers will be 65 or older.
- Also by 2020, 50% of the workforce will be made up of Millennials.
The U.S. workforce is about to undergo a fundamental shift, and quickly. Baby Boomers, many with decades of experience in their career industries, will be leaving the workforce in droves as they hit retirement age. At the same time, Millennials will make up the majority of the workforce and will find themselves lacking mentors to pass on valuable industry knowledge.
Baby Boomers in retirement: prime candidates for contracting
For a variety of reasons, 54% of workers aged 60 and older will end up back at work on a part or full-time basis after retiring, according to a 2015 CareerBuilder survey. With their skills and experience being heavily in-demand and their own need for flexibility and health benefits, these are prime candidates to contract through an ACA-compliant back-office.
For a number of current or soon-to-be retirees, retirement may not be turning out the way they envisioned. Whether due to investment portfolios that took a hit in 2008 or other unanticipated financial hardships, many struggle to make ends meet in retirement. Of the workers aged 60 and older who are delaying full retirement, 78% cite their household financial situation and 60% cite the need for health insurance and benefits as their reason.
Even for those pensioners whose financial situations are comfortable, retirement doesn’t always deliver enough of the mental stimulation and satisfaction that working life provided.
Top industries for retiree restaffing
Experts agree that the “Brain Drain” will be experienced most acutely in knowledge-intensive industries, making those same industries ideal for contracting retirees. Top examples include the following:
- Finance/Accounting
- Engineering
- Information Technology
However, management and other leadership positions in every industry are going to be affected by the “Brain Drain,” thanks to the large percentage of Baby Boomers currently in those roles.
Retiree restaffing: how are Social Security benefits handled?
For those Baby Boomers who have retired or semi-retired, how will working on contract impact their Social Security (SS) benefits? Many may not realize that they CAN receive Social Security retirement benefits and work at the same time. Several potential scenarios exist.
- Scenario 1: You are 66 or older, receiving full SS benefits, AND you are making any amount of income. Benefits are not affected.
- Scenario 2: You are between ages 62 and 65, receiving early SS benefits, AND you make less than the 2015 income limit of $15,720. Benefits are not affected.
- Scenario 3: You are between ages 62 and 65, receiving early SS benefits, AND you make more than the 2015 income limit of $15,720. Essentially, the Social Security Administration (SSA) will deduct $1.00 from your benefit payment for every $2.00 earned above the annual limit. BUT monthly benefit amounts will be higher upon reaching full retirement age because your recalculated monthly amount will give you credit for unreceived benefits.
Note: This will not, on average, reduce your total lifetime value of benefits. In fact, benefits may actually increase, since you will be continuing to pay Social Security Administration taxes on earnings as long as you work. The SSA will check yearly to see if your additional earnings will increase your monthly benefit amount and adjust it accordingly.
If you or your organization would be interested in learning more about our Hazeltine's Restaffing Services call our offices at 832-371-6235