The rise of ‘unretirement’: Here’s what that means for business, government and pensioners
Will your pension keep you financially solvent until your 150th birthday?
Research suggests humans could live up to 150 years, as advances in healthcare, improved living conditions, public health initiatives and various social and economic factors continue to lift the average life expectancy.
While longer life expectancy sounds like a purely positive development, a number of economic, social and personal challenges can arise as we all live longer – not least the amount of money needed to retire, as well as the broader economic impact of an ageing population. It’s a theme covered in-depth in the World Economic Forum’s new report, Living Longer, Better: Understanding Longevity Literacy, which provides “a roadmap of the key factors everyone should consider as the world enters a new demographic era”.
One new trend in the workforce, according to data from HR recruitment firm Randstad’s Workmonitor report 2023, is the rise of ‘unretirement’, whereby those already eligible to claim pensions are returning to work for a variety of reasons.
Here’s what is driving the rise of unretirement, and the impact for business, government and pensioners alike.
DISCOVER
What is the World Economic Forum doing about including older people in the workforce?
The rise of ‘unretirement’
The demographic cohort known as the baby-boomer generation, currently aged between 57 and 75 years, is approaching retirement or has already retired. At the same time, fertility rates have been dropping since the 1970s, contributing to the number of individuals exiting the working-age bracket (15-64 years) exceeding those entering it.
Added to that, people have been retiring earlier than usual since 2020, mainly the result of COVID-19-related health and safety concerns, ’The Great Enlightenment’ and government aid, according to Randstad.
But this trend is now swiftly reversing, and we are entering an era of ‘unretirement’.
The ongoing energy crisis, climate crisis and the war in Ukraine have all contributed to economic uncertainty, high inflation and falling government aid, which has led to a shift in people’s perceptions of when they can afford to retire permanently. Last year, 61% thought they’d retire before 65, now only half think this, according to the survey.
Statistic on respondents decision on retirement.
Fewer people now believe they will retire before 65 as a result of high inflation and a faltering economy. Image: Randstad
Not everyone wants to, but for those over-65s who like the idea of working through retirement, it’s more than just a paycheck. For some, they see working as a way to keep connected and busy.
The benefits to business are clear too, as the wave of ‘unretirees’ could help mitigate the global skills shortage that the World Economic Forum’s Future of Jobs Report 2023 shows is the key challenge for evolving businesses.
Figure showing the share of organizations surveyed expecting these factors will limit the transformation of their business.
Companies are looking to the over-50s to plug skills gaps, currently the biggest barrier to business transformatio Image: World Economic Forum
Solving the skills shortage with unretirement
“The impact of ageing populations around the world will reach a critical stage during this decade, as millions more leave the labour market creating a vacuum in economies around the world,” cautions the report, which recommends working with the workforce to help them reach their retirement goals early, and supporting life-long learning.
Infographic illustrating three tips for the workforce’s retirement plans.
Working with the older workforce on retirement goals can help transition gradually, retaining valuable experience and skills in the workplace. Image: Randstad
But already, companies are increasingly looking to the over-50s to plug senior roles that have been historically hard to fill, and are offering the right flexibility to help make returning to work easier.
Plugging the skills gap with experienced and knowledgeable staff who want to work and are over retirement age suits both businesses and ‘unretirees’ alike, and could help ease the growing challenge of increasingly dependent populations.
Ensuring job quality across all age groups – which in turn will support older workers – is the objective of the Good Work Framework, developed by the Good Work Alliance in collaboration with the World Economic Forum and Mercer.
The Framework sets out five workplace goals:
1. Promote fair pay and social justice
2. Provide flexibility and protection
3. Deliver on health and well-being
4. Drive diversity, equity and inclusion
5. Foster employability and learning culture.
Governments can support tackling ageism in the workplace
For some countries, the issue of an ageing population is more advanced than in others. Japan has the highest median age in the world, at nearly 49 years old, whereas the median for the US is 37 and India is just 27. But more and more countries are seeing the number of people in the working-age bracket fall, which is putting pressure on social systems and the economy.
Graph showing the median age from 1980 to 2100.
As median ages rise, countries anticipate increased economic strains, but supporting ‘unretirement’ can help mitigate them. Image: Our World in Data
A rapidly ageing population not only means employment challenges, it can also signify rising healthcare costs, pension benefits and other publicly funded initiatives aimed at the retired.
Andrew Scott, Professor of Economics at the London Business School, says it is “crucially important” to find ways to help older employees stay productive, and supporting them is critical. Governments can help by enforcing employment rights and introducing supportive diversity legislation that protects employees from ageism in the workplace, he concludes.
Infographic showing the respondent’s opinions on retirement.
Most people would like to retire earlier than they think they will be able to, but 2% hope to never retire. Image: Randstad
Most people want to retire by the time they are 51-60, Randstad’s report shows, although most expect it will happen at 65-69. Given the ever-changing economic backdrop, picking the right moment to retire can be daunting. But government support and flexible business approaches can help support the rise of ‘unretirement’ and work to help prolong careers.
Source: World Economic forum