The Impact of Delayed Retirement to Business

The Impact of Delayed Retirement to Business

Industry strategies to mitigate negative impacts of delayed retirement

It is generally believed that aged employees are, less active, more prone to disability and less productive than younger workers. Levanon, Rappaport, Abel & Cheng list the perceived negative impacts of delayed retirement (2012). These they say include; effects on succession planning for younger workers, employee morale, average wage and salaries, health benefits and pension benefits. These factors may not necessarily affect businesses negatively if companies planned for retention of an aging workforce

Succession planning for younger workers

It is important to put in place measures that will ensure that the succession plans of the younger workers are assured. Critical to this is the ability of the company to attract and retain talent. The introduction of mentorship programs is one way to allay these fears and help younger workers plan for their succession, and older workers their retirement (McKimm, Jollie, & Hatter, 2007). A two way mentoring plan maybe one way of assuring young workers that their future is assured.

Employee morale

Retention of older workers may affect employee morale both ways, negatively or positively. Generally high rates of early retirement are associated with reduction in staff morale. The implementation of findings from a successful assessment may help increase employee morale. Often, employees want to contribute ideas to the productivity and growth of the company.  When such ideas are taken favourably and implemented, employee morale is given a big boost.

Average wage bill, salary, health and retirement benefits

To mitigate the effects of an increased wage bill, the company should be able to hire a mixed workforce(Tishman et al., 2012). This helps to stagger the wage bill and make it more affordable to pay. The maintenance of an older workforce may bring the challenge of many disability claims. A good disability management plan will help minimize the effects of disability, either as a financial strain or physical strain through provision of preventive and remedial services to maximize productivity.

Phased retirement/ Hiring of retirees

One of the strategies to retain workers is to adopt the Deferred Retirement Option Plan (DROPS), the city of Philadelphia offers a DROPS option for its workers. Aerospace Corporation (2007) rehires retirees on casual or temporary basis, a strategy that allows retirees to collect full benefits while working.

Motivating young workers

One of the issues perceived to be most challenging in the workforce today, is technological knowhow and the gap between the older and the younger generation as concerns technology. Younger workers may be motivated if assigned reverse mentorship roles especially in technologically-oriented fields.

The strategy of having the younger workforce mentor the older is especially crucial in companies retaining or hiring retirees. The sense of superiority in a certain aspect of the job makes the younger workers more inclined to stay, and have a sense of belonging. The younger generation seeks to belong(Hamilton, 2009). This quest can be fulfilled when companies show commitment to the stated company values, awareness of the employee needs and employee retention strategies.


Does recession have anything to do with current delayed retirement trends?

The greatest link between the recession and delayed retirement is financial unpreparedness(Levanon et al., 2012). Workers during the recession were either laid off or changed jobs so rapidly, which meant they could not save well. The result of this is that more and more workers of the baby boomer generation are engaging in work even after attaining the retirement age.


Hamilton, J. (2009). Trends and Strategies in Recruiting and Retaining Talent. Journal of Petroleum Technology, (May). Retrieved from

Levanon, G., Rappaport, A., Abel, A., & Cheng, B. (2012). Recession Aftermath-What the Delayed Retirement of Mature Workers Means for Business (No. A-0375-12-EA) (pp. 1–9).

McKimm, J., Jollie, C., & Hatter, M. (2007). Mentoring: theory and practice. Retrieved from

Mintzberg, H. (2007). How Productivity Killed American Enterprise, 1–13. Retrieved from

Tishman, F. M., Van Looy, S., & Bruyère, S. M. (2012). Employer strategies for responding to an aging workforce (pp. 1–39). New Brunswick. Retrieved from

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