Back to work: as more post-retirees return to the workplace, insurers and benefit brokers are designing benefit packages that incorporate their needs.

After retiring four years ago from a state job at a developmental center and then going through a divorce, Janice of North Dakota found herself in need of additional income. Now, the 69-year-old said she's back in the work force part time at a local pharmacy to help supplement her income to pay bills and pay for her necessary medications.

Janice isn't alone. The aging work force is a growing demographic. About 14% of today's labor pool is 55 or older, and the number is expected to reach 19% by 2012, according to AARR. Millions of workers are either working past traditional retirement age or are returning to the workplace post-retirement due in part to financial constraints and the need for socialization.

The aging of the baby boomer generation plays a significant role in driving the growing mature work force. The first of the estimated 78 million individuals who fall into the baby boomer group--those born between 1946 and 1964--will reach full retirement age in 2011, leaving many unfilled jobs in their wake. In addition, the U.S. Bureau of Labor Statistics predicts that the number of U.S. workers between the ages of 25 and 44 won't increase at a fast enough rate to replace baby boomers.

Some group life and health insurers and benefit brokers are working with employers to design benefit packages that include the benefits needs of older workers, such as flexible work arrangements and health coverage.

On the Job

Actor and comedian George Burns may have said it best when he said, "I can't get old; I'm working. As long as you're working, you stay young."

Many seniors agree, and it's just one of several reasons a growing number of older workers are remaining in the work force beyond age 65.

According to results of a recent Prudential Financial study, during the first 10 years of retirement, seven in 10 Americans expect to continue working to supplement income and continue to build their nest egg. In the second 10 years of retirement, 80% said health care was a top concern, with many retirees expecting to require nursing-home services and/or run out of money.

In addition, a growing number of individuals over age 50 are falling deeper into debt. Despite the fact that collectively the over-50 age group is still the nation's wealthiest, the Consumer Bankruptcy Project, a joint project of scholars at six American universities, found that more than 450,000 of these individuals filed for bankruptcy in 2002.

For those ages 60 to 78, Chuck Underwood, founder and president of Cincinnati-based consulting firm, the Generational Imperative, refers to them as the "silent" generation. He said several financial drivers are forcing many in the generation back to work, including that they were the hardest hit among all age groups by the recent executive corruption scandals that wiped out many retirement nest eggs. Approximately $678 billion in retirement savings has reportedly been lost as a result, he added. "In addition, African Americans in this generation bridge the pre- and post-civil rights movement era, and many haven't had the same career and financial opportunities that white males have enjoyed." He also said there's now an influx of "silent generation" females who are widowed or divorced and living on their own, absent a spouse's income or retirement benefits to support them. The number of females in the work force between the ages of 55 and 64 has steadily increased from 49.2% in 1985 to 56.6% in 2003, according to the U.S. Department of Labor.

According to Prudential's survey, seven in 10 Americans are most concerned with short and midterm spending, while placing retirement savings a distant third priority. In fact, 60% of Americans indicated they are behind schedule ha saving for retirement and the vast majority now expect to work longer and/or continue working in some way in retirement.

Health Care a Concern

The loss of pension benefits, stock losses due to the recent downturns in the market, and the escalating costs of health care and prescription drugs are, in part, driving some older adults back into the work force.

"For many mature workers nearing traditional retirement age, it's a top-of-mind concern to maintain continued access to affordable health-care insurance and prescription drug benefits, particularly where the worker is tinder 65, the age at which most older adults qualify for Medicare," said Marci LeFevre, program coordinator with AARP's Work and Financial Security Team. "Someone with the expectation of retiring at age 62, for example, may realize that paying out of pocket for these benefits can be expensive. The need for health-care benefits is one of the factors that workers between the ages of 50 and 65 cite most often when asked to identify major reasons to work in retirement."

Mature workers also find other workplace benefits appealing to them, LeFevre said. In addition to health insurance coverage, many are seeking jobs that offer employee benefits that can help boost their financial security in their retirement years. The ability to continue to accrue pension benefits, contribute to an employer-sponsored 401(k) with a company match, and benefit from the provision of financial planning education materials and tools to help plan for retirement can affect a mature worker's decision to continue working with a particular employer.

Flexibility is also an important benefit. Some employers are accommodating mature workers' needs by offering flexible work arrangements such as part-time employment, flexible work hours, telecommuting, job sharing and project consultation opportunities.

The Benefit of Benefits

"The historical perspective has been that benefits end at 65, but we have enhanced product features to go beyond that, in addition to products that focus on people going back to work part time or on modified work schedules," said Eric Hamilton, associate vice president of disability products for Philadelphia-based Cigna Group Insurance. He said the company works with Social Security, resulting in a plan provision that's flexible and is evolving to interface with Social Security qualifications. "Most companies focus on employee benefits around the medical equation, and we've tried in our offerings to provide services that complement both that equation and the disability equation. We know that older individuals who are chronically disabled drive medical costs at a rate of 18 times higher than all other employees, so we're designing our disability products to try to keep older workers productive and available to employers."

Phased retirement programs increasingly are desired by some older workers; however, many organizations haven't yet jumped on board with these offerings. In phased retirement, workers approaching retirement age make a gradual transition into full retirement by reducing hours or job responsibility. According to a recent AARP survey, two in five workers age 50 to 65 said they were interested in phased retirement, and nearly 80% of those said that availability of such programs at work would encourage them to keep working longer.

Some organizations are now beginning to offer other incentives, such as elder care and child-care benefits. These coverages aid the growing number of post-retirees that fall into the "sandwich generation'--those faced with caring for both aging parents and for children or grandchildren.

Because regulations prohibit organizations from segmenting benefits by age, companies aren't able to gear benefit packages specifically for older workers. However, Harriet Hankin, national director of business development for Willis Benefits Practice Group, believes that may change. "I think the government will work hand-in-hand with the pressures of baby boomers becoming the older workers and will work beside companies to design appropriate benefits to meet their needs," she said.

Meeting the Needs

Post-retirees know what they need from employers, but are companies gearing up for an older labor force?

"The companies we've spoken with aren't yet putting a lot of effort into these workers," said Hankin. "However, forward-thinking companies are now beginning to prepare for it by figuring out bright ways to attract and retain these valuable workers."

One of those leaders is home improvement giant The Home Depot. The company is one of 13 employers that AARP has selected as "Featured Employers" in its Workplace Initiative to recruit and retain older individuals. (See "Calling All Mature Workers," page 65.) The company is meeting the needs of its mature labor pool by offering flexible schedules and benefits to both full-time and part-time associates, including medical, dental and vision; short-term disability; life insurance; tuition reimbursement; a discounted stock purchase plan; and the opportunity to share in the company's growth through its Success Sharing program. Some older workers also benefit from the company's "snowbird" program in which associates can work in different locations throughout the year. For instance, an older employee can work in a Florida store while living in the state for the winter and then work in a hometown store during the remainder of the year.

It's important that employers are aware of the impact their aging work force may have, said Kenneth Mitchell, head of corporate return-to-work program development for UnumProvident Corp. "Sometimes senior managers have a general sense of this but don't have an accurate picture as to what their work force feels and looks like." UnumProvident also helps employers understand the impact older workers may have on the organization--from both a health-care and productivity standpoint. "We are able to align lost time management policies and practices with the type of retirement program companies have, such as whether they have programs with cliff retirement where an individual reaches a certain age and then retires, or de-escalation with a transition into retirement so companies aren't immediately losing talented employees."

In addition, it's important that employers be aware that older individuals often are at greater risk for chronic diseases, such as arthritis, diabetes and coronary artery disease, said Mitchell. UnumProvident designed its "Productive Aging" Corporate Education programs to inform employers on older workers' patterns of lost time and types of health-care situations and conditions they may encounter. "That way [employers] can begin to design a workplace that creates and protects the productivity of their older workers," he said.

In addition, companies are starting to re-evaluate the needs of their Medicare population. "There are now so many options about something that's so complex and important--finding trusted sources for information and how people will make choices about, for instance, staying where they are, whether or not to join a prescription drug program or whether to join a Medicare Advantage plan. These are things now occupying the minds of benefits consultants and employers," said Dr. Arthur Southam, senior vice president, product and market management, for Kaiser Foundation Health Plan Inc. and Kaiser Foundation Hospitals.

While companies continue to enhance their older worker relationships, Hankin doesn't foresee any major immediate changes--at least not for the next five to seven years. Companies will then likely begin to change policies, become more flexible and begin to work on true choice benefits, such as flexible work hours, she said. "Traditional benefits being flexible as well as flexible policies will help companies prepare for a stage when we really need the older worker."

Ideal Candidates

Once-held stereotypes that mature workers tend to be less interested in working, are more unhealthy and are less motivated are being debunked. In fact, employers are finding the contrary: Older workers are proven to be more dependable, exhibit lower turnover, have more positive work values, and have less frequent absenteeism rotes. In addition, they serve as good mentors to younger colleagues.

Borders Inc. finds all these qualities in its mature work force, said Suzanne Trevisan, senior manager of specialty recruiting. Nearly 16% of the Borders labor pool is over the age of 50, and Trevisan expects by 2010 that 20% to 25% of its total work force will fall into that age sector.

The aging work force continues to change. "A 65-year-old in 2005 is much different from a 65-year-old in 1940, thanks in part to great advances in health care that have allowed people to age very well," said Dr. Sharon Brangman. a member of the American Geriatric Society's Board of Directors; professor of medicine, chief of the division of geriatrics and fellowship director of geriatric medicine at the State University of New York; and director of the CNY Alzheimer's Disease Assistance Center. "And when they retire, companies are losing vast amounts of knowledge and experience that's hard to replicate." She said in part this is forcing society to redefine traditional retirement. "We're seeing more people who aren't happy following the old cliche of retiring to Florida and playing bingo, but instead have invested so much into work and relationships pursued from work and don't want to just end it when they reach some magical age that was really arbitrarily determined years ago," she said.

In addition, the disability rate among older Americans continues to decline. In 1999, the disability rate dropped to 19.7% from 26.2% in 1982, according to a study by Duke University's Center for Demographic Studies.

There are also other benefits older workers enjoy. "From a health perspective, continuing to work keeps their brains stimulated and helps prevent them from feeling isolated and depressed," said Brangman. "It helps keep them busy, so they don't have time to think about health problems that may become the focus of their lives."

Key Points

* About 14% of today's work force is 55 or older, and the number is expected to reach 19% by 2012.

* Post-retirees often return or remain in the work force due to economic needs, desire for socialization or need for benefits.

* Older workers often look for other benefits, such as short- and long-term disability, life insurance, retirement incentives and elder care.

Learn More

Cigna Insurance Group Inc. A.M. Best Company # 68124 Distribution: Independent agents, brokers, consultants

Kaiser Foundation Health Plan Inc. A.M. Best Company # 64585 Distribution: National consulting houses, regional brokers and brokerage firms, membership exchanges, direct

MetLife Inc. A.M. Best Company # 06704 (Metropolitan Life Insurance Co.) Distribution: Career agents, LTC specialists, independent agents, wirehouses, banks and contractual through AARP and federal

Prudential Insurance Company of America A.M. Best Company # 06974 Distribution: Career agents, brokerage general agencies, independent financial advisers, banks, wirehouses

Unum Life Insurance Company of America (UnumProvident) A.M. Best Company # 06256 Distribution: Independent brokers and agents, corporate marketing agreements, benefits consultants, direct sales force

For ratings and other financial strength information about these companies, visit www.ambest.com

Calling All Mature Workers

The AARP Foundation recently partnered with 13 major companies to help Americans who are 50 and older to return to the work force. The new AARP Work Force Initiative includes highlighting "Featured Employers," companies that have committed to an aggressive program of recruiting, hiring and retaining mature workers.

Featured employers include Adecco, AlliedBarton Security Services, Borders Group Inc., Express Personnel Services, Johns Hopkins Health Systems, Kelly Services, Manpower Inc., MetLife Inc., Pitney Bowes, Principal Financial Group, The Home Depot, Universal Health Services and Walgreens.

For MetLife, the initiative is helping attract talented workers to its labor pool of already more than 14,000 individuals who are 50 and older. MetLife has been partnering with AARP for a number of years on various initiatives, and it's the exclusive provider of long-term-care insurance for AARP members. "This current initiative fits well with one of our core values--'people count,'" said James Heston, senior vice president of human resources at MetLife. "We know full well that in the current marketplace where we're all competing for top talent, you need people with different perspectives to drive us forward in innovation and bring various perspectives to the work force."

Through the initiative, AARP members can log onto the association's Web site to scan job openings. They're then connected to the featured employers' Web sites.

"AARP is an excellent organization and has a very broad constituency. This connection helps us foster a very inclusive environment and grow an important talent source," said Heston. During its initial first four months, MetLife received more than 6,500 hits to its dedicated AARP Web page.

At a Glance: An Aging Work Force

Future Growth
People over the age of 65 are
expected to be 20% of the
population by 2030.
No. of people 65+ (Millions)

1990     31.2
2000     35.0
2010     40.2
2020     54.6
2030     71.5

Source: Dept. of Health and Human Services
Administration on Aging

Note: Table made from bar graph.

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