Where will they come from? That is a question that is facing organizations and businesses in the United States as they ponder where the next wave of workers will emerge. Organizational recruitment and retention strategies have been challenged to find replacements for a generation of employees on the brink of retirement. This generation, the Baby Boomers, is a generation numbering 76 to 78 million people (Stendardi, 2005), a staggering number when contrasted with a 2009 Department of Labor figure of an employed civilian workforce of 140 million workers. The Boomers’ imminent retirement, sometimes referred to as the “ demographic tidal wave,” will challenge organizations and Human Resource departments to develop programs and policies to address the labor shortage. One of the strategies that have gained increased attention is the idea of a phased retirement. Organizations have turned to the concept of phased retirement to delay the loss of critical employees, ensure the transition of critical skills and knowledge, reduce recruitment and retention costs, and help bridge the labor gap. Normally phased retirement is an informal ad-hoc program that has different definitions and meanings. Lets examine the essence of the strategy and how it may be implemented at Princeton University.
The Essence of Phased Retirement
Phased retirement, as a legal concept, is undefined. It is not because this is a brand new phenomenon that is sweeping across Human Resource departments nation wide. In fact, the idea of phased retirement has been around since at least the 1950’s. Originally referred to as rehires, subcontracting, or consulting, phased retirement is a strategy that has been around for decades, though with a different purpose. Now phased retirement is being viewed as a way for organizations to bridge the labor gulf and for individuals to keep working in order to delay full retirement. The most comprehensive definition of phased retirement is: a collection of programs that allow an employee to systematically transition from full-time employment to full-time retirement over a period of time (Stendardi, 2005). This is an employee-employer relationship that differs from the traditional model. The income of the participant is kept relatively even by substituting the gradual reduction in the employer provided compensation with gradual increases from the employee’s retirement income (Department of Labor (DOL), 2008). To get a better understanding of the genesis of phased retirement, we need to examine the current retirement model and why it no longer applies today.
The widely accepted concept of retirement resembled a three-legged stool. The first leg was the Social Security component. In 1950, there were approximately 30 workers contributing taxes for every retiree. Today that ratio has been reduced to 3:1, and it is projected to fall to 2:1 as the Boomers retire. The effects on the entitlement programs of Social Security and...