"A lot of companies are worried because there is no room to promote your up-and-coming employees," says Robyn Credico, senior retirement consultant at Towers Watson. "There is no infusion of new, less expensive people doing the work."
A report by the Employee Benefit Research Institute found that, while Americans' confidence in their ability to retire is stabilizing, more people plan to work longer.
More than 30% of workers now say they expect to retire after age 65, compared to 24% in 2005 and 15% in 1995, according to the 2010 Retirement Confidence Survey.
The not-yet-public (as of mid-March) Transamerica Retirement Survey found that 40% of the baby boomers it surveyed plan to work past age 70 or simply to not retire.
Rick Guzzo, a partner at consulting firm Mercer, says companies are seeing significant declines in voluntary attrition. The full impact of delayed retirement could take time to materialize, he says, but some implications seem clear.
"If people can't job hop, that's not creating opportunities" for lower level workers looking to move up.
Many companies were caught off guard last year, and were obliged to resort to more layoffs because they hadn't adjusted their hiring plans to reflect lower retirement and turnover rates, says Byron Beebe, U.S. retirement market leader at consulting firm Hewitt Associates. He says companies are making the adjustment this year.
In the past, companies often offered enhanced pension benefits to induce workers to retire, but "that's harder to do when pensions aren't well-funded," he says. Stock market losses and low interest rates have left most pension plans significantly underfunded.
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