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Comptroller General's Forum: 

United States Government Accountability Office: 


February 2007: 

Highlights Of A GAO Forum: 

Engaging and Retaining Older Workers: 


GAO Highlights: 

Highlights of GAO-07-438SP, a GAO forum. 

Why GAO Did This Study: 

In the future, older Americans are expected to be a larger share of the 
U.S. population, live longer, and spend more years in retirement than 
previous generations, and by 2025 labor force growth is expected to be 
less than a fifth of what it is today. Without major increases in 
productivity or immigration, low labor force growth will ultimately 
lead to slower economic and federal revenue growth. This in turn will 
accentuate the overall pressure on the federal budget, which will face 
increased claims for Medicare and Social Security benefits while 
relatively fewer workers pay into the benefits systems. Moreover, the 
possible loss of many experienced workers as the baby boomers retire 
could lead to further adverse effects. If older Americans were to 
remain in the labor force longer, it could ease some of the pressures 
on Social Security, supplement individual retirement incomes, and help 
finance health care. However, researchers have suggested that barriers 
may impede some older workers who want or need to work. GAO convened 
this forum to address the issues surrounding engaging and retaining 
older workers. Participants included experts representing employers, 
business and union groups, advocates, researchers, actuaries, and 
federal agencies. These highlights do not necessarily represent the 
views of any one participant or the organizations that these 
participants represent, including GAO. 

What GAO Found: 

Forum participants discussed obstacles, best practices, and lessons 
learned from programs to help those older workers who can to work 
longer and better prepare for retirement. Participants also considered 
strategies for encouraging organizations to implement practices that 
will result in more opportunities for older workers. 
Key Obstacles:
* Some employers’ perceptions about the cost of hiring and retaining 
older workers are a key obstacle in older workers’ continued 
employment; total compensation and training costs were seen as primary 
* Workplace age discrimination, the mismatch of workers’ skills and 
availability of jobs because of changes in the economy, as well as the 
need to keep skills up to date, are all challenges facing older workers.
* There is a more limited pool of interested workers because of 
financial incentives to retire as soon as possible, workers’ desire to 
retire or change careers, and some jobs’ requirements that make 
continued work unappealing or unfeasible because of health issues.
* Legal and regulatory requirements hinder hiring and retaining older 
Best Practices and Lessons Learned: 
Participants shared examples of best practices and lessons learned, 
such as:
* Use nontraditional recruiting techniques such as partnerships to help 
identify and recruit older workers.
* Employ flexible work situations and adapt job designs to meet the 
preferences and physical constraints of older workers.
* Offer the right mix of benefits and incentives to attract older 
workers such as tuition assistance, time off for elder care, and 
employee discounts.
* Treat all employees in a fair and consistent manner and employ a 
consistent performance management system to prevent age discrimination 
* Provide employees with financial literacy skills to ensure they have 
a realistic plan to provide for retirement security. 
* Conduct a national campaign to help change the national mindset about 
work at older ages. 
* Hold a national discussion about what “old” is to help change the 
culture of retirement.
* Strengthen financial literacy education to help workers prepare to 
* Create a clearinghouse of best recruiting, hiring, and retention 
practices for older workers. 
* Make the federal government a model employer for the nation in how it 
recruits and retains older workers. 
* Create a key federal role in partnerships to implement these 
* Consider specific legislation or regulations to increase flexibility 
for employers and employees to create new employment models. 


To view the full product, including the scope and methodology, click on 
the link above. For more information, contact Barbara Bovbjerg at (202) 
512-7215 or 

[End of section] 



Introduction from the Comptroller General of the United States: 

Key Obstacles to Engaging and Retaining Older Workers: 

Best Practices and Lessons Learned: 

Suggested Strategies: 

Appendix I: List of Participants: 

Appendix II: Agenda: 

Related GAO Products: 


DB: defined benefit: 
DC: defined contribution: 
DROP: deferred retirement option plan: 
ERISA: Employee Retirement Income Security Act: 

United States Government Accountability Office: 
Washington, DC 20548: 

Introduction from the Comptroller General of the United States: 

The aging of the baby boom generation, increased life expectancy, and 
declining birth rates have created a demographic tsunami that poses 
serious future challenges for individuals, employers, and the economy. 
In the 21st century, older Americans are expected to make up a larger 
share of the U.S. population, live longer, and spend more years in 
retirement than previous generations. At the same time, by 2025 labor 
force growth is expected to be less than a fifth of what it is today. 
Without a major increase in productivity or higher than projected 
immigration, low labor force growth will ultimately lead to slower 
growth in the economy and slower growth of federal revenues. These 
circumstances in turn will accentuate the overall pressure on the 
federal budget, which will be encumbered with increased claims for 
Medicare and Social Security benefits while relatively fewer workers 
are paying into the benefits systems. 

An additional concern is the possible loss of many experienced workers 
as the baby boomers retire. Employers face challenges in engaging and 
retaining older workers, that is, recruiting seasoned workers, adapting 
job designs and making workplace accommodations, and keeping workers 
past the traditional retirement age. Some research has indicated that 
the impending retirements of the baby boom generation and the decline 
in the growth of the labor supply could affect certain industries and 
occupations more than others. These trends could create gaps in skilled 
workers and managerial occupations in particular, leading to further 
adverse effects on productivity and economic growth. 

As older Americans live longer and spend more years in retirement, they 
will face several challenges that contribute to the growing insecurity 
of retirement income. First, while more older Americans are working, 
there is a cultural expectation that workers should claim Social 
Security benefits as soon as they become eligible; many workers claim 
them prior to reaching the full retirement age, resulting in lower 
monthly payments.[Footnote 1] Second, workers bear greater risk and 
responsibility for their retirement savings than in the past. About 
half of U.S. workers do not have a pension plan through their employer, 
and those who do are less likely than in the past to be covered by 
defined benefit (DB) plans, which pay a specified amount per month 
based on the workers' pay and job tenure. Employers have increasingly 
shifted from traditional DB to defined contribution (DC) plans, such as 
401(k) plans, which are based on contributions and investment returns 
on individuals' accounts. DC plans place greater responsibility on 
workers to make voluntary contributions and prudent investment 
decisions. However, in 2005, the personal savings rate declined to the 
point at which Americans spent more than they received in disposable 
income. Rising health care costs have also made health insurance and 
anticipated medical expenses such as the potential need for long-term 
care increasingly important issues for older Americans. A long-term 
decline in the percentage of employers offering retiree health coverage 
has leveled off in recent years, but retirees face an increasing share 
of costs, eligibility restrictions, and benefit changes that contribute 
to an overall erosion in the value and availability of coverage. Thus, 
as older Americans face less secure retirements, many may need to 
continue working. 

If a larger proportion of older Americans were to remain in the labor 
force longer, even on a part-time basis, it could mitigate some of the 
economic pressures on Social Security as well as supplement individual 
retirement incomes and help finance health care. However, researchers 
have suggested that age discrimination and pension statutes and 
regulations, among other factors, may present barriers that make it 
difficult for some older workers who want or need to work to do so. 

While many, including GAO, have reported on these trends and their 
likely consequences, not enough has been done to address them. Many 
employers are still unaware of these trends, and few have implemented 
programs to engage or retain older workers. Similarly, despite their 
increased risk, many workers are not adequately preparing for 
retirement. With the first baby boomers becoming eligible for Social 
Security retired worker benefits in 2008, the time to prepare for these 
challenges is running out, and employers and employees, as well as 
government, have a role to play. 

GAO convened this forum on December 5, 2006, to address the issues 
related to engaging and retaining older workers. The forum brought 
together a diverse array of experts, including employers from AARP's 
"Best Employers for Workers Over 50" program and representatives from 
business groups, unions, advocates, researchers, actuaries, academia, 
and federal agencies. Forum participants discussed obstacles, best 
practices, and lessons learned from programs to help older workers to 
work longer and better prepare for retirement. Participants also 
considered strategies for encouraging more organizations to implement 
these activities on a larger scale. (See app. I for a list of forum 
participants and app. II for the forum's agenda.) This forum was 
designed for the participants to discuss these issues openly, without 
individual attribution, in order to facilitate a rich and substantive 
discussion of these issues. 

This report summarizes the ideas and themes that emerged at the forum, 
the collective discussion of participants, and comments received from 
participants based on a draft of this report. The highlights summarized 
in this report do not necessarily represent the views of any individual 
participant or the organizations that these participants represent, 
including GAO. 

I want to thank all the forum participants for taking the time to share 
their knowledge, insights, and perspectives. We at GAO will benefit 
from these insights as we carry out our work for the Congress and the 
country. I look forward to working with the forum's participants on 
this and other issues of mutual interest and concern in the future. 

Signed by: 

David M. Walker: 
Comptroller General of the United States: 

February 28, 2007: 

Key Obstacles to Engaging and Retaining Older Workers: 

We presented the results of a survey participants completed prior to 
the forum that asked them to identify obstacles employers face in 
engaging or retaining workers who are past the traditional retirement 
age, factors that keep workers from working beyond the traditional 
retirement age, and any legal or regulatory requirements that impede 
hiring or retaining older workers. The key obstacles cited by 
participants in the survey and during the forum discussion focused on 
employer perceptions about the cost of hiring and retaining older 
workers, perceptions about older workers' skills and abilities relative 
to available jobs, skill gaps among older workers, and the limited pool 
of workers who want to work past traditional retirement age. 

Employers' Concern about Costs Associated with Older Workers: 

Participants stated that some employers' perceptions about the cost of 
engaging and retaining older workers is a key obstacle in older 
workers' continued employment. Participants generally agreed that total 
compensation and training costs are among the most important concerns, 
although at least one participant challenged employers' perceptions 
that the costs of older workers exceed the return on investment. 

* Employers are concerned about older workers' total compensation costs 
relative to younger, less experienced workers. In particular, 
participants cited concern about the rising cost of health insurance. 
However, at least one participant challenged the assumption that older 
workers cost more, citing the value that older workers bring to a 

* Employers perceive that older workers cost more from a training 
perspective. For example, some participants stated that younger workers 
may have better computer and other technological skills. Also, 
employers are concerned about investing in training older workers 
because they may retire before the company recovers its training 

Perceptions about Older Workers: 

Perceptions about older workers' skills and abilities were cited as a 
key obstacle to engaging and retaining older workers. Participants 
generally agreed that workplace age discrimination is a key obstacle to 
older workers' continued employment. 

* Participants noted that workplace culture and employer perceptions 
can be unfriendly to older workers. Participants stated that many 
companies have not learned to place high value on their experienced 
workers, and they do not understand that much of their organization's 
intellectual capital and institutional memory can reside within their 
older employees. Perceptions held by employers include the idea that 
older workers will produce a lower quality and quantity of work, their 
poorer health will have an impact on productivity, they may be less 
flexible and more resistant to change, and have less capacity for 
training in new technology. Employers may also have the perception that 
as workers near retirement age, they disengage and await their 
retirement date. Employees may have their own perceptions about how 
they are valued. One participant said older workers may believe their 
life experiences will be disregarded. Another participant mentioned 
that older workers may not even apply for jobs because they often 
assume they will not get hired. 

Skill Gaps among Older Workers: 

Changing industries and required job skills can be an obstacle for 
older workers. Participants said that layoffs due to changes in the 
economy, as well as the need to keep skills up to date or retrain for a 
new career, are all challenges facing older workers. 

* Layoffs may affect older workers more than younger workers. Some 
participants expressed concern that employers may lay off older workers 
sooner than younger workers when downsizing. More specifically, one 
participant noted that declining older industries tend to employ older 
workers. Another participant mentioned that layoffs due to business 
restructuring in both manufacturing and professional service industries 
affect older workers disproportionately. Positions of some low-skill 
older workers may have been automated, eliminated, or outsourced, 
according to one participant. In many cases an employer may have 
changed the enterprise in which it had been engaged. For example, a 
computer hardware manufacturer who has matriculated to a software or 
service enterprise will no longer need the hardware engineers and other 
employees associated with manufacturing processes. 

* Older workers may lack training to keep skills up to date or make a 
career change. In general, participants recognized the difficulties 
older workers sometimes have in finding employment that is comparable 
in skill level to their previous occupation. One participant stated 
that access to and financing of training is an issue, especially for 
career changers. Older workers may have no career adviser program to 
identify their skills and match them to a new position on a part-time 
basis that would benefit their organization. Yet another participant 
mentioned that there may be structural barriers to employers 
identifying suitable applicants and high-skilled workers finding 
suitable employers. Finally, one participant stated that language 
barriers may be an issue for older legal immigrants in lower-skilled 
jobs who have limited English proficiency. 

Strong Incentives for Older Workers to Retire: 

Participants generally agreed that there is a limited pool of workers 
interested in staying employed because of financial incentives to 
retire at the early retirement age, workers' desire to retire or change 
careers, and some jobs' requirements that make continued work 

* Participants cited the structure of pension plans and Social Security 
as retirement incentives. 

- The structure of traditional defined benefit retirement plans 
encourages retirement because some pension statutes and regulations 
have traditionally prohibited working for the same employer while 
receiving benefits.[Footnote 2] 

- The Employee Retirement Income Security Act's (ERISA) anticutback 
rule prohibits employers from making amendments to their pension plans 
that would have the effect of eliminating or reducing an early 
retirement benefit. This may make it slow and complicated for employers 
to amend plans to raise retirement ages. 

- The availability of Social Security at age 62 and high effective tax 
rates on earnings may encourage some workers to retire. They may view 
the after-tax income from continued work as too little to compensate 
for the trouble and effort. 

- Workers who receive Social Security benefits and have not yet reached 
the normal retirement age may have their benefits reduced because of 
the "retirement earnings test." More specifically, if an early retiree 
worker's annual earnings exceed a certain threshold, $1 of Social 
Security benefits will be withheld for every $2 or $3 earned, depending 
on whether or not the worker reaches the normal retirement age that 

- Disincentives also exist for workers with disabilities who generally 
must show that they cannot work in order to qualify for Social Security 
disability benefits. 

* Workers want to retire or change careers. Participants expressed 
concern about a "culture of retirement" in the United States that leads 
many workers to retire at the earliest available opportunity. Some of 
these workers think they have the means to retire, but may not. Also, 
the focus on wellness and healthy lifestyles has created a frame of 
mind that retirement is another phase to enjoy an active lifestyle but 
in a different setting. Many skilled workers are likely to want to 
venture into another career. 

* Participants listed job requirements, such as inflexible work 
schedules, lack of suitable work, physically demanding work, and family 
needs, such as caregiving, as other disincentives to continued work. 

- Lack of employer flexibility with regard to hours and vacations and 
phased retirement was one of the most frequently cited concerns. 

- The availability of jobs that match workers' preferences is another 
issue. While one participant noted that older workers often do not want 
to learn new skills, many participants mentioned the unavailability of 
work that is suitable to being part-time labor, the challenge of 
generating and managing consulting assignments for high-skilled 
workers, and limitations of human resource and pension systems that do 
not facilitate shifting to a less stressful role in the company as 
potential barriers. Participants also mentioned job location as 
influencing a job's desirability. Some older workers look toward 
relocation later in life or desire geographic mobility to spend more 
time with family. 

- Most participants agreed that jobs that are too physically demanding 
encourage retirement. One participant noted that work capacity changes 
as people age and that health problems are realities for those over the 
age of 40. As a result, employers need to consider and address 
functional work capacity issues like cancer and back pain. Managing 
chronic diseases is critical to and can help hold health care costs 

- Family caregiving responsibilities frequently compete with work past 
traditional retirement age. Participants noted that caregiving can be a 
particularly big issue for workers who, whether for financial or 
cultural reasons, take care of their relatives or spouses at home. 

Other Factors Also Limit Older Workers: 

* Legal and regulatory requirements hinder hiring and retaining older 

- Employers fear age discrimination lawsuits related to hiring and 
firing decisions based on the Age Discrimination in Employment Act. One 
participant stated that nondiscrimination laws create a disincentive to 
hire older workers or implement phased retirement. 

- Medicare's Secondary Payer rule prohibits employers of a certain size 
from terminating employees' health benefits when they become eligible 
for Medicare at age 65. This means that older workers continue to be 
entitled to the same health benefits as workers under age 65 and the 
employer's plan continues to be the primary health insurer and payer. 
In these cases, Medicare becomes the supplementary insurer. 

- The tax code and Internal Revenue Service regulations permit 
employers to offer early retirement windows, provided certain 
conditions are met, that give employees an incentive to retire early. 

- The Fair Labor Standards Act limits most employers' ability to 
provide compensatory time off, in lieu of paying for overtime, and 
therefore reduces employers' incentive to provide flexible work 
arrangements to hourly workers. 

- Mandatory retirement ages in certain professions, such as law 
enforcement officers and airline pilots, have made it difficult for 
employers to retain older workers. 

* Succession planning may conflict with retaining older workers. One 
participant noted that workforce management is generally geared toward 
replacing older workers with younger workers. Another participant 
stated that employers often view lower-skilled older workers as 
"expendable," and therefore do not place high value on their retention 
or training and promotion. Finally, one participant noted that 
employers seek the flexibility to engage and retain those workers 
capable of performing the job at hand as well as learning new skills 
for the long run. 

* Employers may not perceive a need to engage or retain older workers, 
or may not place a high priority on the issue. Participants disagreed 
about whether or not companies are aware of the need to engage or 
retain older workers. One participant stated that some companies may 
not yet realize that the population is aging and that there are fewer 
younger workers to hire. Another participant cited an example of one 
manufacturer that actively retains older workers. A few participants 
observed that while companies are becoming more aware of the growing 
need to hire older workers, the issue as a whole is a nonpriority for 
them. Businesses have generally been reluctant to commit to doing 
something about the issue. One participant stated that employers 
understand these complex issues, but those in decision-making roles may 
be avoiding the responsibility because they won't be around to deal 
with the problem in the future. Also, officials in human resources 
departments of small and midsized companies are so busy that they 
cannot address these issues. Another participant stated that 
corporations are only able to focus on one crisis at a time, and that 
they will not act until there is a crisis. 

* Obstacles differ by industry and type of worker, but are treated 
uniformly in legislation and regulations. Participants agreed that the 
types of problems facing organizations and employees differ depending 
on the industry and that it is important to talk about these issues in 
terms of different industries and different types of workers. Although 
these problems are different for different industries, the legislative 
and regulatory environment generally does not distinguish among 
industries regarding older worker issues. One participant cautioned 
against policies that promote downward mobility or have unintended 
consequences for younger workers or those with low incomes. 

Best Practices and Lessons Learned: 

Forum participants offered a range of insights, views, and examples 
from their experience and expertise in educating employers and in 
helping older workers to work longer and better prepare for retirement. 
Many of our forum employer participants, who have been recognized as 
best employers for older workers, have found that new approaches and 
incentives may be needed to engage and retain older workers. Other 
participants from business groups, unions, advocates, researchers, 
actuaries, academia, and federal officials also shared their 
experiences and knowledge of best practices and lessons learned. One 
key thread that emerged throughout the discussion was that treating 
employers and older workers with a one-size-fits-all approach would be 
a mistake for policymakers, as there are a variety of employers with 
different needs and a variety of workers with different knowledge, 
skills, abilities, and goals. In order to effectively engage older 
workers, participants noted the need for new recruiting approaches, 
workplace flexibility, the right mix of benefits and incentives, a 
consistent performance management system, and the need for older 
workers to feel they are valued. There was also general agreement that 
there is a need to improve the financial literacy of workers and help 
them better prepare for retirement. 

Educating Employers about Older Workers: 

Participants discussed methods they are using to educate employers on 
why they should care about engaging and retaining older workers. One 
participant's organization is using community-based solutions in 
working to educate small employers about the need to hire older workers 
and assists them in addressing the issue. For example, this 
organization has been working with another organization in four 
communities to develop a local curriculum on hiring and retaining older 
workers. Using employer panels and other tools, this organization 
educates businesses about what is going on in their areas. 

Engaging and Retaining Older Workers: 

New Approaches Being Used to Engage Older Workers: 

One participant said that it is important to recognize that employers 
cannot all rely on the same recruiting techniques if they want to reach 
older workers. Another participant found that traditional recruiting 
mechanisms--job boards and newspapers--only find workers who are 
actively looking for work. To enhance their recruiting efforts, this 
and another participant have been using partnerships with other 
organizations to help advertise themselves as employers of older 
workers, for example, working with the National Council on Aging and 
the AARP to recruit older workers. The AARP's Featured Employer Program 
lists 30 national employers who hire older workers on its Web site. 

Information sharing can also be useful in engaging older workers. One 
participant's organization maintains an Employer Resource Center Web 
site with information on best practices for hiring and retaining older 
workers, while a second also has resources available for its members on 
this topic. Another participant works with other human resource 
officials to locate work for older workers. In spite of these 
resources, one participant cautioned that it can be complex for 
retirees to be rehired and that some types of employers are not used to 
hiring retirees. 

Many participants look to their own retirees as a source of seasoned 
workers or knew of other employers who do so. One participant's 
organization encourages and recruits retirees from positions at all 
levels to come back and work for short stints. One benefit of this 
program is that it helps to retain institutional knowledge. A second 
participant agreed, saying its clients seek out their retirees for 
their organizational knowledge and expertise. Another participant knew 
of an employer that allows its retirees to come back after 6 months of 
retirement to take part-time jobs, whether it is to work for 1 week or 
9 months. A fourth participant knew of an employer with a program 
called "Reserves at the Ready," which signs up its retirees for 
availability for specific short-term assignments. 

Flexible Schedules and Workplaces Needed to Attract and Retain Older 

Participants agreed that flexible work situations were crucial to 
attracting and retaining older workers. For example, one participant 
said it is important for employers to be creative in terms of how they 
design jobs they are looking to fill, and to allow for flexible work 
locations away from the traditional office. Another participant stated 
that people in the health care industry over age 50 leave work for 
three key reasons: (1) elder care responsibilities, (2) physical 
constraints, and (3) desire to pursue other interests. To address these 
concerns, this employer allows employees to have 10 days to use for 
elder care, flexible work schedules, and for employees working at least 
15 hours per week, benefits such as medical benefits and tuition 
reimbursement. This employer alleviates the physical burden of lifting 
through the use of patient-lifting teams and supports its employees' 
desire to pursue outside interests by bringing outside experts in to 
speak on various topics such as art. The importance of flexible elder 
care policies was also raised by another participant, who noted that 
older female workers are more likely to use family medical leave for 
elder care. As a result, allowance for elder care is critical for 
retaining these older workers. Another participant's organization 
highlights opportunities for workers to use flex-time, work part-time, 
and tele-work in job announcements. 

Further corroborating the need for flexibility, another participant 
noted that there is a whole portfolio of different work models that can 
help employers engage and retain older workers. For example, the 
private sector could emulate the emeritus status universities use for 
their retired faculty to offer opportunities for retirees to continue 

Adapting the way jobs are designed is also important for retaining 
older workers. One participant cited two examples of adaptive job 
design practices from a report on best practices. In the first example, 
a hospital installed hydraulic systems in all its beds so patients 
could fold into a sitting posture, a change that assisted older staff 
in moving patients. In the second example, an employer modified an 
assembly line so that cars on the line could be rotated to grant easier 
access for mechanics who were unable to lie down to work on cars as 
required by the old assembly line system. Another participant stated 
that the issue of workplace flexibility was common to both older 
workers and disabled workers, suggesting a need for more dialogue 
between the two groups. 

Adapting workers to fit new jobs is also an important but uncommon 
practice. One participant mentioned an organization that actively 
retrains its older workers for new positions. For example, it will 
retrain staff from the legal department to work in sales or retrain a 
secretary to work as an assistant on a project. 

Participants also offered other suggestions for providing workplace 
flexibility. In order to retain older workers, two participants' 
organizations offer their "snow bird" employees flexible work 
locations. Under this program, workers can work for the same employer 
in different parts of the country, depending upon the season. Another 
participant's organization uses its retirees as substitute teachers and 
temporary workers. These arrangements are typically flexible and allow 
older workers to make their own schedules. Finally, one participant 
suggested that employers think about flexibility in terms of shorter or 
longer phased retirement options in addition to schedules and 

Benefit Packages Help to Attract and Retain Older Workers: 

Many participants noted the importance of benefit packages in 
attracting and retaining older workers. Some participants were offering 
benefits to both full-and part-time workers along with additional 
benefits such as tuition reimbursement and employee discounts. One 
participant's organization uses a combination of benefits including 
tuition assistance, performance bonuses, and financial literacy 
resources that it feels is effective in attracting older workers. 
However, not every employer can offer full benefits to the older 
workers it tries to recruit. One participant mentioned an employer who 
cannot afford to offer older workers the same level of benefits as most 
of its full-time employees and, as a result, tends to hire older 
workers on a part-time rather than a full-time basis. 

Making pension systems more flexible is also a way to attract and 
retain older workers. One participant's organization offers its 
employees a deferred retirement option plan that allows workers to 
retire and return to work after 1 month.[Footnote 3] Another employer 
is considering making itself a more desirable workplace by matching a 
greater percentage of older workers' DC plan contributions, thereby 
appealing to older workers who may not have been with the company for a 
very long time. 

Consistent Performance Management and Placing High Value on Older 
Workers Are Needed to Avoid Litigation Issues: 

As discussed previously, many participants were concerned that engaging 
and retaining older workers could increase their exposure to age 
discrimination litigation. To avoid such exposure, one participant said 
a consistent performance management system is essential for dealing 
with all workers. Besides treating all employees in a fair and 
consistent manner, participants agreed it is also important to show 
older workers that they are valued. One participant's organization 
studied mature workers and found that they wanted to be recognized for 
their contributions, and to feel that they are making a difference. In 
addition to its companywide commitment to encouraging its employees to 
stay with them in their later years, this organization encourages its 
older workers to mentor school-age kids toward a career in this 
company's industry. Another participant's organization uses its 
retirees as mentors and as resources for teaching leadership courses. A 
third participant's organization sponsors a program that brings 
together different generations of workers to help them better 
understand each other and work better together. 

Improving Employee Financial Literacy and Helping Employees Better 
Prepare for Retirement: 

With older Americans living longer and spending more time in 
retirement, employees will have to ensure they have a realistic plan to 
provide for retirement security that may include working past the 
traditional retirement age. The shift from defined benefit plans to 
defined contribution plans also means that employees will have to 
improve their financial literacy if they hope to have a secure 
retirement. Proper preparation can help employees to achieve their 
retirement goals. 

Financial Literacy Is Crucial for Retirement Security: 

Participants discussed the lessons learned concerning the need for 
financial literacy among employees. Many participants agreed that 
increasing financial literacy would help employees better prepare for 
retirement by giving them the tools to assess whether or not they have 
sufficient funds to achieve their retirement goals. One participant 
also noted that many employers have moved from defined benefit plans to 
defined contribution plans. This change has placed the burden of 
financial management on employees who may lack the financial literacy 
skills to effectively manage the investment of their pensions. However, 
it was further noted that financial literacy education alone is not 
going to help people who have insufficient resources to support 
themselves. Another participant said special attention needs to be paid 
to those groups that are disadvantaged. A third participant, whose 
group has promoted financial literacy among its members, has found from 
experience that financial literacy alone has limited impact. They have 
found that automatic enrollment in retirement savings plans is more 
effective than financial literacy efforts at increasing savings. 
According to this participant, once these savings plans are begun, it 
is also important to help people regularly manage and rebalance their 
investment portfolios. Another participant noted that automatic 
enrollment is particularly effective when the level of contributions 
automatically increases over time. 

Educating workers about future health care costs is also part of 
financial literacy. Participants said educating and encouraging workers 
to save to fund future health care and disease management is essential 
to retirement security. One participant said their organization has 
undertaken a few initiatives related to helping Medicare recipients 
become informed about the need for long-term care and options for 
financing long-term care. The initiatives exist because many people are 
under the false impression that Medicare pays for these expenses. 

Preparation Can Help Employees Reach Their Retirement Goals: 

Helping employees understand what they need to do to attain their 
retirement goals can help employees formulate their plans. One 
participant's employer offers a retirement-planning program for 
employees over 50 years old. The program teaches employees how to plan 
financially for this next phase by learning such things as how to put 
together a budget for their retirement. The program also offers 
individual counseling to help employees determine how much and how long 
they need to work to reach their goals and allows program participants 
to determine what sort of flexibility they may need in terms of their 
continuing work arrangements. A panel of retirees then discusses with 
program participants the lessons they have learned about transitioning 
to retirement. Another participant's organization has developed 
retirement simulation models to help its employees plan for their 
financial future. 

Suggested Strategies: 

Participants suggested a number of strategies to encourage older 
workers to remain in the labor force and to encourage employers to 
engage and retain older workers. These strategies include creating a 
national campaign to promote employment opportunities, beginning a 
national discussion of the definition of "old," increasing financial 
literacy, and creating a national clearinghouse of best practices. In 
addition, participants stated that the federal government should become 
a model employer in engaging and retaining older workers. 

Create a National Campaign to Promote Older Workers: 

Participants generally agreed that what is needed is a change in the 
national mind-set about work at older ages. To that end, the idea of 
creating a national campaign to promote older workers was suggested. 
Such a campaign could highlight the different types of work older 
people are engaged in, the positive attributes of older workers, and 
the business case, i.e., the benefits to employers, for engaging and 
retaining older workers. 

Begin a National Discussion to Change the "Culture of Retirement" 

Many participants talked about the need to think differently about life 
at older ages. To change the "culture of retirement," one participant 
suggested the need for a national discussion to reconsider what "old" 
is and what the new retirement age should be or whether there should be 
a "retirement age" at all. Another raised the question of what our 
national norm is on work and lifelong learning. 

Increase the Financial Literacy of Workers: 

Participants agreed that strategies that increase financial literacy 
may help workers better plan for their futures and know when to retire. 
Participants suggested that both public and private efforts may be 
needed to promote financial literacy, including teaching financial 
literacy as early as grade school, promoting the discussion of 
retirement planning much earlier in workers' careers, and using faith- 
based organizations as a conduit for financial planning such as 
homeownership counseling. 

Establish a National Clearinghouse of Best Practices in Engaging and 
Retaining Older Workers: 

In addition to encouraging older workers to remain in the labor force, 
participants agreed that employers need information about the best 
practices in engaging and retaining older workers. One strategy 
discussed was the establishment of a national clearinghouse of best 
practices, such as the different kinds of work structures, recruiting 
techniques, benefit packages, and workplace flexibilities--such as part-
time work, flexible hours, and phased retirement--used by some 
employers to attract and retain older workers. 

Federal Government Should Be a Model Employer and Provide Leadership: 

Participants discussed a number of ways that the federal government 
could be a leader on the issue of keeping older workers in the 
workforce. First, one participant noted that as an employer of 
millions, facing its own demographic wave, the federal government 
should be a role model for the nation in terms of how it engages and 
retains older workers. Second, it can be a key player in the kinds of 
public/private partnerships that would promote the national campaign, 
begin a national discussion, or create the national clearinghouse 
discussed above. Another participant stated that the public sector in 
general has a role to play, in cooperation with the private sector, in 
helping displaced older workers who need new skills to remain in the 
workforce. And third, through specific legislation or regulations that 
would increase flexibility for employers and employees, the federal 
government can help create new models of employment for older 
Americans. For example, one participant suggested offering tax credits 
to employers as a way to motivate them to hire older workers and to 
workers as a way to motivate them to work longer. Some participants 
discussed the need for safe harbors in the tax code and ERISA that 
would make it easier for people to return to work after retirement. 
Others suggested that age discrimination laws may have had some 
unintended consequences, such as creating disincentives for hiring 
older workers and preventing employers from taking inventive actions, 
and that these laws should be re-evaluated or amended to encourage 
employers to hire older workers rather than discourage them. 

[End of section] 

Appendix I: List of Participants: 


David M. Walker: 

Comptroller General of the United States: 
U.S. Government Accountability Office: 


Larry E. Anderson: 
President and Chief Executive Officer: 
National Older Worker Career Center: 

Martha C. Artiles: 
Chief Diversity Officer: 
Manpower Inc. 

Linda Barrington: 
Principal Director, Maturing Workforce Program and Research Director, 
The Conference Board: 

Charles P. Blahous: 
Special Assistant to the President for Economic Policy: 
The White House: 

Barbara Bovbjerg: 
Director, Education, Workforce, and Income Security: 
U.S. Government Accountability Office: 

Bradford P. Campbell: 
Acting Assistant Secretary, Employee Benefits Security Administration: 
U.S. Department of Labor: 

Barbara Peacock-Coady: 
Consultant, Aging Workforce: 
Massachusetts Institute of Technology: 

Craig Copeland: 
Senior Research Associate: 
Employee Benefit Research Institute: 

Lynn Dudley: 
Vice President, Retirement Policy: 
American Benefits Council: 

Maria Kniesler Flynn: 
Administrator of Office of Policy Development and Research, Employment 
and Training Administration: 
U.S. Department of Labor: 

Steve Grossman: 
Vice President, Human Resources: 
Hoffmann-La Roche, Inc. 

Karyne Jones: 
President and Chief Executive Officer: 
National Caucus and Center on Black Aged, Inc. 

Carol A. Kelly: 
Director, Office of Policy: 
Centers for Medicare and Medicaid Services: 

Nancy H. Kichak: 
Associate Director, Strategic Human Resource Policy Division: 
U.S. Office of Personnel Management: 

Jan Magill: 
Director of Workforce & Education Programs: 
U.S. Chamber of Commerce, Institute for a Competitive Workforce: 

Dawn Malone: 
Administrative Director, Work and Family Services: 
Bon Secours Richmond Health System: 

Susan R. Meisinger: 
President and Chief Executive Officer: 
Society for Human Resource Management: 

Steven T. Miller: 
Commissioner, Tax Exempt and Government Entities Division: 
U.S. Internal Revenue Service: 

Kenneth Mitchell: 
Vice President: 
UnumProvident Corporation: 

Sigurd Nilsen: 
Director, Education, Workforce, and Income Security: 
U.S. Government Accountability Office: 

Pamela Perun: 
Aspen Institute, Initiative on Financial Security: 

Jane McDonald-Pines: 
Workforce Issue Specialist, Department of Legislation: 

Anna M. Rappaport: 
Anna Rappaport Consulting: 

W. Thomas Reeder: 
Benefits Tax Counsel, Office of Tax Policy: 
U.S. Department of the Treasury: 

Deborah Russell: 
Director, Workforce Issues: 

Susan G. Standley: 
Director of Compensation and Benefits: 
Brevard County School Board: 

Marlon Sullivan: 
Senior Director of Staffing: 
The Home Depot: 

Sue Suter: 
Associate Commissioner, Office of Employment Support Programs: 
U.S. Social Security Administration: 

Mark J. Ugoretz: 
The ERISA Industry Committee: 

Stephen M. Wing: 
Director of Government Programs: 
CVS Corporation: 

[End of section] 

Appendix II: Agenda: 

8:30 a.m. 


9:00 a.m. 

Opening session Welcome and introductions. 

Setting the stage-- presentation by the Comptroller General: 

9:45 a.m. 

Session I: Key Obstacles. 

Presentation of presurvey results regarding the obstacles facing older 
workers and their employers, including a discussion of the types of 
jobs available to older workers and the pay and benefits associated 
with them. 

10:45 a.m. 

Coffee Break: 

11:00 a.m. 

Session II: Best Practices and Lessons Learned. 

Discuss activities or programs now in place to help older workers to 
work longer and better prepare for retirement. We will hear from 
participants about employment best practices and lessons learned 
regarding topics such as recruitment, retention, rehiring, workplace 
flexibility, training, financial planning, health benefits, pension 
plans, and phased retirement for both lower-skilled and higher-skilled 
jobs and workers. 

11:50 p.m. 

Lunch will be distributed and Session II continues: 

12:30 p.m. 


12:45 p.m. 

Session III: Strategies. 

1. What can government do to encourage more organizations/people to 
implement these types of activities on a large scale? 
2. On what topics should GAO focus its work to help facilitate these 
3. What can employers do to retain or recruit workers who are near or 
past traditional retirement age among a variety of industries and skill 
4. What can employee groups do to facilitate work for those who wish to 
work longer? 

1:45 p.m. 


2:00 p.m. 


[End of section] 

Related GAO Products: 

Human Capital: Retirements and Anticipated New Reactor Applications 
Will Challenge NRC's Workforce, GAO-07-105. Washington, D.C.: January 
17, 2007. 

Senior Community Service Employment Program: Labor Has Made Progress 
Implementing Older Americans Act Amendments of 2000, but Challenges 
Remain, GAO-06-549T. Washington, D.C.: April 6, 2006. 

Older Workers: Labor Can Help Employers and Employees Plan Better for 
the Future, GAO-06-80. Washington, D.C.: December 5, 2005. 

Private Pensions: Information on Cash Balance Pension Plans, GAO-06-42. 
Washington, D.C.: November 3, 2005. 

Social Security: Societal Changes Add Challenges to Program 
Protections, GAO-05-706T. Washington, D.C.: May 17, 2005. 

Redefining Retirement: Options for Older Americans, GAO-05-620T. 
Washington, D.C.: April 27, 2005. 

21st Century Challenges: Re-examining the Base of the Federal 
Government, GAO-05-325SP. Washington, D.C.: February 2005. 

Highlights of a GAO Forum: Workforce Challenges and Opportunities For 
the 21st Century: Changing Labor Force Dynamics and the Role of 
Government Policies, GAO-04-845SP. Washington, D.C.: June 2004. 

Older Workers: Policies of Other Nations to Increase Labor Force 
Participation, GAO-03-307. Washington, D.C.: February 13, 2003. 

Older Workers: Employment Assistance Focuses on Subsidized Jobs and Job 
Search, but Revised Performance Measures Could Improve Access to Other 
Services, GAO-03-350. Washington, D.C.: January 24, 2003. 

Older Workers: Demographic Trends Pose Challenges for Employers and 
Workers, GAO-02-85. Washington, D.C.: November 16, 2001. 

Private Health Insurance: Declining Employer Coverage May Affect Access 
for 55-to 64-Year-Olds, GAO/HEHS-98-133. Washington, D.C.: June 1, 

Retiree Health Insurance: Erosion in Employer-Based Health Benefits for 
Early Retirees, GAO/HEHS-97-150. Washington, D.C.: July 11, 1997. 


[1] The full eligibility age (or normal retirement age) for Social 
Security benefits is being raised gradually from 65 to 67. When the 
full eligibility age was 65, the actuarial reduction for taking 
benefits at age 62 was 20 percent. When the age increase to 67 is fully 
implemented, in 2022, the reduction will be 30 percent. The reduction 
in monthly payments for claiming early Social Security retirement 
benefits takes account of the longer period of time over which benefits 
will be paid. 

[2] However, the Pension Protection Act of 2006 permits employers to 
make in-service distributions to employees age 62 and older. 

[3] Deferred retirement option plans (DROP) are largely limited to the 
public sector. Under a DROP plan, instead of paying a pension benefit 
directly to the participant, it is placed in a separate account in the 
individual's name. This individual account is also invested so that 
when the participant ceases employment and accepts retirement, he or 
she receives the accumulated account balance in addition to the ongoing 
pension benefit. DROPs allow a pension participant, generally for a 
fixed maximum period, to have his or her pension benefits start on a 
particular date even though he or she continues to work with the 
employer providing the pension. By allowing a pension participant to 
gain access to or be credited with pension benefits while still 
working, DROPs remove a key incentive for older workers to retire. 

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