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Tuesday, April 04, 2023
The incentives of early retirement
One of the channels I am following on YouTube is TLDR News. Yesterday they published a video called Is Early Retirement Hurting the Economy?, with an even more clickbait thumbnail, containing the question "Are old people lazy?" and Rishi Sunak telling an elderly gentleman to "do some damn work". The video itself is a lot more factual, but I still thought that the discussion about the reasons for early retirement was missing one very important factor: Companies actively pushing people into early retirement, something that happened to me.
This is mostly a problem of medium to large sized companies. They have large HR departments, which due to having hundreds or thousands of people to manage tend to do so with statistical tools, not having the time to look at each employee individually. So what do HR statistics reveal about employees over the age of 50? Well, due to often having worked at that company for decades, the salaries of these employees compared to starting salaries are obviously higher. On the other hand, younger employees often work longer hours and are more motivated earlier in their careers. Thus to an HR department it seems preferable to hire harder working young employees who are paid less. In many places there are worker protection laws in place that prevent companies to simply fire older employees who have worked for decades for them. Thus the interest of HR in schemes where they incentivize older employees to leave into early retirement.
Of course that doesn't apply to everybody. Some older employees have made a great career and are in senior management by the time they are 50. Age discrimination isn't something that happens in senior management, in fact in very many companies old white men make up the majority of senior management. In senior management, experience is valued, when obviously experience aids at all levels of business. But of course in a company not everybody makes such a career, and there are older employees who are still filling standard jobs that never evolved into taking account of experience, the kind of job where they can be easily replaced by somebody younger. The lack of any further career development and the feeling of their experience not being sufficiently valued by the company encourages them to accept those early retirement plan offers. Small companies, and especially one-man businesses, tend to find ways to adjust the work tasks of the older person to his increased experience and lower energy. Larger companies with standardized job descriptions have a much harder time to adjust job positions to the age of the job holder.
I believe a lot of people who left work for early retirement would have stayed if they had felt that their experience was still useful and valued by their company. And schemes that plan to encourage longer work participation and less early retirement will never work without a contribution from companies creating a work culture in which the experience of older employees is utilized better. There are a lot of cases where somebody leaving for early retirement is just a missed opportunity both for the employee and the employer to adjust work conditions to age.
- posted by Tobold @ 6:30 AM Permanent Link
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I think the Sunak/UK thing is mostly due to expensive education and no on-the-job training combined with a ban on immigration due to Brexit and domestic policy ... and already trained retirees are a potential source to immediately fill the staff shortage.
But age discrimination in larger companies definitely happens, especially for the non-managerial positions, where experience is mostly seen as cost from HR.
At least I can make my boss cry when I do in 10 minutes what his team of three outsourced teenage devs spent the last 6 months faffing around with.
But age discrimination in larger companies definitely happens, especially for the non-managerial positions, where experience is mostly seen as cost from HR.
At least I can make my boss cry when I do in 10 minutes what his team of three outsourced teenage devs spent the last 6 months faffing around with.
Adjusting the workload and valuing experience is achieved by moving up the corporate ladder.
By guiding others, you are doing less actual work and sharing your experience.
What I have encountered in the past was that there was not enough experience to share (or rather not enough people skills to share the experience) coupled with corporate cost cutting: people would quit their official position and be employed by a different section until retirement. Then the statistics would look good again.
By guiding others, you are doing less actual work and sharing your experience.
What I have encountered in the past was that there was not enough experience to share (or rather not enough people skills to share the experience) coupled with corporate cost cutting: people would quit their official position and be employed by a different section until retirement. Then the statistics would look good again.
This is interesting. Isn’t it ten minutes ago that the boomers were being criticized for monopolizing all the good jobs and holding back young people?
# posted by 
: 4/4/23 14:55
: 4/4/23 14:55
The idea of somebody “monopolizing all the good jobs” is based on the wrong assumption that the number of good jobs is constant. Early retirement means an old person losing a good job, and a young person getting a bad job replacing him for less pay and less career advancement opportunity. That is the consequence of rising inequality, a lot of middle-income people need to be worse off for one guy to get rich. It is not a generational problem.
Isn't the UK supposed to be an open market economy? If it is then the value for experienced workers should go up. If that's the case then they should stop complaining and let the market work. Pay for experienced workers should go up. However, I get the feeling that's not what the complainers want. They want those people to just smile and keep working and providing value.
However, you're older now - you need to take time off for your kids, your parents, your own health?! Don't let the aging process cause cognitive or health issues because then you're a liability. Why can't you just be young forever? In the wild young lions kill the old lions, why can't humans be like that? What you want to retire and leave the workforce? With all that knowledge? Who's going to train the next generation? Will you just stay on board another five years and take a 20% pay cut? That'd really help us out. Oh we won't actually cut your pay we'll just give you insignificant raises so inflation does our dirty work. You won't leave will you - after all who's going to train the others?
Yup, this got me riled up. I've been working towards early retirement since I was 18. I'm very close now, I structured a lot of my life around the ability to save and invest to reach my goals. I hate the return to yellow journalism! (https://en.wikipedia.org/wiki/Yellow_journalism)
However, you're older now - you need to take time off for your kids, your parents, your own health?! Don't let the aging process cause cognitive or health issues because then you're a liability. Why can't you just be young forever? In the wild young lions kill the old lions, why can't humans be like that? What you want to retire and leave the workforce? With all that knowledge? Who's going to train the next generation? Will you just stay on board another five years and take a 20% pay cut? That'd really help us out. Oh we won't actually cut your pay we'll just give you insignificant raises so inflation does our dirty work. You won't leave will you - after all who's going to train the others?
Yup, this got me riled up. I've been working towards early retirement since I was 18. I'm very close now, I structured a lot of my life around the ability to save and invest to reach my goals. I hate the return to yellow journalism! (https://en.wikipedia.org/wiki/Yellow_journalism)
I was going to comment essentially this. Age discrimination absolutely happens all the time in America at least. There are only so many managerial/senior positions available at outside of those positions it can often be very difficult for someone in their 50s or 60s to find a job with a decent wage.
"Isn't the UK supposed to be an open market economy? If it is then the value for experienced workers should go up. If that's the case then they should stop complaining and let the market work. Pay for experienced workers should go up. However, I get the feeling that's not what the complainers want. They want those people to just smile and keep working and providing value."
Unfortunately free market principles don't seem to apply to workers because the only tools governments seem to want to use to tackle inflation are aimed at bringing down worker wages and raising unemployment. I wonder why.
Unfortunately free market principles don't seem to apply to workers because the only tools governments seem to want to use to tackle inflation are aimed at bringing down worker wages and raising unemployment. I wonder why.
"This is interesting. Isn’t it ten minutes ago that the boomers were being criticized for monopolizing all the good jobs and holding back young people?"
It's not necessarily the Boomers who are retiring. I am 55, which makes me Generation X, and I have now retired. I started work straight after leaving school at 18 in 1986. I spent over a decade in the UK civil service and them spent the rest of the time working in the private sector in IT, then contract work, then self employment, up until 2016. I stopped working when both my parents had life altering strokes. I spent the next 6 years caring for them full time.
Last September my Mother died (my father had died 2 years prior) and I considered a return back to work. Simply put, I could not find employment with terms and conditions that I considered to be commensurate with my skills. I could find minimum wage work, on a contract with no specific hours.
Work is a quid pro quo. The employer wants a favourable deal but so does the employee. Another factor that put me off the traditional job market, is the culture of the modern work environment. I suspect that it would not be to my liking.
So I spoke to a financial advisor and went through my options. I had set up a private pension scheme circa 1990 and although I hadn't paid as much as I would have liked into it, it yields sufficient to allow me support myself. So I elected not to go back to work and I do not regret that decision.
I like the freedom that retirement offers me and have plenty of time to pursue my interests. I do not want the stress and hassle modern working incurs and do not wish to endure sociopathic, middle management and the bullshit of office politics.
UK chancellor Jeremy Hunt said recently "if you can work, you should". It's not so much the statement that bothers me but who said it and what they truly mean by it.
It's not necessarily the Boomers who are retiring. I am 55, which makes me Generation X, and I have now retired. I started work straight after leaving school at 18 in 1986. I spent over a decade in the UK civil service and them spent the rest of the time working in the private sector in IT, then contract work, then self employment, up until 2016. I stopped working when both my parents had life altering strokes. I spent the next 6 years caring for them full time.
Last September my Mother died (my father had died 2 years prior) and I considered a return back to work. Simply put, I could not find employment with terms and conditions that I considered to be commensurate with my skills. I could find minimum wage work, on a contract with no specific hours.
Work is a quid pro quo. The employer wants a favourable deal but so does the employee. Another factor that put me off the traditional job market, is the culture of the modern work environment. I suspect that it would not be to my liking.
So I spoke to a financial advisor and went through my options. I had set up a private pension scheme circa 1990 and although I hadn't paid as much as I would have liked into it, it yields sufficient to allow me support myself. So I elected not to go back to work and I do not regret that decision.
I like the freedom that retirement offers me and have plenty of time to pursue my interests. I do not want the stress and hassle modern working incurs and do not wish to endure sociopathic, middle management and the bullshit of office politics.
UK chancellor Jeremy Hunt said recently "if you can work, you should". It's not so much the statement that bothers me but who said it and what they truly mean by it.
I really wish retirement wasn't so abrupt. I'm hoping I can work something out with my company where I switch to part time before I retire. I feel like going from a 40 hour work-week to nothing is a shock to the system, it's something not everyone could handle. It would be cool if as you reach your 50s your work-week slowly gets reduced until you retire. The only downside would be your pay would get reduced as well.. in theory.
I'm approaching 50 and find the 40 hour work-week to be a grind now. I keep reading articles on how well the 4-day work-week has been working for those who've adopted it and I'm really hoping it becomes a trend.
I'm approaching 50 and find the 40 hour work-week to be a grind now. I keep reading articles on how well the 4-day work-week has been working for those who've adopted it and I'm really hoping it becomes a trend.
Just a word of caution there: The 4-day work week works great for some, and is a complete disaster for others. A lot of people work jobs where “40 hours” is very theoretical, and in reality they do a lot of unpaid extra hours, ending up with 50 or 60 hours actually worked per week. If you are in such a situation, agreeing to an “80%” occupation without there being a reduction of your workload means you just negotiated a 20% pay cut.
Better idea for people over 50 that are working far more than 40 hours per week: Just decide unilaterally to go home earlier and only work those 40 hours you are being paid for. There isn’t actually much your boss can do about it, and you keep the same salary while reducung your stress.
Better idea for people over 50 that are working far more than 40 hours per week: Just decide unilaterally to go home earlier and only work those 40 hours you are being paid for. There isn’t actually much your boss can do about it, and you keep the same salary while reducung your stress.
I'm very good at working my 40 hours per week. I have read that some companies who switch to 32 hour work-weeks make up for lost productivity by eliminated wasteful activities. Lots of meetings get removed if they are not critical.
I did experiment with my own 4-day work-week during COVID. We were required to use our vacation but I was hard-pressed to use it since we couldn't go anywhere. When fall came I just took every Monday off for about 3 months. I was able to get all my work done but did find the work-week hectic. I agree that workload would need to be reduced a little, maybe in combination with time wasters.
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I did experiment with my own 4-day work-week during COVID. We were required to use our vacation but I was hard-pressed to use it since we couldn't go anywhere. When fall came I just took every Monday off for about 3 months. I was able to get all my work done but did find the work-week hectic. I agree that workload would need to be reduced a little, maybe in combination with time wasters.
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