Image via Cardens Design/Shutterstock.com

The Retirement Wave You Didn’t See Coming

The departure of workers under 60 years old could cause huge disruptions.

You’ve likely heard of the impending government retirement wave.  For a decade, agency leaders have been monitoring their workforce demographics with increasing concern. Low attrition rates combined with less hiring have produced a static employee base that grows older with each passing year.

Many employees have put retirement on hold during the economic and federal budget crises. This may delay any mass exodus from federal staffs, but it will increase the size of the wave in years to come. As agencies tweak workforce plans to account for these trends, they’ve rightly planned for the departure of their oldest employees. But they also need to consider employees under age 60, whose exit represents the single biggest risk to the continuity of operations.

There are roughly 650,000 federal workers in their 50s, which is twice the size of the group that is age 60 and older. Historically, many employees in their late 50s leave the civil service soon after they became retirement eligible. Many who want to continue full-time employment use their federal pension as a financial cushion while they seek opportunities in the private sector. Before the financial crisis, employees in their 50s accounted for roughly half of all federal retirements. By 2013, the number had dropped to 35 percent. So, during the past five years, tens of thousands of employees in their late 50s who might have otherwise left the federal workforce (based on attrition levels before the economic downturn) have instead decided to stay. 

There are three primary factors that led these employees to delay retirement, but recent developments are likely to reverse the trend. 

First, the retirement system has changed. Actually, it changed in 1987 when the Federal Employee Retirement System was created, but the ripple effects are just starting as the first batch of employees who joined under FERS become retirement eligible. The new system provides greater retirement account portability through the Thrift Savings Plan and less emphasis on tenure, in the form of smaller and less progressive multipliers on the basic annuity. These features combined with pay freezes during the last three years have eroded the incentive to stay in the civil service after initial retirement eligibility. 

The bigger economic picture has also affected retirement decisions. Stock market and housing prices declined abruptly during the financial crisis, which is notable because these factors account for most personal wealth. Retirement-eligible employees with smaller nest eggs—and, in some cases, less mobility due to underwater mortgages -- have lacked the confidence to make a major career move or to stop working. The situation has changed a lot in the past few years, however. Stocks have more than doubled after hitting lows in early 2009, and real estate prices also have climbed. In addition, private sector hiring has picked up, which presents more post-government employment options.

Not least among the reasons to expect an acceleration of retirements is employee morale. After three successive years of partisan gridlock, cutbacks, furloughs and an overall degradation in the perception of government employment, morale among federal employees continues to plummet. Research from CEB, an industry advisory company, shows that productivity and retention is predicated on employees having sufficient resources, as well as a clear understanding of what’s expected and how one’s work contributes to organizational success. Feedback from the Office of Personnel Management’s Federal Employee Viewpoint Survey indicates each of these drivers of engagement has been damaged in recent years. Some employees will stay at their agencies despite such developments, but those who are retirement eligible will increasingly vote with their feet.

Many agencies are rightly planning for the departures of their oldest workers, but few have considered what will happen when those workers’ successors depart as well. Without the strong federal employment value proposition of years past, there’s little doubt that more people will choose to retire from federal service at a younger age. The strongest agencies will be the ones that can answer the question: Who is the successor of the successor?

Adam Cole is senior director at CEB, a member-based advisory company.

Image via Cardens Design/Shutterstock.com

X
This website uses cookies to enhance user experience and to analyze performance and traffic on our website. We also share information about your use of our site with our social media, advertising and analytics partners. Learn More / Do Not Sell My Personal Information
Accept Cookies
X
Cookie Preferences Cookie List

Do Not Sell My Personal Information

When you visit our website, we store cookies on your browser to collect information. The information collected might relate to you, your preferences or your device, and is mostly used to make the site work as you expect it to and to provide a more personalized web experience. However, you can choose not to allow certain types of cookies, which may impact your experience of the site and the services we are able to offer. Click on the different category headings to find out more and change our default settings according to your preference. You cannot opt-out of our First Party Strictly Necessary Cookies as they are deployed in order to ensure the proper functioning of our website (such as prompting the cookie banner and remembering your settings, to log into your account, to redirect you when you log out, etc.). For more information about the First and Third Party Cookies used please follow this link.

Allow All Cookies

Manage Consent Preferences

Strictly Necessary Cookies - Always Active

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data, Targeting & Social Media Cookies

Under the California Consumer Privacy Act, you have the right to opt-out of the sale of your personal information to third parties. These cookies collect information for analytics and to personalize your experience with targeted ads. You may exercise your right to opt out of the sale of personal information by using this toggle switch. If you opt out we will not be able to offer you personalised ads and will not hand over your personal information to any third parties. Additionally, you may contact our legal department for further clarification about your rights as a California consumer by using this Exercise My Rights link

If you have enabled privacy controls on your browser (such as a plugin), we have to take that as a valid request to opt-out. Therefore we would not be able to track your activity through the web. This may affect our ability to personalize ads according to your preferences.

Targeting cookies may be set through our site by our advertising partners. They may be used by those companies to build a profile of your interests and show you relevant adverts on other sites. They do not store directly personal information, but are based on uniquely identifying your browser and internet device. If you do not allow these cookies, you will experience less targeted advertising.

Social media cookies are set by a range of social media services that we have added to the site to enable you to share our content with your friends and networks. They are capable of tracking your browser across other sites and building up a profile of your interests. This may impact the content and messages you see on other websites you visit. If you do not allow these cookies you may not be able to use or see these sharing tools.

If you want to opt out of all of our lead reports and lists, please submit a privacy request at our Do Not Sell page.

Save Settings
Cookie Preferences Cookie List

Cookie List

A cookie is a small piece of data (text file) that a website – when visited by a user – asks your browser to store on your device in order to remember information about you, such as your language preference or login information. Those cookies are set by us and called first-party cookies. We also use third-party cookies – which are cookies from a domain different than the domain of the website you are visiting – for our advertising and marketing efforts. More specifically, we use cookies and other tracking technologies for the following purposes:

Strictly Necessary Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Functional Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Performance Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Social Media Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Targeting Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.