For many organizations the biggest challenge will be replacing the retiring Boomers, particularly if they have spent all or most of their career with one employer. Some of the studies that have been done recently argue that Boomers do not intend to delay retirement while others say they will never fully retire.
This contradiction can be clarified only by carefully defining “retirement.” If the employer has a defined benefit pension plan that enables employees to retire with full benefits when their age and years of service total 75 or more, it is reasonable to assume that some will exercise that right. U.S. laws limit the ability of some employees to continue to work for an employer while they are receiving pension benefits from that organization, and there are limitations with regard to the way in which they are retained after retirement.
It is possible to extend career management strategies beyond the time when an employee ceases to be a full-time, permanent employee. If an organization needs to train new personnel, it could create a training contract with retiring employees to accomplish the training. Having a retiree spend one week a month or one day a week running a focused training program may allow the organization to utilize the retiree as a contractor and to accomplish what otherwise would have been a difficult challenge. Although mentoring and other on-the-job approaches can theoretically accomplish the same thing it is often found that daily work demands cause underinvestment in training time, with dire consequences when the experienced person leaves.
Many organizations have created the ideal incentive for forcing out everyone eligible for retirement, no matter how badly they are needed or want to stay. Overly generous retirement plans; fully paid retiree health programs and other rewards for past service may provide more value to those who leave than those who stay. Employees who are eligible for full retirement at a fairly young age can begin to receive the income stream from the pension plan and move on to collect a second income from another organization. Defined contribution plans lend themselves to encouraging continued service more than defined benefit plans, since additional benefits will accrue beyond normal retirement. Also, those who are relatively secure financially are in a position to contribute more to these plans in their later years.
An excerpt from my book: Rewarding Performance: Guiding Principles; Custom Strategies By Robert J. Greene