Present: The State of the Workforce Changes, Challenges, & Opportunities in the 495/MetroWest Region

The Graying of Massachusetts: Aging, the New Rules of Retirement, and the Changing Workforce The State of the Workforce: Changes, Challenges, and Opportunities in the 495/MetroWest Region

2 Three critical questions as the baby boomers approach retirement: What does the upcoming demographic shift look like? How well prepared are families for retirement? What are the labor market implications of this demographic shift?

3 Massachusetts is Aging In 2000, Massachusetts was the 12 th oldest state in the nation, with 13.5% of residents older than 65. That number will jump to more than 18% by The Commonwealth’s two oldest counties – Barnstable and Berkshire – both have a larger share of seniors than Florida. The 1.87 million baby boomers in Massachusetts – those born between 1946 and 1964 – will start retiring in less than 5 years.

4 MetroWest/495 Region Demographics State share of population 65 and over: 13.5% MetroWest/495 region share of population 65 and over: 11.0%

5 MetroWest/495 Region Demographics State share of population 65 and over: 13.5% MetroWest/495 region share of population 65 and over: 11.0%

6 Preparing for Retirement Since the mid-1980s, the average retirement age has hovered in the early 60s. Social Security is the primary source of retirement income.

7 Preparing for Retirement The age at which people collect full benefits is rising from 65 to 67. Today, the majority of people start collecting before age 65. The personal savings rate (just over 2% in 2001) is at its lowest point since the Great Depression.

8 Preparing for Retirement About one-third of full-time workers in Massachusetts have no access to any type of pension coverage (traditional or 401(k)-style) at their current workplace. For those with pension coverage, the nature of pensions has changed dramatically over the last decade.

9 How well prepared are Massachusetts families? Some advantages compared to national peers. But general lack of preparedness means retiring in early 60s no longer a choice. Good news Our workers: healthier and better-educated. Our jobs: less physically demanding Older workers have higher labor force participation Our incomes higher Bad news Our homeownership rates lag the nation’s Older women most at risk for old-age poverty Our cost-of-living higher

10 Labor Market Implications A decline of prime-age workers means that all the growth in the Massachusetts labor force will come from older workers. Potential labor shortages ahead. Massachusetts Population, , by selected age group Total (15-64) 19801,110,1412,147,705588,3493,846, ,0162,863,136546,0474,229, ,8152,599,192834,4124,353,419

11 Labor Market Implications Traditional supplemental labor sources (immigrants, women, domestic migrants) are unlikely to fill the labor supply gap. Increased employment of older workers can help employers facing labor shortfalls. Increased employment of older workers can help older households facing retirement income shortfalls.

12 Impediments to Hiring Older Workers Older workers are expensive – higher earnings and more costly fringe benefits. Employment policies encourage early retirement. Older workers may not have required skills. Employers resist part-time employment. Age discrimination may still exist.

13 Recommendations Increase access to retirement savings accounts for full- time workers (e.g. through business associations or the state’s 457 plan). Increase employee participation in existing plans. Improve financial education and initiate on-going statewide conversation. Improve job training opportunities for older workers.

The State of the Workforce Changes, Challenges, & Opportunities in the 495/MetroWest Region