Fidelity’s Longer Working Lives Index is putting a spotlight on how well the G7 nations support people to remain in work later in life. No country has completely solved this issue, and in the UK many over-55s have said they’re struggling to find good quality work that keeps them motivated, often working due to financial uncertainty.

For many employers, the challenge is no longer whether they will have an ageing workforce. It's what they do about it. According to consultancy Bain & Company, 150 million jobs will shift to workers over the age of 55 by 2030. By the end of the current decade, it predicts that over-55s will make up a quarter of the workforce across the G7 nations.¹

However, employers should not see experienced workers as an inevitable fact to deal with, but rather a growing force that could bring significant benefits to their business.

Experience often means faster decision-making, fewer mistakes, better judgement, stronger customer relationships and high-quality problem solving.

What’s more, by working to attract and retain older workers, employers can reduce the hidden costs and damage caused by early unplanned retirements.

When experienced employees leave an organisation, they take with them client relationships, organisational memory, judgement, an understanding of company culture, and their ability to mentor others. These benefits are very difficult and expensive to replace.

By retaining experienced workers, employers can reduce recruitment and training costs and use their knowledge to accelerate the development of younger colleagues.

Not ready to retire yet

One concern we sometimes hear from employers is that some experienced employees may remain in work because they don't feel financially able to retire, rather than because they remain motivated by their role.

Our research suggests there may be some truth in that concern. The UK performed particularly poorly on Work Choice & Motivation, with many over-55s saying financial necessity plays an important role in their decision to continue working. They also earn on average 2% less than those aged 25–54, making the UK one of only two G7 countries where older workers earn less than their younger counterparts.

However, this should not lead employers to conclude that experienced workers are the problem. Instead, it highlights the importance of helping employees feel financially confident about how and when they retire.

This is where financial wellbeing initiatives come in. Helping employees to understand whether they are on track for a comfortable retirement, exploring different retirement pathways, and building confidence in their long-term financial plans benefits both the individual and the employer.

Time and time again, we see that this confidence leads to higher levels of engagement and motivation at work. Employees see an end point rather than simply working because they don’t know if they can afford not to.

Dan Smith and James Carter on the implications of Fidelity’s Longer Working Lives Index for employers and policymakers

Increasingly, employers are recognising that financial wellbeing deserves the same attention as physical and mental wellbeing.

As a business, Fidelity has invested significantly in developing tools and services to help employers improve financial wellbeing in their workforce. These include Plan for Life – a new tool which helps Fidelity workplace pension members to build a personalised financial plan – and our financial coaching service, where they can get one-to-one support with turning that plan into a reality.

Since launch more than 10,000 Fidelity members have created their Plan for Life, with 49% of workplace members on track for their desired lifestyle in retirement.

When this kind of support is combined with training and learning opportunities so that workers of all stages of life feel they have room to grow and progress, the overall effect can be hugely powerful.

Our report argues that working for longer should be a choice not an obligation. Employers need to recognise they have a role in creating that choice.

The most successful employers of the future won't simply retain experienced workers for longer. They'll help them continue contributing while giving them the confidence to retire when the time is right.

Why supporting experienced workers does not come at the cost of younger ones

With millions of young people out of work across much of the G7, some might question whether now is the time to focus attention on supporting those at the other end of their working lives.

Surely, the argument goes, by helping the over-55s to stay in the world of work, we are blocking younger people from entering it?

Economists call this the “lump of labour fallacy” – the idea there is only a finite amount of work to be done in the world and therefore that, by supporting one cohort into jobs, you take jobs away from another.

In reality, labour markets are far more dynamic. Economies grow by increasing the number of people in work, by improving productivity, or both. As businesses expand and become more productive, they create new jobs rather than simply redistributing existing ones.

That helps to explain why many of the countries with low levels of youth unemployment also often have low levels of unemployment overall: Japan and Germany are examples of this.

Rather than competing for a fixed number of jobs, younger and older workers often complement one another. Experienced workers transfer knowledge, mentor colleagues and strengthen productivity, while younger workers bring new ideas and skills.

The challenge for policymakers is not choosing between generations but creating labour markets where both can thrive.