Retirement is changing. Here's why companies need to change, too | Fortune

"America's workforce is on the verge of an unprecedented transformation. More Americans are turning 65 in 2025 than any year before. That trend is set to continue through 2027. As millions of employees age into retirement, employers will find themselves struggling to replace that seasoned talent with younger, less experienced workers. Part of the problem stems from demographic reality. Birth rates have declined for nearly two decades, which means fewer young adults are entering the workforce each year."

"Of course, there's no way to manufacture more young workers. But it's not too late for employers to stave off the impending talent deficit. To do so, they'll need to rethink prevailing workplace norms - and start treating retirement not as a cliff but as a gentle slope. It's called "phased retirement" in the industry jargon. At its most basic, it involves gradually reducing work hours and responsibilities for older employees while still leveraging their expertise, ideally to coach up the next generation of workers."

"Employers need their most seasoned workers to stay on. More than seven in 10 U.S. employers today say they can't find the skilled workers they need. And many recent college graduates lack the kinds of soft skills that today's jobs demand - including clear communication and leadership. Keeping experienced employees on board as mentors is a simple way for companies to instill these critical competencies in newer cohorts."

America's workforce faces a demographic shift as more Americans turn 65 from 2025 through 2027 and birth rates have declined for nearly two decades, projecting the largest U.S. labor shortage by 2032. Employers will struggle to replace seasoned talent with fewer young workers and many recent graduates lack necessary soft skills. Phased retirement—gradually reducing hours and responsibilities while leveraging expertise—allows older employees to mentor newer workers, preserve institutional knowledge, ease succession planning, and prevent brain drain. Phased retirement benefits companies by maintaining skills and relationships and benefits older workers by offering gradual transitions from full-time work.

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