Reference no: EM132868645

Retirement is one of the last things on young employees' minds. But it should be top-of-mind, because time and the power of compounding are huge advantages in building retirement savings. The high cost of labor has resulted in firms replacing traditional pensions with 401(k) programs. This shifts the responsibility for saving for retirement from the employer to the employee.

According to the 2012 Retirement Confidence Survey, employees' confidence in their ability to retire comfortably is at historically low levels. (See attached Fact Sheet.) Thus, baby boomers , born between 1946 and 1964,may become the first generation to never retire.

Just as scanning the environment helps managers make better decisions; it can help individuals make better decisions. Let's look at the environmental elements of social/cultural, political, and economic. Demographics are important to the social/cultural element in environmental scanning. The approximately 76 million baby-boomers are beginning to retire from the workforce. But, since they haven't saved enough money, they may delay retirement. If they do retire, the huge numbers will affect the political element. Congress could raise the retirement age from 66 to 70. If not, the government will have to print money to pay for social security. That will affect the economic element. Printing more money will trigger inflation and devalue the currency. Interest rates will move higher.

Many baby boomers will work longer, consume less, and save more. How can young employees and managers meet the challenge to balance the cost of retirement with the quality of work?