As the oldest baby boomers begin turning 60 this year and move one step closer to retirement, business owners will confront an entirely new workforce environment - one in which the potential for labor shortages is increasingly likely. This makes it imperative to address a key issue: How will the boomers' retirement affect the future of today's business?

Results of the 2006 Merrill Lynch New Retirement Study, conducted by Harris Interactive, confirms that the baby boomer generation has a fundamentally different perspective on retirement from that of previous generations. Although this "new retirement" presents a few challenges, it also offers significant opportunities to business owners who plan well in advance.

New Expectations for a Working Retirement
The study indicates that boomers intend to make work an important component of their retirement. For example, nearly three-fourths of boomers (74 percent) say that they will work in some capacity during retirement, for an average of nine years. In fact, of those who want to work, 45 percent aren't planning to stop completely.

The study also reveals several important lessons about the different ways in which boomers intend to work in retirement. For example, boomers want flexibility, and rather than work consistently, a significant percentage of boomers (40 percent) intend to cycle between work and leisure and 19 percent say permanent part-time employment is ideal. Only 10 percent prefer a traditional fulltime schedule.

Boomers will also seek new challenges - and even new careers, as 65 percent of respondents say they expect to try a new line of work in retirement. Meanwhile, one in 10 boomers intends to start a business. In fact, these shifts are already under way, as 32 percent of boomers have researched specific opportunities, while 23 percent have received training.

"Your older workers who have been with you for years may not stick around after they reach retirement age," says Steve Mitchell, director of retirement marketing at Merrill Lynch.

And finally, boomers are concerned about healthcare costs. Most respondents (71 percent) say they are worried about paying for health insurance during retirement, while 67 percent are willing to work in retirement to gain access to healthcare coverage. Nearly half (45 percent) say they would consider working at a job they did not like simply to secure coverage.

Implications for Business Owners
The study also found that many companies are not prepared to take on this fundamental shift in the workplace. Nearly one-third (31 percent) of companies surveyed say they have not put much thought into preparing for the large number of boomers approaching retirement age, while 40 percent don't see boomers retiring as an important priority. In fact, the companies say they are much more likely to focus on finding and keeping younger workers (23 percent) than on retaining older workers (7 percent).

Those types of decisions may be big mistakes, according to Mitchell. "It's easy to ignore the boomers retiring because it's a long-term trend instead of a one-time event, but it's a shift that will happen and will impact your business - for better or worse," he says.

Indeed, with a projected scarcity of younger workers in the future, many companies will benefit by courting boomer retirees who want to continue working. With that in mind, Mitchell recommends several steps business owners can follow to begin developing business plans that reflect the aging boomer workforce, including:

• Size up the current employee pool: The boomers' retirement will affect different companies to varying degrees. If a firm consists mainly of younger workers, the impact may be minimal. But if most workers are older, companies may need to focus more on keeping them around.
• Assess employment needs: Business may stand to gain from boomers' attitudes toward working in retirement. For example, seasonal companies that hire temporary employees each year could benefit from attracting boomers who wish to cycle in and out of employment. "For some firms, retired boomers can serve as a ready pool of on-call workers," says Mitchell.
• Focus on what boomers want. If targeting retired boomers makes sense for a particular company, then focus on benefits that will hold the most appeal for them, such as allowing telecommuting, offering flexible schedules, promoting opportunities to teach or mentor younger workers and providing access to affordable healthcare.