The idea of a traditional retirement after age 65 is a notion that is fading as rapidly as the legendary gunslinger Shane rode off into the sunset.
Back in 2008, a fifth (20%) of Puerto Rico’s residents age 40 and older expected to retire at any age between 68 and 80. And even as early as 2007, the U.S. Bureau of Labor Statistics (BLS) estimated two major shifts would occur in workforce demographics that would lead U.S. employers to face “unique human resources challenges”—the aging of the workforce and a diminishing number of young workers. Almost 10 years later, that estimation has become a harsh reality for Puerto Rico with a potential for even harsher consequences for the local economy.
“The law in Puerto Rico states that a senior citizen is anyone who is 60 years or older. But even though this age is the judicial cutline for what is considered the second half of our lives, as part of the senior citizens’ group, distinctions must be made [within this group],” said gerontologist Mildred Rivera.
In 2010, the U.S. Census Bureau reported 20.4% of Puerto Rico’s population was 60 years of age or older, and 14.5% was 65 years or older.
By 2014, those 60 and older were estimated to make up 28.4% of the local population or 812,000, of the noninstitutionalized population 16 years and older.
This trend, which was originally attributed to lower birth rates in Puerto Rico and longer life expectancy, is expected to continue in the coming years, as Puerto Rico’s lost decade and continuing fiscal and economic woes have led thousands of residents to move to the U.S. seeking better lives. According to the Census Bureau, about 300,000 people have migrated out of Puerto Rico in recent years, and many of these are younger adults with children who have favored the state of Florida as their new home. In a recent interview with Caribbean Business, the president of the Broward Chamber of Commerce said a survey ordered by the Orlando Sentinel newspaper confirmed more than 100,000 Puerto Ricans had moved there in recent years.
This trend coincides with the exit since 2006 of many pharmaceutical plants and other companies operating in Puerto Rico under Section 936 of the U.S. Internal Revenue Code, after Congress repealed the section. Since then, and along with other factors, Puerto Rico’s economy has spiraled down into a recession lasting 10 years.
The direct and indirect effects of lost jobs and decreasing government revenues from Section 936 industries leaving the island, the worldwide financial crisis in 2008 and the manner in which the Puerto Rico government has attempted to keep the island’s economy afloat, first by increasing public debt and later by approving more taxes, has plunged the island deeper into recession and pushed itself into the verge of default and bankruptcy.
For the past 10 years, whatever economic advances Puerto Rico may have previously made, were reversed or cancelled by negative or flat growth in its gross national product, insufficient revenues, increasing public debt, new and higher taxes and increasing unemployment rates. In fact, based on government figures, Puerto Rico’s economic indicators are currently at the same level as they were in the early 1990s.
40% of elderly residents living in poverty
In a 2014 survey conducted by AARP, formerly the American Association of Retired Persons, it was estimated that 40% of senior citizens in Puerto Rico were living below the poverty level, as defined by the Census Bureau. The report said this figure is almost four times higher than that of the elderly population in the U.S.
The AARP survey also reported that some 537,000 senior citizens in Puerto Rico were out of the labor force and living on fixed incomes provided by Social Security benefits, retirement pensions and the U.S. Nutritional Assistance Program for low-income individuals and their families.
The situation with so many senior citizens living in poverty and on fixed incomes has prompted a significant number of people who are still working to postpone their retirement, while those who have retired are contemplating or even returning to the workforce, perhaps part time or in different fields altogether.
“The majority of [senior citizens] expect to be working and in a variety of ways—at least seven in 10 say they expect to work at their current jobs as long as possible or as a consultant on an as-needed basis. Half of these respondents think they will be working part time at another company or organization or change careers, while others are thinking about starting a business or going back to school,” according to the AARP report.
Specifically, seven out of 10 (69%) Puerto Rican workers interviewed for the report indicated “it is likely they will put off complete retirement.” Most of these respondents said they will likely be working in different ways, such as continuing to work at their current jobs (full or part time), becoming consultants or starting their own businesses. More than half of those currently working and age 40 or older—expected to retire between the ages of 68 and 80.
This situation, estimated to be a global trend in terms of a worldwide reduction of births, improved living conditions and life expectancy, is the main reason why the BLS gave a heads-up to American businesses on “the two major shifts in workforce demographics.”
As a result of the aging population and the continuing outmigration, employers in Puerto Rico have expressed their concerns regarding specific issues that could have an impact on their businesses. Among those issues are:
- The difficulty of finding employees with the right skills and qualifications;
- The difficulty of recruiting key positions;
- Providing competitive benefits and/or compensation to workers; and
- The impact of professional emigration on their respective industries.
Senior workforce offers solutions
While these concerns are real, for José Acarón, who is the director of AARP Puerto Rico, both the central government and private-sector employers are failing to see that the solution is right in front of them.
“They don’t see the experience in the senior workforce as an asset. They see the senior worker as someone on the verge of retirement, so they don’t provide those workers with the necessary training to make them more competitive in their respective fields,” Acarón said.
Because of Puerto Rico’s tough economy, what is happening is that senior workers are not leaving their jobs or retiring, he indicated. At the same time, they have not been trained to be competitive in such areas as managerial or executive functions, technical expertise and even computer technology.
According to the AARP Puerto Rico director, employers have to start changing their perspectives on senior workers and start seeing them as solutions to some of their concerns.
“One of the alternatives that can be explored is ‘position-sharing,’ whereby two employees share the same position in a company. This is a surefire mechanism for transferring knowledge that would otherwise be lost when the senior employee leaves,” explained Acarón, who also assured that from a certain moment in life on, the senior worker will not necessarily be interested in working full time.
Acarón recalled a case in which a senior manager at a famous rum plant in Puerto Rico decided to retire at age 70 and had met with his younger successor to say hello and wish him good luck. A couple of months later, the young manager suffered a heart attack and died. As a result, the recently retired manager was hired once again because no one else could do the job as well.
Acarón believes the island’s labor laws must be changed to make them more flexible in terms of work schedules and conditions. Even though he foresees there could be strong opposition from different sectors, particularly labor unions, he is convinced changes to make labor laws more flexible would be beneficial for unionized workers as well as employers and their businesses.
“There’s a rich source of talent and experience withering away watching TV and playing dominoes while the country falls apart,” Acarón said.
Gerontologist Rivera had stated there is a need to distinguish between “the different kinds of senior citizens” mainly because of the wide age bracket used to define them.
“Distinctions have to be made because a 60-year-old person is not the same as a 75-year-old or an 80-year-old. There are 60-year-olds who enjoy good health and an active lifestyle and do not see themselves as senior citizens,” she said.
Rivera’s proposed distinctions would include from healthy seniors who live independently, to those who are still independent but require some assistance with certain services, to others who are bedridden and in need of assistance 24/7. As the island’s population continues to age, it is expected that the need for senior citizens’ services will also increase, in such areas as health, transportation, food preparation, caregivers, etc.
An analysis made by the Puerto Rico Planning Board revealed that the main problem affecting seniors is health. While 95% of seniors (people 60+) in Puerto Rico have medical insurance, a number of health-related problems stemming from limited insurance coverage have a negative impact on their quality of life, such as the lack of integrated services and restrictions on services and medical procedures, among others.
Elderly needs represent opportunities
Acarón sees a silver lining here, provided the necessary changes in attitudes and perspectives are made.
“One of the changes that we need to make is our conviction that entrepreneurship is in the exclusive realm of the young. Seniors can also be entrepreneurs,” said Acarón, who characterized the job market as an extremely limited universe for those 45 and older.
“Those 60 and older are almost unemployable,” he added.
Acarón proposes that the needs of one be provided by the other.
“Think of it. If you are an independent retired senior and you need to supplement your income now that you live off a pension or Social Security benefits, you could very well provide transportation, food services or any related service needed by seniors who suffer from vulnerabilities. This way you supplement your income and keep your independent lifestyle. Employment, income, services…everything is covered,” argued Acarón, who also assured this could be developed as a community-based business model.
Some of these services are being offered, mainly by the government at both the state and municipal level, but in a very limited scope. For example, the Metropolitan Bus Authority offers its Llame y Viaje (Call & Get a Lift) program, which takes senior and residents with disabilities to their medical appointments. Nevertheless, the program is limited to the San Juan-metropolitan area and only for medical appointments. Other transportation needs, such as grocery shopping and entertainment, are not covered by the service.
There is also the Ama de Llaves (Housekeeping) program, in which mainly municipal governments assign housekeepers to help seniors and people with disabilities with regular chores they have difficulties performing, such as cleaning and cooking.
In terms of food services, several years ago the concept of providing fully cooked meals—known as fiambreras (lunchboxes)—was common, mainly for families with both parents working, the concept has not been widely developed, if at all, to include seniors with limited mobility. Nowadays, there are but a handful of businesses offering this service and combining it with catering. Even fewer businesses offer meal delivery, such as meals on wheels.
Housing, a key issue
For Rivera, the next significant need that has to be managed for senior citizens is housing, particularly for those who are still working and are independent, but their incomes are not necessarily enough to pay their monthly rents or mortgages, and for those who are retired and independent and have seen their incomes reduced.
The gerontologist argued the best alternative is for a person to be able to stay in his/her home during his/her elderly years because not only is this situation emotionally healthy, but also because the local community serves as a support network. Nevertheless, she admits there are circumstances that could limit this possibility, such as loss of income, widowhood, health conditions and lack of mobility, among other vulnerabilities.
The concept of égidas, a residential complex for retired people that could be oriented to specific professional groups (i.e. teachers, police officers, etc.) because part of their retirement funds were used to build the facility, is “the healthy solution” for these independent seniors, according to Rivera.
Most, if not all, of these égidas are subsidized by government-managed federal programs that have set a predetermined cost for each housing unit and, depending on the seniors’ incomes, the federal government pays for part of the rent or its totality.
Some égidas have been developed recently by a few municipal governments and social-interest groups, such as the Methodist Church, whereby the eligibility of prospective residents is determined by their incomes, among other requirements. But the most important requirement is for residents to be independent. Residents who need medical care need to relocate to a proper facility, most likely a nursing home, which in turn also represents a significant housing need for this population.
Tamara Pérez, former president of the Federation of Extended Care Centers of Puerto Rico, has said that despite “the enormous need” for nursing homes on the island, the government is making it “more and more difficult for these to operate.
“The government has strict requirements for licensing nursing homes in Puerto Rico, and if any of our centers does not comply with one or more of those requirements, it could be closed down immediately. But when an illegal nursing home is detected operating without a license, that center is allowed 60 days to comply with all regulations. This isn’t fair for those that are complying but could fail in one or two items,” Pérez said.
Most of the extended care centers affiliated with the Federation serves middle-class families who cannot care for their elderly loved ones. There are a few high-end nursing homes on the island, where the cost of caring for an elderly person exceeds $3,000 a month, not including the cost of medicine or other special needs.
According to Acarón, as Baby Boomers—those born between 1946 and 1964—start reaching their retirement age, an increase in the number of working, independent seniors can be expected. This is despite the fact that, according to the Labor Department, in 2014, 72,000 out of a total senior population of 812,000 was working. Within this working group, 69,000 were employed, with the balance actively seeking employment.
It should be noted, though, that the labor-force participation rate for those 60 to 64 years old was estimated at 18.8%. Within that age group, 24.3% were men. This means that almost 25 out of every 100 men in Puerto Rico between 60 and 64 are working beyond the common age boundary for retirement.
Meanwhile, the labor-force participation rate for female senior citizens is higher, reported at 36.6% in 2014, corresponding with another trend of more women working than men in Puerto Rico.
Baby Boomers have also been labeled the “Sandwich Generation” because they have had the double responsibility of raising their children while caring for their elderly parents. Today, some adult children have also started living with their older parents, due to economic difficulties. These circumstances, along with the need for medical care, could be among the reasons why Baby Boomers are postponing their retirement, according to Acarón.
If this trend continues, as a consequence of Puerto Rico’s paralyzed economy, by 2024—when the last of the Baby Boomers reach retirement age and as senior adults continue to work and lead independent, active lives—the need for services and facilities for seniors in Puerto Rico will become immediate and can no longer be postponed. This is only eight years away.