The Future of Work: Rethinking Retirement

By Susan Lyne and Carol Magalhães Isaacs, BBG Ventures

We’ve been digging into the implications of the Aging of America, an area of interest at BBG Ventures that has now hit an inflection point. By 2030, the entire Boomer population will have hit retirement age and Americans 65+ will outnumber those under 18. Compare this to 2000, when 26% were under 18 and just 12% were 65 and over.¹ That age swing is only accelerating due to longevity advances and lower fertility rates, with the Congressional Budget Office projecting that the share of the US population aged 65 or older will increase by 50% in the next 20 years.²

This is not a small change — the repercussions will be felt across every aspect of society, including productivity, economic growth, healthcare costs, the care economy, gender equity, even global power dynamics. As a nation, we could go at each of these issues independently, but at BBGV we are more interested in whether a singular focus on retirement could address many if not most of the negative impacts:

Can we re-focus healthy Americans 60+ on a new phase of productivity, a “third act” that enables them to keep learning, keep earning, keep socially-engaged and contributing to the nation’s economic growth? And what role can AI play in helping every senior identify their unique skill set and personal priorities — and connect them with the right opportunities?

Rethinking retirement

American workers can take social security benefits as early as 62, at a reduced maximum payment of $2710/mo. They are entitled to 100% of their benefits if they wait until 67 ($3911/mo max) and 124% if they wait till 70 ($4873/mo max).³ As of July 2024, the average check size was $1782.74 — so the economic reality is that most people cannot survive on social security alone.⁴ Yet half of Americans over 55 have zero retirement savings. In 2022, about 46% of households reported any savings in retirement accounts, 26% had saved more than $100K, and only 9% had more than $500K.⁵ As a result, more people continue to work past retirement age; and a growing number are re-entering the workforce — 1 in 8 plan to go back to work in 2024.² The reasons are myriad: some have been blindsided by the increasing cost of essentials like food, gas, electricity and rent. A recent survey in the WSJ found that retirees are spending ~25% more on these fundamentals than expected.⁶ Others, who stopped working due to layoffs, illness, or caregiving demands, are returning to work not just to supplement social security but to stay busy or find a sense of purpose, opting to take jobs that employers have a hard time filling. Taken together, these trends underlie Pew Research estimates that 57% of labor force growth through 2032 will come from Americans +65.³

Macro-impacts of ignoring this shift

These are good signals, but we won’t see the transformational change we need without a solution that presents lifelong work as a net positive, not a broken promise. Absent such a solution, the macroeconomic impact of this demographic shift will create a worker shortage, knowledge drain and productivity gap that could depress economic growth for the next half century.⁷ While the tight, post-pandemic labor market has loosened somewhat, the most recent data still shows 8.2M job openings in the US and only 7.2M unemployed workers⁸ — with the share of the population participating in the workforce having dropped from 67.2% in 2001 to 62.7% today. Multiple factors are contributing to this trend, but one driver is the 3M adults pushed into early retirement by the pandemic.

How Boomers perceive work

BBG Ventures recently surveyed over 2000 Americans across different races, genders, ages, jobs, incomes and geographies to better understand how identity shapes attitudes and priorities. That study, The Polycultural Future of America, will be published this fall, but there were a number of salient takeaways from the Baby Boom cohort:

• Engagement at Work: Approximately 40% of all survey participants agreed or strongly agreed that they feel burned out by work. However, Baby Boomers (aged 60–77 today) had the lowest level of work burn-out (28%) of any generation.
• Loyalty/Retention: A significant percentage of surveyed Americans said they had considered a career change in the past year, but Boomers had the highest number of respondents who are happy in their current role. Pew’s 2023 research also found that people 65+ are happier in their jobs than other generations.⁹ That is a strategic advantage for employers, reducing costs related to churn and preserving institutional knowledge.
• Educational Advantage: They were the most highly educated generation among survey respondents, with 43% possessing a Bachelor’s degree or higher. This is a larger percentage than in the Boomer population as a whole, but fewer than 30% of all Boomers stopped their education after high school, positioning them well for re-entering the workforce and contributing meaningful expertise.
• Financial Security: Financial security is a top 2 priority alongside health/healthcare, and a likely motivator to continue working or re-enter the workforce.

What would make work a net positive for Americans 60+?

The vast majority of people 65–84 say that they feel healthy enough to work;¹⁰ and many keep working well into their 70s and even 80s — because they love their job; crave structure in their lives; are driven by purpose; value the daily social connections; or fear the loss of mental stimulation. Many more keep working because they have to. But by the time we turn 65, 70% of Americans have “retired.” Some, especially those in physically demanding jobs, are forced into retirement early, but most stop working because it’s expected, a reward of sorts for decades of labor.

Third Act work needs to be positioned as its own reward — and to that end it can take many forms, from self-employment to a half-time job; from gig work to a full-time role in a new field; from teaching younger workers to volunteering for a local service group. Re-entering the workforce post retirement age has the added benefit of protecting older adults from loneliness and social isolation, factors that are linked to a roughly 50% higher risk of dementia, along with increased rates of depression, anxiety, suicide, and overall poor health.¹¹

Why AI creates a new opportunity

While it’s still early days, broad access to AI tools has the potential to transform the experience of job searching and career matching. We are already seeing founders developing capabilities and platforms that, while not focused on the retirement challenge, could be adapted to address the Third Act opportunity.

• AI Agents and Copilots: Even a few years ago, the idea of personalized skills assessment and job matching would have been out of reach for anyone who couldn’t pay a consultant’s fee. But AI agents and co-pilots are already being effectively used to screen job applicants and build resumes. What would it take to build a similar co-pilot to help people 60+ identify strengths and skill sets, along with personal priorities (e.g. flexible hours, benefits, commute time, or a multigenerational workforce). Companies we’ve seen deploying AI for hiring needs include:
• Upwage, a BBGV portfolio company, enables faster, fairer hiring and screening of hourly workers via AI-powered screeners that are tuned to identify specific qualities and infinitely more patient than a human recruiter.
• Rezi, an AI-powered resume builder, offers features like AI Skills Explorer and expert resume review.
• HireVue includes automated video interviews and assessments, using AI for candidate skills and suitability screening.
• SeekOut specializes in hard-to-find talent, offering AI-driven candidate matching and screening tools.
• Transformify offers an AI-powered ATS that uses ML to rank candidates based on skills, qualifications and suitability, promoting diversity and inclusion in hiring.
• Eightfold.ai uses AI in a skills-driven approach to match individuals to job opportunities and upskilling programs.
• Skillfully, a hiring platform that integrates AI tools to create customizable virtual simulations to evaluate job candidates’ skills before hiring.
• Voice Interfaces: Mary Meeker’s recent post on AI and Education suggests that co-pilots could usher in an age of one-on-one tutoring.¹² That would create a path to skills development for this population; and could also be a route to capturing the institutional knowledge that will be lost as seniors retire from long-held positions. There are well known platforms geared to learning, upskilling and training: Coursera and Khan Academy provide personalized DTC learning opportunities; Degreed, Skillsoft, Stepful and Pluralsight offer B2B workforce development, the latter predominantly focused on developers and IT personnel, ensuring their knowledge base and content stays relevant and up-to-date. But innovation in training and reskilling to keep seniors engaged in the workforce remains limited. Products that use the power of voice to enable coaching and upskilling would be a game-changer. Historically, smart speakers like Amazon’s Alexa and Google Home have been used for simple tasks, such as providing weather updates. However, with the emergence of LLMs, virtual assistants can now offer advanced conversational human-like capabilities, speeding learning through the proven superiority of one-on-one tutoring — at scale.
• Personalized and/or skills-based job matching: Gathering, processing and interpreting large data sets and information sit at the top of Gen AI’s core capabilities today. As GPT-4o and it’s future versions get increasingly sophisticated, we envision a time in the not too distant future when predictive models will be able to match a candidate’s transferable skills, life experience, and people savvy with relevant jobs, opportunities, and/or training, opening their eyes to new possibilities. Predictive analytics could add another layer to job matching, assessing the likelihood that someone would be successful in a role, leading them into a successful and fulfilling third act.

In a recent podcast, Floodgate founder Mike Maples noted the importance of tech inflection points, noting that “they give founders an asymmetric weapon to wage warfare on the present… providing new empowerment that an entrepreneur can harness to create something radical.”¹³ To date, VC investment in AgeTech has been highly practical, with a bent towards death and decay (think: fall prevention; home health aide training; cost-control for long term care facilities; end-of-life planning). While there is definitely a market for those solutions, we think it’s time for something more radical.

We are eager to meet founders who want to use the asymmetric weapon of AI to create new empowerment for the senior workforce. If you are building in any of these spaces, reach out to susan@bbgv.com or carol@bbgv.com — we’d love to hear from you.

At BBG Ventures, we are developing a thesis on Aging America, starting with the impact of our aging population on the workforce. While this demographic shift could create myriad challenges, it should drive us to rethink retirement and imagine a Third Act for Americans where they can continue to learn, earn, and contribute to the nation’s productivity. Our thesis, as previewed above, is centered around leveraging AI, and technology broadly, to develop tools and platforms to enable that Third Act. We are actively looking for people innovating in this space. If you are a founder building in this arena or an investor who shares a similar interest, connect with us!

Footnotes
¹US Census Bureau
² The Demographic Outlook: 2024 to 2054 | Congressional Budget Office
³What is the maximum Social Security retirement benefit payable?
⁴ What Is The Average Social Security Check? | Bankrate
⁵Nearly half of American households have no retirement savings
⁶ Congrats on Your Retirement. Time to Find a New Job. — WSJ
⁷ The U.S. productivity slowdown: an economy-wide and industry-level analysis : Monthly Labor Review
⁸ Understanding America’s Labor Shortage | U.S. Chamber of Commerce
⁹ Pew, How Americans View Their Jobs (2023)
¹⁰ Meet the 80 and 90-Somethings Who Want to Keep Working | TIME
¹¹Social Isolation and Loneliness in Older Adults: Opportunities for the Health Care System | The National Academies Press
¹²Bond Cap Mary Meeker’s recent post on AI and Education
¹³Insights from Venture Visionary Mike Maples, Jr. of Floodgate Fund

Further Reading:

1. “Who will find the first silver unicorn?” by Roy Bahat and Ai-Jen Poo
2. AgeTech Revolution by Keren Netkin
3. Stage not Age Susan Wilner Golden
4. The Longevity Economy by Joseph F. Coughlin
5. The Future is Graying: Tech Opportunities for the Aging Landscape | by Cowboy Ventures
6. Better with Age: The Rising Importance of Older Workers | Bain & Company
7. Gray New World: Aging in the Time of Technology by Cake Ventures