The percentage of older workers in the total workforce—those aged 55 and older—is growing faster than that of any other age group, and they are expected to live longer than past generations. Labor force participation for this cohort has grown from about 31 percent in 1998 to 38 percent in 2007. In contrast, labor force participation of workers under the age of 55 has declined slightly (see fig. 1). Many factors influence workers’ retirement and employment decisions, including retirement eligibility rules and benefits, an individual’s health status and occupation, the availability of health insurance, personal preference, personal wealth, and the employment status of a spouse. The availability of suitable employment, including part-time work or flexible work arrangements, may also affect the retirement and employment choices of older workers. In addition, under current law, many federal retirees face a financial disincentive if they decide to return to the federal workforce— their salaries would be reduced by the amount of their annuities. In the late 1980s, the federal government phased in a new retirement system, replacing the Civil Service Retirement System (CSRS), a defined benefit plan, with the Federal Employees Retirement System (FERS), which combines a defined benefit plan with Social Security and a defined contribution plan. Under CSRS, a worker can retire with full benefits at age 55 with 30 years of service and at older ages with fewer years of service. Under FERS, workers can receive their full annuity at age 60 with 20 years of service. But, because of Social Security rules, workers under FERS do not receive full Social Security benefits until they are 65 or older; the specific age at which workers receive their full Social Security benefits depends on their date of birth. In addition, because the Thrift Savings Plan is an important part of a retiree’s income under FERS, balances in an individual’s Thrift Savings Plan also may help dictate when an individual chooses to retire. While we do not know the total effect of this shift in retirement plans on retirement decisions, it is possible older workers under FERS will work longer than their CSRS colleagues in order to increase their retirement earnings. As the government’s human capital leader, OPM is responsible for helping agencies develop their human capital management systems and holding them accountable for effective human capital management practices. For example, one such practice is strategic human capital planning, which addresses two critical needs: (1) aligning an organization’s human capital program with its current and emerging mission and programmatic goals and (2) developing long-term strategies for acquiring, developing, and retaining staff to achieve these goals. In developing these strategies, we have reported that leading organizations go beyond a succession-hiring approach that focuses on simply replacing individuals. Rather, they engage in broad, integrated succession planning and management efforts directed at strengthening both current and future organizational capacity. In implementing its personnel policies, federal agencies are required to uphold federal merit system principles in recruiting, engaging, and retaining employees. Among other provisions, the merit system principles require agencies to recruit and select candidates based on fair and open competition, as well as treat employees fairly and equitably. Federal agencies can recruit skilled or experienced workers, many of whom tend to be older, to fill full- or part-time career positions requiring demonstrated expertise. OPM is also responsible for providing guidance and information about federal governmentwide hiring and retention authorities and flexibilities to agencies to help them address workforce challenges. In some cases, agencies can use options as they choose without prior approval from OPM. For example, federal agencies can engage workers, including older workers, as consultants to meet temporary or intermittent needs or contract with individuals or organizations to obtain needed skills. In other cases, OPM serves as the gatekeeper by approving or disapproving an agency’s request to use particular options (see table 1). Of these options, only one, rehiring annuitants without reducing their salaries, exclusively affects older workers. OPM is also responsible for administering retirement, health benefits, and other insurance services to civil service government employees, annuitants, and beneficiaries. It also develops regulations when Congress makes new options available to federal employees and often advocates for new legislation. We and others have highlighted the need to hire and retain older workers to address the challenges associated with an aging workforce. In so doing, we have called upon the federal government to assume a leadership role in developing strategies to recruit and retain older workers. At our recommendation, the Department of Labor (Labor) convened a task force composed of senior representatives from nine federal agencies and issued its first report in February 2008. The report provides information on strategies to support the employment of older workers, strategies for businesses to leverage the skills of an aging labor pool, individual opportunities for employment of older workers, and legal and regulatory issues associated with work and retirement. In March 2008, the task force formed work groups for each strategy that continue to meet and develop implementation plans, and in June, OPM joined the task force and two of the work groups. While the task force’s focus is the private sector, some of the strategies it identified are relevant for federal agencies as well—for example, providing flexible work arrangements and customized employment options that include alternative work schedules and part-time work. Across the federal government, the proportion of older and retirement- eligible workers is growing. About one-third of federal workers will be eligible to retire by 2012, although most federal employees do not retire immediately upon becoming eligible. The percentage of federal workers nearing retirement eligibility varies across federal agencies. For example, within 5 years, 20 percent of employees at the Department of Homeland Security (DHS) will be able to retire, while 46 percent of employees at HUD and Transportation will be eligible. Governmentwide, the proportion of senior executives and supervisors eligible to retire by 2012 exceeds the overall average, with 64 percent of senior executives and 45 percent of supervisors eligible to retire within 5 years. In the current economic situation, projections of how many federal workers will actually retire remain unclear, but historically, the majority of federal workers stay well past their initial retirement eligibility date. Of the federal workers who first became eligible to retire between 1997 and 2002, at least 40 percent were still in the federal workforce 5 years later. Beyond retaining their current federal workforce, federal agencies’ efforts to bring in additional older workers to help meet workforce needs currently focus more on hiring them as new employees than on bringing back federal retirees. In 2007, federal agencies hired almost 14,000 new workers aged 55 and older. In comparison, in 2007, federal agencies tapped 5,364 rehired annuitants for service. The average age of federal workers is inching up, and older workers, many of whom have passed their retirement eligibility age, now comprise a larger proportion of the federal workforce than in the past. Based upon OPM’s data for 2007, the last year for which data are available, the average age of federal workers is now about 48, somewhat older than in 1998, when the average age of federal workers was about 45. Similarly, the proportion of federal workers aged 55 or older has also increased to about 24 percent, up from about 20 percent in 1998. However, the proportion of older workers varies widely across federal agencies. For example, in fiscal year 2007, the percentage of career federal employees in the 24 CFO agencies aged 55 or older ranged from about 9 percent at the Department of Justice (Justice) to about 37 percent at HUD and SBA (see fig. 2). Similarly, the proportion of federal workers eligible or nearly eligible to retire is increasing and varies across federal agencies. Thirty-three percent of federal career employees in the workforce at the end of fiscal year 2007 will be eligible to retire by 2012. This is an increase from 10 years earlier when about 20 percent of federal career employees in the workforce at the end of fiscal year 1997 were projected to be eligible to retire by 2002. The effects of retirement will likely differ across agencies, as many workers projected to be eligible to retire by 2012 are concentrated within certain agencies. These proportions range from a high of 46 percent at four agencies—HUD, SBA, Transportation, and USAID—to a low of 20 percent at DHS (see fig. 3). Within agencies, the estimated proportion of workers eligible to retire also varies at the component level—that is, by bureau or unit. Thus, even those agencies that have relatively low overall percentages of retirement-eligible employees may have components that have higher percentages of retirement-eligible staff. This, in turn, could affect the accomplishment of mission tasks and strategic goals for agency components and for the agency as a whole. For example, although the Department of Homeland Security (DHS) has a low proportion—20 percent—of workers eligible to retire by 2012, the proportion of workers eligible to retire now or by 2012 in its Federal Emergency Management Agency is currently about 33 percent, and agency projections indicate that about 58 percent of the senior executives in this agency will be eligible to retire by 2012. Certain occupations have particularly high proportions of workers eligible to retire by 2012. Fifty percent or more of workers in 24 occupations that have 500 or more staff are eligible to retire by 2012. Several of these occupations, such as air traffic controllers, customs and border agents, and administrative law judges, are considered mission critical. In addition, federal law requires mandatory retirement at specified ages for some occupations, such as air traffic controllers who must retire at age 56 (see fig. 4). Moreover, the proportion of federal executives and supervisors who will reach retirement eligibility exceeds that of the overall proportion of federal employees. Of the approximately 7,200 career executives in the to federal workforce at the end of fiscal year 2007, 41 percent were eligible retire in 2008 and 64 percent will be eligible by 2012. For supervisors who are not career executives, 25 percent were eligible to retire in 2008, and 45 percent are projected to be eligible by 2012. In comparison, 17 percent of all federal workers were eligible to retire in 2008 and 31 percent are projected to be eligible by 2012.