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For boomers, it's the retirement plan that never happened

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Call it the retirement that never was. The oldest baby boomers are turning 69 years old this year, yet many are still working and have no plans to go anywhere.

In 1990 just 12.1 percent of workers were 65 and older; by 2010 more than 16 percent were, according to the Census Bureau. That number is likely to grow as more boomers move into the over-65 demographic.

Modern retirement calls for different rules, so it's no wonder that boomers are redefining retirement.

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"To think that you can finance a 40-year retirement is mathematically impossible," said Catherine Collinson, president of the Transamerica Center for Retirement Studies. A Transmerica survey shows that almost two-thirds of baby boomer workers plan to stay on the job beyond age 65—or don't plan to retire at all. "Baby boomers do not envision not working," Collinson said.

People who are at least 65 can expect to live another 19 years, and those who make it to 75 should plan to live well into their 80s, reported the Centers for Disease Control. At the same time, the average account balance for workers in their 50s and 60s is less than $150,000, according to the Employee Benefits Research Institute.

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"Unless you socked away a lot of money, retirement for many is just not going to be what we grew up believing retirement was," said certified financial planner Mark Singer, president of Safe Harbor Retirement Planning, author of "The 6 Secrets to a Happy Retirement" and himself a boomer, at age 60.

As a result of working longer, boomers are transforming not just retirement, but the workplace itself.

Benefits of working

Working longer is the most obvious solution to the retirement savings problem. Among all of the options available to pre-retirees, it's the one that has the biggest impact on a nest egg, said Judith Ward, a senior financial planning with T. Rowe Price. Working three years longer and contributing 15 percent of income can grow a 401(k) by 22 percent; working five years more can increase savings by 39 percent. Combining more years of work with a bigger retirement-plan contribution (say, 25 percent) has an even more powerful impact.

Of course, not all boomers will be content to continue pounding out 40-hour weeks, said Kerry Hannon, a jobs expert with AARP and author of "Love Your Job: The New Rules for Career Happiness."

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Some will opt for phased retirement schemes, where they're able to cut back on their hours but still stay employed. Depending on the number of hours, they may be able to hold on to crucial health insurance and retirement-plan perks. Most important, however, is that even part-time work can keep boomers from tapping their nest eggs too soon.

However, employers may not be so quick to jump on the phased-retirement bandwagon. "The trend is happening so quickly that employment practices have simply not kept pace with the changing times," Collinson at Transamerica said.

Changing careers

There are some legal obstacles in switching from full-time to part-time work—specifically, how to account for insurance and pensions for part-time workers—noted Mark Schmit, executive director of the Society for Human Resource Management Foundation. What's more, these arrangements could be seen as unfair to younger workers. "They might be thinking, 'These older folks are getting a perk that the rest of the organization is not getting,'" he said.

Some industries, however, are more open to it, said Schmit, especially if they have a looming brain drain, as is the case in health care and mining. Phased retirement might give businesses time to accelerate their recruiting efforts while still benefiting from the talents of boomers.

Intergenerational conflicts loom

Of course, staying in the workplace longer is not without glitches.

According to Dan Schawbel, founder of WorkplaceTrends.com, a research and advisory firm focusing on millennials in the workplace, every generation has a negative view of the generation that's coming up but a positive view of their elders'. "The younger generation is seen as more connected and they're cheaper to hire, so they're seen as a threat [by boomers]," he said.

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In SHRM's survey of human resource managers, more than a quarter reported some level of intergeneration conflict in their organizations.

Dress code is one area particularly fraught, with millennials advocating for casual dress and boomers insisting on business attire. "Millennials want you to appreciate what's coming out of your head, not the costume they're wearing," said Anne Donovan, a managing director and millennials expert at accounting giant PricewaterhouseCoopers.

Focusing on dress code might seem trivial, said Donovan, but it speaks to workplace culture. Businesses that cling to formal dress will continue to lose young talent to companies that do not, she said. Few would argue that the hoodie-wearing engineers in Silicon Valley aren't getting the job done.

Communication style, too, causes conflicts. "The technology divide is getting wider," said Schawbel at WorkplaceTrends.com. "[Younger people] don't use email; they're texting and using Snapchat, and voice mail's dead."

These issues come to a head in particular when millennials supervise workers 20 years or more their senior. "We're seeing more and more of that, and that's just life," said AARP's Hannon. Boomers lamenting this reality, she added, are just "going to have to get with the program."

The millennials are learning from the baby boomers, but the baby boomers are also learning from the millennials.
Dan Schawbel
founder of WorkplaceTrends.com

Roll for reverse mentoring

To quell these conflicts, some companies have instituted reverse mentoring programs—pairing up boomers with younger workers who can help guide them in today's technology and communications.

At Pricewaterhouse Coopers, where 80 percent of workers belong to the millennial generation, boomers in the company's Atlanta office can get help with their technology questions through their millennial mentors. "What we've done is taken the stigma away for the boomers, and millennials want to have that interaction with leadership," Donovan said.

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Philips, the Dutch lighting company and a client of WorkplaceTrends.com, uses cross-generational teams of millennials who manage employees nearing retirement. "The millennials are learning from the baby boomers, but the baby boomers are also learning from the millennials," Schawbel said.

—By Ilana Polyak, special to CNBC.com