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Phased Retirement: The New Way to Rightsize Your Career

July 24, 2017


The number of people working later in life is on the rise — whether for financial reasons or the desire to stay active. Some soon-to-be retirees honestly love their job and co-workers so much that they don’t want to leave. However, the thought of working less than full-time becomes more and more appealing as we move closer to retirement.

Studies indicate that many older workers plan on working beyond the traditional retirement age. The challenge for employers is having too many older workers, which can cause a bottleneck for the advancement opportunities of younger employees. These companies need both experienced and younger workers to ensure their business is well prepared for the future.

Phased retirement is proving to be a promising compromise. This is when employers let their older workers adjust to working part-time by either working a shorter day or shaving a day or two off their work week. This helps provide workers with a gradual transition into retirement life, and lets them have a sneak peak of how their life will be with less income. It also benefits companies by providing opportunities for younger employees to be mentored by the more-experienced.

The ability to reduce hours is not without some potential issues. Consideration needs to be given to pension plans, healthcare restrictions, profit-sharing incentives, social security, and spousal and death benefits. It is important to know how these items will be impacted if you decide to cut down on your hours. This will help you determine if phased retirement is a good option for you.

What do you think of Phased Retirement? Please share your comments with us.

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I think phased retirement is a great idea! I would love to have this option when I an ready to retire. It would be great to ease out of the daily work life.
My husband tried phased retirement when he retired from LIncoln Electric System and he did not like it. So I think it has a purpose, but it's not for everyone!

Thanks for reading and posting, Judy. Good point about it not being for everyone. We appreciate you reading our blog!

I think it is a great idea. My Uncle was a bank VP and this was wonderful for him. He was in his 70's however, not ready for full retirement. This eased his transition.
When my mother retired, she did not have that option. She experienced an awakening social shock. I believe transitioning would have really helped her ease into the lifestyle change easier. I am hoping I have this opportunity someday with my company.

Thanks for your comments, Paula. The "shock" you mention isn't something we tend to consider when we think about retirement.

This blog article is for informational purposes only, and is not an advertisement for a product or service. The accuracy and completeness is not guaranteed and does not constitute legal or tax advice. Please consult with your own tax, legal, and financial advisors.