Why Phased Retirement?
Employers and advocates have merely talked about “phased retirement” for decades. Rather than enabling longtime contributors to ease into retirement, the last chapter of work has been marked by decades of mandatory termination or early buyouts. A common assumption: 65 or earlier is most people’s “sell-by date.”
There is a dramatic gap between what older workers want and employers offer. As the Boomer exodus continues and labor markets tighten, change is inevitable. The retirement model is broken and transformation is essential.
- • U.S. Department of Labor: Workers 55-and-older are the fastest growing segment of the workforce
• “64% of workers age 18-64 envision a phased transition into retirement”
• Majority of employees age 50+ consider formal phased retirement “‘very” or “‘somewhat” important’
• 27% of Americans plan to “keep working as long as possible”
• Another 12% say they don’t plan to retire at all
• In 2016,11% of companies offered “informal phased retirement”
• In 2016, fewer than 5% of companies offered “formal phased retirement”
• Just 21% of workers say employers enable reduced work hours, any shift from full-time to part-time
The sudden and massive COVID-driven adoption of work from home demonstrated that deeply and irrationally held old employer habits can be replaced with sensible alternatives. Times have changed. People want and need to work longer. Proven talent is growing scarce. And knowledge workers are departing with valuable intellectual property. More flexible, creative approaches – widespread phased and partial retirement – are required.
As older workers approach traditional retirement ages, employers and employees can collaborate on customized schedules that extend individual work lives and yield continuing contribution, knowledge capture and intensive mentoring.
Proven Phased Options Include
Benefits for Everyone
Employers can gain:
- Retention of highly valued employees 55+
- Capture of unique, hard-to-replace knowledge
- Enhanced mentoring, development efforts
- Focus of pre-departure employees on high value work
- Reduced payroll costs
- Enhanced collaboration skills
Aging Workers can realize:
- Extended work life and income
- Enhanced pension contributions
- Continued engagement, contribution, and satisfaction
- Role in knowledge transfer, mentoring
- Healthy means of easing into retirement
Societal benefits can include:
- Continued contribution to the economy and inclusion in workforce growth
- Enhanced physical and mental health of those spared sudden termination
- The restoration of Recession-ravaged savings and reduced risk of poverty
- Continued employee contributions to Social Security and Medicare taxes
- A positive impact on pervasive age-based assumptions and discrimination
- Support for this “care-giving cohort” to privately assist their spouses and elders
Employers can gain:
To achieve the goal of retention of valued employees beyond “retirement age,” we recommend to employers that:
- The options have to be diverse enough to appeal to a range of employee profiles
- Each phased retiree’s work needs to be systematically re-prioritized to align with reduced schedules
- A clear plan for knowledge transfer and mentoring has to be well-designed, executed and monitored
- Individualized Mutual Respect skills training and ongoing coaching is essential for maximization of the employee and manager experience
In exchange for employees meeting these requirements, a mutually beneficial and respectful approach will:
- Assure extended employment on a flexible and/or reduced schedule
- Provide prorated benefits with no negative impact on pension terms
- Encourage the elimination of low-value work and systematic engagement in mentoring
Do you want more information on Flexible and Phased Retirement?
Respectful Exits provides employees with the processes and tools to propose and implement Extended Work and Flexible & Phased Retirement solutions with our web-based tool, ThePhazer™.
Employers can learn more about these options with live and online presentations by our Respectful Exits Advisory Team. Contact us for more information.