If you’re nearing retirement, the thought of quitting your job cold turkey may be a daunting one. A sudden end to your salary and benefits would require you to have sizable savings on hand. And the disruption to a schedule that you have had for years might be difficult to adjust to. That’s why many employees nowadays hope for a phased retirement. By gradually reducing the number of hours they work and transitioning from full-time work into retirement, they hope to ease the shock of leaving the workforce. But even though employees might want to phase their retirements, the number of employers offering phased retirement programs is still relatively small.
Over three-quarters of employers believe that their employees plan to continue working in retirement, and nearly half believe that many of their employees hope for a phased retirement. Yet less than a third of employers allow their full-time employees to shift to part-time work, and only about a quarter allow their employees to take on less-demanding work in order to smoothly transition into retirement.
For many employers, the disruption to their operations from shifting an established full-time employee to part-time or less-substantive work, especially when they know that employee will be leaving in the near future, might not be worth it. And if they don’t have anyone on hand to fill the gap, they’ll have to hire someone. If they’re going to go through that effort, they might as well get rid of the retiring employee and hire another full-time replacement, otherwise, they’re going to be paying salary and benefits for two employees, not just one.
That explains why formal phased retirement programs are relatively rare. If you’re looking to phase into retirement, you will likely have to work out an arrangement with your employer. If you’re in an industry that values experience and institutional knowledge, in a position that will be difficult to backfill or have skills that you know your employer will need, it will be far easier to work out an arrangement. The benefits, in that case, accrue to both you and your employer, as your employer doesn’t instantly lose a valued employee and you can ease your way from the work world into retirement.