Retirement doesn't have to be cold turkey. There's also phased retirement,
in which older workers gradually depart through shorter work
weeks, flexible hours, or some other arrangement.
One out of three older workers would like to take advantage of phased retirement,
according to the results of a recent survey conducted by the consulting firm
Watson Wyatt.
But the survey also found that many employers have yet to make any provisions
for this option, formally or informally.
"Worker attitudes about retirement are changing dramatically, and employers
have some catching up to do," said Janemarie Mulvey, assistant director
of Watson Wyatt's Research & Information Center and one of the study's authors.
"We found that a significant gap exists between what older workers are
looking for and the opportunities employers provide. For example, a majority
of survey participants would like to work fewer hours late in their careers,
but less than half of them expect their employer to offer this opportunity."
Why phased retirement?
According to the survey, which involved more than 1,000 workers at or near
retirement age, more than half (57 percent) of those already in phased retirement
entered into the arrangement voluntarily, to have more leisure time. When asked
their primary reason for choosing phased retirement instead of full retirement,
42 percent of these workers indicated they enjoyed their work, while 28 percent
said they needed the income.
One-third (32 percent) of workers in phased retirement arrangements retired
completely from their career jobs but later re-entered the workforce after becoming
disillusioned with retirement. In contrast to voluntary phasers, 40 percent
of this group said they returned to work primarily because they need the income,
while only 34 percent said they work because they enjoy it.
Approximately 10 percent of workers currently in a phased status were forced
into phased retirement when their career jobs were eliminated. A majority of
these workers (58 percent) said they are working in retirement primarily for
the income.
"What was once a three-legged stool of individual retirement income is
quickly becoming a four-legged stool, with income from wages constituting the
fourth leg," noted Mulvey. "But it is important to note that extra
income is not always the key motivator for phasers--many work because they
enjoy it."
How do workers phase?
When asked how they would like to phase, many older workers said they hope
to work part-time (63 percent) or work more flexible hours (48 percent) before
retiring completely. Nearly two-thirds (63 percent) of current workers aged
50 and older indicated that they would like to phase in an entirely different
career. Among current phasers, 80 percent work flexible hours and 79 percent
work part-time. Two-thirds (67 percent) have less responsibility in their current
job compared with their career job.
"Although some phasers leave their career employers to pursue an entirely
different line of work, many leave to perform similar work with a competitor,
but with more job flexibility," said Valerie Paganelli, a senior consultant
with Watson Wyatt and leading authority on phased retirement programs. "This
survey reveals that employers can still do a lot more to preserve the hard-won
talent and experience of their career employees."
According to the survey, even an informal phased retirement program can go
a long way toward retaining experienced workers. Among workers currently in
a phased retirement arrangement with their career employers, 82 percent had
been offered the opportunity to work part-time and 71 percent had the opportunity
to work a more flexible schedule. On the other hand, among those who left their
career employer to phase elsewhere, only 16 percent would have been allowed
to work part-time for their career employer and only 20 percent would have been
offered a more flexible work schedule.
Delaying full retirement
The opportunity to phase has significant implications for the timing of workers'
retirement. Nearly one-fourth of survey participants already in phased retirement
programs expect to work past age 65, while another 20 percent do not plan to
retire at all. In addition, one out of three older workers said they would continue
working longer than otherwise planned if their employer offered a phased retirement
program.
"As the economy recovers and baby boomers reach traditional retirement
ages, labor shortages will re-emerge as an important issue," said Paganelli.
"Employers would be wise to consider phased retirement strategies that
address older workers' needs and that will help maintain an adequate supply
of talent and experience in the years to come."
The survey report, Phased Retirement: Aligning Employer Programs with Worker
Preferences, is based on the responses of a unique cross-section of Americans
between the ages of 50 and 70. They include full-time workers who are approaching
retirement, workers currently in a phased retirement arrangement and those who
are fully retired. Copies of the report are available here: http://www.watsonwyatt.com/research/resrender.asp?id=w-731&page=1.
