Partial Retirement

Defining Partial Retirement

The term “partial retirement” is seldom used to describe the practice of taking a one-time reduction in schedule from full time to a stated percentage over a designated period of years. But that is exactly what it is. In other societies and the rare companies which regularly practice flexible paths to retirement, the distinction is made between “phased” and “partial” because they pose different opportunities, management issues and comp and benefit arrangements. 

In the United States, we have fallen into the imprecise language that confuses one with the other and thus limits choices that can matter to both employer and employee. So while neither is broadly practiced by most employers, it is important when you are considering one of these options that you be clear what you are seeking. 

The choices covered on this site are gradually reducing time worked from full time to full retirement (“phased retirement”), choosing a one-time reduction and staying with that schedule for a number of years  (“partial retirement”) or being terminated and brought back as a full or part-time contractor (“contracting.”)

A typical example of partial retirement is a reduction from a 100% to 80% time schedule for a period of several years. This timeline could be shortened or lengthened by mutual agreement. If your employer already has formal part-time work, similar compensation and benefit proration would apply. If such policies don’t exist, models can be accessed by signing up for The Refresher. 401K pension payouts are not affected by this option. Workarounds for less common defined benefit pension plans can be found through the The Refresher.

Employee Benefits and Challenges of Partial Retirement​

There are both benefits and challenges for employees and employers/managers in this different way of working. Which apply to your situation and to what degree will depend on many factors. And of course these are not exhaustive lists. Keep this in mind as you consider the feasibility and desirability of this option, as you make and negotiate this desired change.

Benefits Can Include:

  • Greater focus on priority work
  • Extended work life and income
  • Opportunity to enhance pension contributions
  • Continued engagement, contribution, and satisfaction
  • Increased status that comes from knowledge transfer and mentoring
  • Healthier process for easing into retirement

Challenges Can Include:

  • Maintaining the boundaries of a reduced schedule
  • Managing a rigorous knowledge transfer regimen
  • Continuing to be seen as a true team member
  • Choosing which meetings, trainings, etc. to attend
  • Staying "in the loop" for critical information
  • Co-worker envy of your unique opportunity

Employer and Manager Benefits and Challenges
with Partial Retirement

The offering of flexible and partial retirement can be seen as a significant or modest change in an organization. It is important to recognize that there are different impacts on the employer and the direct manager. Ideally these are complementary, but there can also be some tension between longer term business goals and the day-to-day requirements of making phased retirement work for a certain person within a unit or team. 

The range of potential outcomes follows. The party in parentheses will be primarily affected.

Benefits Can Include:

  • Retention of highly valued employees (Mgr/Eer)
  • Enhanced monitoring, development efforts (Mgr/Eer)
  • Improved morale of aging workforce (Mgr/Eer)
  • Reduced payroll costs (Eer)
  • Capture of unique, hard-to-replace knowledge (Eer)
  • Market perception as employer of choice (Eer)
  • Greater focus of employees on high value work (Mgr)
  • Enhanced collaboration skills (Mgr)

Challenges Can Include:

  • Fear that "everyone" will want to work this way (Mgr/Eer)
  • Concern that it will be more work for manager (Mgr/Eer)
  • Difficulty in fairly evaluating performance (Mgr)
  • Problems with covering key tasks, schedules (Mgr)
  • Concern about slow erosion of commitment (Mgr)
  • Perceptions of fairness in assignment of work (Mgr)
  • Difficulty redesigning comp and benefits standards (Eer)
  • Potential co-worker envy (Mgr)

Manager = Mgr | Employer = Eer

Making Your Proposal

Having reviewed the Qualifying section and with this information as background, you can decide to proceed – or put this idea on hold for a later day. If you choose to go forward, follow the steps outlined in Proposing, Planning and Persuading. The process we outline is a rigorous one. It is designed to position you and your proposal for success. Since you may well be a pioneer in your organization as you go forward, it is important to understand that while the outcome of such ventures is never assured, there will definitely be hard work along the way.

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