Phased Retirement

Defining Phased Retirement

The term “phased retirement” is not clearly or uniformly defined. It covers practices as different as 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.”)

We are using the definition of phased retirement that is generally accepted in societies that embrace both phased and partial retirement. An example of phased retirement might be a decision to work toward retirement over a four-year period. Year one would entail a 90% schedule; year two, 80%; year three, 70% and year four 60%.

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 Refresher.

Employee Benefits and Challenges of Phased Retirement

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 Phased Retirement

The offering of flexible and phased 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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