Create Your Own Phased Retirement

Just because your company doesn’t support phased retirements doesn’t mean you have to delay your retirement. Staying in their full-time rat race grind may be the only solution they offer. But it isn’t the only solution for anyone wishing to ease into retirement using a phased retirement approach.

Create Your Own Phased Retirement A recent study done by the Transamerica Center for Retirement Studies (TCRS) found that 77% of employers actually believe many of their employees plan to continue working after they retire. 47% of these employers also say many of their employees envision they’re using a phased retirement transition approach for their retirement.

Yet only 31% of the employers that Transamerica surveyed said they would let their employees shift from full-time to part-time employment. Not surprisingly, only 27% of employers said they would allow phased retirement seeking employees to move into less stressful or demanding positions.

Caution is Needed for Employer Allowed Phased Retirement

Retiring employees do need to be careful entering into a formal or informal phased retirement work arrangement with their employer.

Careful attention has to made into the impacts that a reduced schedule or a lower stress/lower paying position will have on any defined retirement benefits there may be. The defined benefit rules and the formulas they use are tough to get around. The last thing you want is for your phased retirement time dragging your retirement benefit amount down.

Other active employee benefits like medical insurance and paid-time-off/Vacation will also need to be carefully examined. Entering into a phased retirement arrangement will most likely impact them.

Signs to Look for Before Staying With Your Company in a Phased Retirement Agreement

Being able to have a phased retirement with one’s current employer is certainly the most comfortable way to go. We already understand the business, the work processes, and the culture. But based on my first career I believe caution is justified.

I think my corporate world experience isn’t unique and is a shared experience. Entering into a phased retirement agreement with one’s employer may not be the no-brainer decision you might think.

Think about the following:

Does your company have a habit of expecting employee loyalty but never reciprocates?

In other words, do they treat long-time loyal and dedicated employees as just a disposable number? Your phased retirement gig may be just short-term to ring out all they can before letting you leave on their terms, not necessarily yours. They will and do value younger employees who they think they can retain longer-term.

Do employees who have transferred to a new position or have been promoted get sucked back into their previous roles every time feces hits the fan?

Do you think your phased retirement agreement will stand if your company has a habit of doing that? Are you OK with a prolonged or indefinite return to your pre-retirement job obligations?

Has there been times when your company has backtracked away from promises made?

Think bonuses, raises, 401k match, pensions, health insurance, promotions, etc. When they do, did they include executives in the pain or did they state they decided not to include them in order to attract and retain the best for the company? Do you think they will honor your phased retirement agreement for as long as you want, need, or agreed to? If your company throws employees under the bus but never its executives then maybe you should think twice about extending your relationship with them.

Just take a moment and really think about your experience with the company.

If your career there has been nothing but a stellar experience then I think you are in the minority. If it’s that good I would also question why even consider a phased retirement. Just enjoy it until you can feel like fully retiring. If you have concerns now about the company then why enter into a phased retirement agreement and continue with any negative feelings in your life?

For my first early retirement I wasn’t thinking “phased retirement”.

I was fully in a “retire early and often” mindset. I have successfully done that with some rewarding and interesting post-retirement work. In hindsight some of the things I did while preparing for that included asking myself the above questions about my long-time employer.

Let’s just say that I have never worked for them again in post-retirement. I admit that there is some truth in the saying better the devil you know (than the devil you don’t)”. However I found entering into a new relationship to be in my favor when working in retirement.

I could work without a legacy of career obligation baggage to be dragged back into. I could create a retirement lifestyle where I would only seek opportunities aligned with my interests and passions. That includes only working under my terms for as long as I wanted to.

Not having to worry about upsetting or angering a long-time employer who may still have control over some of my retirement benefits, thus having control over me. That to me is a big deal.

Why Creating Your Own Phased Retirement May Be the Better Way

First off, understand what kind of phased retirement you really want. Even if your company does offer a phased retirement option it may not be aligned with what you envision.

  • Are you looking to go part-time?  
  • Change job duties to something with less stress and less responsibilities?
  • Wanting to only work certain parts of the year or specific seasons?  

Also try to figure out how long you want the arrangement to last. I think the fact anyone is willing to bring up phased retirement with their employer means they aren’t afraid to signal their retirement intentions. Hopefully this is done only after knowing one could actually retire because employers may sideswipe someone who have prematurely signaled their retirement intentions.

Rather than thinking only “phased retirement”, open up your options by thinking of retirement as the absence of needing to work. You can think of it as a phased retirement or as I had planned to do and have successfully done. That is retiring early and often.

If your plan is to go directly into your desired phased retirement position then begin finding, interviewing, and accepting a position before announcing your retirement. This will at least allow for you to explore your options over only attempting to stay at your existing company.

Here are some reasons supporting why you should create your own phased retirement:

Make a clean break from your employer. No worries of negatively impacting any retirement benefits through a reduced salary (less stress-pay/fewer hours) phased retirement agreement.

Free to choose opportunities aligned with your interests and passions. Not what your employer thinks is their best way to use you. It’s easier to limit your duties to agreed upon responsibilities and negotiate rather than be dictated when our role needs to be changed.

No previous legacy obligation of work to be dragged back into in any time of crisis, real or otherwise. That certainly could circumvent your phased retirement wants and needs.

New working environments offer new experiences. In people, work, education, and culture. It may not be as comfortable starting out but it makes up for that by being more exciting. We all stay in our ruts too long.

It’s easier to move on or as I call it “retire early again” when there are no long-term ties. Knowing that I can simply leave once a retirement job isn’t checking off all my boxes anymore makes working in retirement fun and not a dreaded burden.

Last Words on Creating Your Own Phased Retirement

The company I worked for over 3 decades did not offer any phased retirement options. It was “their way or the highway”. I waited some months after retiring early before I began looking for my first dream retirement job. It all worked out wonderfully. That doesn’t mean that it didn’t take some effort on my part.

I have several pages on this Leisure Freak site that might be of help:

Retiring Early and Often 

How to Choose Your Retirement Job 

How To Find Your Early Retirement Job 

Retire Early and Start Your Own Business 

Check under the Retiring Early and Often tab at the top of the page and there are pages on retiree resume  and interview  tips, handling the dreaded “overqualified issue, and even how you can increase your wealth by retiring early and often

Before I close out this post I would be remiss if I didn’t mention the fly in the ointment. It’s called health insurance. If you retire without a retirement medical benefit then health insurance must be considered. A phased retirement agreement at your employer that allows for employee group medical insurance does carry some weight.

When looking at creating your own phased retirement, include health insurance in your decision process. Look at staying with the same employer, looking for new opportunities that provide health care benefits, or buying health insurance in the single payer market.  

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4 thoughts on “Create Your Own Phased Retirement

  1. Interesting post and survey results. The company I work for wouldn’t think of helping anyone retire with a phased retirement. I had to laugh at the question about company loyalty. What’s that? I plan on expanding my side hustle in retirement.

    1. Thanks for the comment Franklin. My questions about the company one works for were a bit on the negative side but based on the company I worked for. It’s why I wouldn’t have entered into a phased retirement agreement with them even if they offered one. Good luck with your retirement and side hustle plans. Certainly a good thing to have.

  2. Great points to consider. Probably not many companies anymore that would offer a phased retirement. Maybe if you worked for a family run business, have been there for a long time, and they like you they would work something out. Over a year ago, I was unceremoniously laid off from my IT job after 19 years. It was kind of a slap in the face after putting in so many years there. Truthfully I wasnt happy with a lot of things there but was sticking it out as I was grandfathered in still getting 6 weeks VAC, cell phone, job flexibility etc. Point is, now I wouldnt put up with a bad situation for very long. Like you say, once things change for the worse you can just leave without having too much personally invested in it. I think there can be a kind of “honeymoon” phase to it where its new and exciting for you and too much BS hasnt built up yet on the company side. Right now, I’m just working my side hustle job I’ve done for over 25 years. It’s almost enough to cover the basics and gives me more time each week to do what I want to do. To a point, I dont mind working (and making money), but I dont enjoy the full time commitment of 40 – 50 hour weeks plus commute time anymore. I don’t know if I could ever go back to that for an extended period of time. Perhaps for a limited project of a few months but I need to see light at the end of the tunnel.

    1. Thanks for the comment Arrgo. We have a shared experience in the corp world. What struck me was the survey showed the majority of companies have an understanding about employee retirement challenges and their own employee/skill retention needs but they refuse to find a win-win way to participate in a phased retirement plan that would accomplish meeting all’s needs.
      I did do the 40 hour week thing in my encore gig but knowing I would leave when I felt like it made it much easier to deal with the same old corp BS. I was also able to set boundaries and offer to end the relationship if they couldn’t see my way of thinking when it came to dishing out the BS unfairly/unevenly. My definition of what is an acceptable opportunity has certainly tightened since my first early retirement.

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