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.
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:
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.