Is the so-called “traditional” retirement age a relic of workforces previous? If a rising variety of child boomers and Gen Xers had it their means, it might be. And it’d get replaced with a extra gradual exit from the workforce that provides staff extra management over their departure.
In reality, one in three employees within the U.S. over age 50 wishes a phased method to retirement, in response to the 2024 World Advantages Attitudes Survey of 10,000 employees carried out by advisory and brokerage agency WTW (previously Willis Towers Watson). The survey finds 15% of those employees have already began to part out of labor—by lowering hours or duties, for instance—and one other 19% plan to sooner or later.
WTW’s analysis isn’t the primary to search out that staff are more and more craving the versatile method to work and retirement. Earlier this yr, Fortune coated the phased retirement pattern, noting its rising reputation is because of recognition throughout industries that workplaces are altering, and the way in which corporations take into consideration retirement wants to alter with it. A separate survey from Constancy Investments discovered two-thirds of respondents plan for a gradual method to leaving the workforce.
A phased retirement lets employees unload some duties or swap to a much less intensive profession on the similar firm. Whereas general pay might lower relying on the precise phrases staff and employers conform to—transitioning from working 5 days per week to 4 days per week might include a proportional pay lower—it permits those that might in any other case have left the workforce altogether to nonetheless earn an earnings and preserve office connections.
Employers, in the meantime, can proceed to profit from senior staff’ expertise at a cheaper price level. It additionally permits for a smoother information transition to the corporate’s subsequent technology of employees by giving older staff alternatives to dump their experience on their phrases. It may additionally construct loyalty amongst youthful employees, who could also be extra prone to stick round in the event that they know they’ll be granted the identical flexibility later of their careers.
In fact, retirement within the U.S. isn’t one dimension matches all. Some employees are glad to clock out and as soon as for all proper age 65, whereas many others by no means be capable of totally retire in any respect. Some might not have a lot of a say in once they go away the workforce, and nonetheless others concentrate on saving as a lot as attainable in order that they’ll give up of their 50s—and even earlier. However for many who don’t wish to go away their jobs fully however wouldn’t thoughts taking their foot off the gasoline, a phased retirement might be an excellent method.
Monetary safety and well being had been the highest drivers behind opting right into a phased retirement, in response to WTW’s survey. And the curiosity within the pattern is rising at a time when 46% of employees age 50 and older anticipate to work previous age 70, the survey finds. Simply 30% mentioned the identical factor earlier than the pandemic.
Staff who’ve skilled phased retirements first-hand inform Fortune that not solely is it useful from a monetary planning perspective, however from an emotional perspective as effectively. Although many employees gleefully look ahead to retirement within the years previous to leaving, the reality is after many years of working, many individuals discover it tough to fill their time or be social. A phased retirement could make the transition simpler, they are saying.
The excellent news for staff is that 61% of corporations—largely bigger organizations—have some expertise in implementing them, in response to Principal Monetary Group’s most up-to-date Monetary Effectively-Being Index. That mentioned, solely 16% of employers have expertise with phased retirements regularly.
“Fitting work into their life, rather than their life into their work, is really important,” Chris Littlefield, president of retirement and earnings options at Principal, beforehand advised Fortune. Firms “need to start thinking about an intentional offboarding strategy, because people staying somewhere until 65 is going by the wayside.”
