Retirement Planning

What is a Phased Retirement Program?

Some look forward to their last day of work, some are disappointed to leave coworkers and a purposeful career, and others are somewhere in between. There are many things to love about retirement, like the freedom to travel, spend time with family and friends, and just wake up whenever you want, but hopefully there are also things you love about your career. For people who experienced a sense of accomplishment from their work and like to be busy, suddenly having little mental stimulation can be less than ideal. One solution is to phase from full-time to part-time before retirement.

Transitioning to part-time employment can give you some of the freedom of retirement while keeping familiar routines and relationships in place. It can help you figure out a plan for what you will do with your time after retirement before you actually retire, since transitioning into retirement is no small task. Unfortunately, only 5% of companies offer a formal phased retirement program according to a recent Forbes article. So, if you want to officially transition to part-time before retiring, you’ll probably need to forge your own path.

If your company doesn’t have a formal phased retirement program, you can prepare a proposal for your part-time schedule. Plan which tasks you will still handle and how you will still do them with a reduced schedule, and how you will pass on your expertise, insights, and connections to younger coworkers. It’s important to emphasize how your skills and knowledge can still benefit your company even if you won’t be there full-time. Also articulate how stepping back from your role might give younger workers the opportunity to assume leadership roles while still benefiting from your mentorship.

Formal phased retirement programs are rare, but that doesn’t mean there’s not an interest both on the employee’s and employer’s sides. If you don’t think your company’s culture will be amenable to your request, you can see if any of your colleagues are also interested in transitioning to part-time. A group is likely to gain more traction and share ideas about the logistics of reducing hours and workload.

One crucial thing to consider if you will receive a pension is how working part-time will affect your benefits. Salary just prior to retirement is typically a factor in determining a pension benefit. And, benefits such as healthcare and paid vacation time could also be affected.

Here at Alpha 1, we can take your unique retirement goals into account when helping you create a comprehensive retirement plan. When and how you retire are important, and the decisions you make leading up to retirement can affect you for decades to come. If you’re ready to start planning for the future, click here to sign up for a free financial review.