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 manner, it might be. And it’d get replaced with a extra gradual exit from the workforce that offers staff extra management over their departure.
In actual fact, one in three staff within the U.S. over age 50 needs a phased strategy to retirement, in keeping with the 2024 World Advantages Attitudes Survey of 10,000 staff carried out by advisory and brokerage agency WTW (previously Willis Towers Watson). The survey finds 15% of those staff have already began to part out of labor—by decreasing hours or tasks, 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 strategy to work and retirement. Earlier this 12 months, Fortune coated the phased retirement pattern, noting its rising recognition is because of recognition throughout industries that workplaces are altering, and the best way firms take into consideration retirement wants to vary with it. A separate survey from Constancy Investments discovered two-thirds of respondents plan for a gradual strategy to leaving the workforce.
A phased retirement lets staff unload some tasks or swap to a much less intensive profession on the identical firm. Whereas total pay could lower relying on the precise phrases staff and employers conform to—transitioning from working 5 days every week to 4 days every week could include a proportional pay lower—it permits those that could in any other case have left the workforce altogether to nonetheless earn an revenue and preserve office connections.
Employers, in the meantime, can proceed to learn from senior staff’ expertise at a lower cost level. It additionally permits for a smoother data transition to the corporate’s subsequent technology of staff by giving older staff alternatives to dump their experience on their phrases. It may possibly additionally construct loyalty amongst youthful staff, who could also be extra more likely to stick round in the event that they know they’ll be granted the identical flexibility later of their careers.
After all, retirement within the U.S. isn’t one measurement suits all. Some staff are completely happy to clock out and as soon as for all proper age 65, whereas many others by no means be capable to totally retire in any respect. Some could not have a lot of a say in after they go away the workforce, and nonetheless others give attention to saving as a lot as doable in order that they will give up of their 50s—and even earlier. However for individuals 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 strategy.
Monetary safety and well being had been the highest drivers behind opting right into a phased retirement, in keeping with WTW’s survey. And the curiosity within the pattern is rising at a time when 46% of staff 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 properly. Although many staff gleefully sit up for 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 firms—principally bigger organizations—have some expertise in implementing them, in keeping with Principal Monetary Group’s most up-to-date Monetary Nicely-Being Index. That mentioned, solely 16% of employers have expertise with phased retirements frequently.
“Fitting work into their life, rather than their life into their work, is really important,” Chris Littlefield, president of retirement and revenue 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.”