Why Can’t We Have Gradual Retirement?

We’re ready, but most businesses haven't caught on.

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In the year that Kenneth turned 66, he wasn’t quite ready to stop working entirely. Instead, he had hopes that he could phase into retirement gradually – maybe working three days a week for the first year, then two days, then one. Not only would it keep income rolling in, but he could also hang onto his health benefits.

His wish, in other words, was for a smooth, gradual descent. What he got was a crash landing. On October 31, he was on the payroll. On December 1, he was a retired former employee.

Most older employees share Kenneth’s desire for a gradual transition from working to not-working. According to a 2021 survey, four out of five working Baby Boomers would welcome a flexible schedule, two-thirds would consider a consulting role with their current employer, and 59% would be open to reduced hours and benefits.

The problem is, few employers see the need to offer gradual retirement as an option. Just 15% of employers offer gradual retirement options informally, and only 8% had formal plans in place, according to a 2021 survey by the Society for Human Resources Management.

Now maybe that is starting to change. With worker shortages popping up in many industries, perhaps some employers worried about an exodus of skilled older workers felt compelled to act. That would help explain another survey, by Mercer, which found that 36% of human resources executives planned to offer a phased retirement program in 2022.  I hope to see a follow-up survey next year to tell how many companies actually moved from the “plan to offer” column to “plan in place.”

If companies need examples to follow, they can turn to the federal government, which has been a leader in offering retirement options. Since November 2014, official policy gives eligible federal employees the option to reduce their job responsibilities and go part-time, as long as they use their work time to mentor their likely replacements and transfer the knowledge they have acquired. More commonly, federal agencies rehire key employees after their retirement on a part-time basis for their specific skills or knowledge.

Do-It-Yourself Solutions

If your employer doesn’t offer any of these arrangements and you’re looking for alternatives to a full-stop retirement, here are other possibilities:

•          Get a part-time job. The extra income lets you delay making big withdrawals from your retirement savings. Plus you get the mental stimulation and the human interactions that keep your mind sharp and reduce the risks of loneliness and social isolation.

•          Try a second career. Perhaps your chosen career was the pragmatic choice, but not your first love. With the kids grown, the house note paid off, and less need of income, you can start again in a new field, and you won’t have to earn as much to justify it.

•         Take a sabbatical. If you’re feeling burned out and stressed out, consider taking off a year to relax and explore other possibilities. A year away from the grind may be enough to reenergize you to return to your employer – or find a new one.

•          Take Mini-retirements. Instead of one long retirement, consider extended vacations at regular intervals throughout your life. According to some longevity experts, this may be the new way of working in the future – working the same number of years total but spreading it out over time (in other words working, with breaks, into your 70s). For more on the topic, check this.

•          Begin consulting – working with your former employer or other firms in your industry on special projects can keep you challenged and engaged in your career field, while bringing in income.

•         Make your hobby pay. Your musical skill might be strictly for your own pleasure, but who knows? Maybe you’ll join a group, get gigs, or build a following on YouTube. You might sell your wood carvings at craft shows or on eBay. Whatever your hobby, consider ways it might bring in a bit of extra income to supplement retirement savings.

The transition from working to not-working is difficult for many to manage. The option of making the transition gradually could make it a smoother, more graceful transition into the next chapter in life.

Share the Story of Your Retirement

If you’ve retired and had some difficulties making the adjustment to that stage of life (even if you’ve resolved them by now), I would love to talk to you about it for a research project. If you’re willing to be interviewed, please contact me at don@donakchin.com for details.