Phased Retirement

Monday, November 01, 2010

Workers, who do not wish to or are unable to retire, may want to consider “phased retirement”. This process allows employees to continue to work but gradually, over several years, reduce their hours from full time to part time and eventually retire. This allows the employee to “ease” themselves into retirement and out of the workforce. At the same time, the employer is spared the shock of losing a skilled worker all at once, possibility permitting the transfer of knowledge to a replacement. Phased retirement is more or less a mirror image of how many workers started their working lives, part time after high school or on weekends, full time in the Summer and on holidays, maybe half days working during the last year or two of high school, and finally full time once their exited high school. Phased retirees could be partnered with interns, as the workers reduce their hours, the interns could increase their hours. The higher wages of the phased retiree is offset by the increased but lower wage rate of the interns.

One example is the University of Pennsylvania’s “Voluntary Phased Staff Retirement” which became effective on February 01, 2010, it states, in part:

“Voluntary Phased Staff Retirement is a means of transitioning retirement-eligible staff from full-time employment to retirement … [enabling] the staff member’s department to retain the knowledge and skills of the staff member during a period of transition while also aiding the staff member in meeting their personal goals/obligations.”

A Sloan Work and Family Research Network (Boston College) report updated in August 2009 reported that, “More than 80 percent of white-collar workers are employed in an establishment that permits some form of phased retirement”. The report went on to conclude that, 86% of employers surveyed would be willing to “work something out” for workers who were interested in phased retirement. In addition, “Older people appear to have more flexible work arrangements …” A Hewitt (now Aon Hewitt) survey quoted in the Sloan report indicated that more 55% of the survey’s participants had reviewed the effects potential retirements could have on their organization. 61% have developed or are in the process of developing “special programs to retain targeted, near-retirement employees”. Although only 21% perceive that phased retirement is essential to their organization’s human capital strategy at the current time, 61% believe it will be critical by 2013.

In the July/August 2010 edit of the Journal of Nursing Administration, Karen Hill that one third of RN’s are 50 years or age or older. In her article, “A Business Case for Phased Retirement: Will It Work for Nursing?”, Hill points out that programs such as phased retirement can be a business need based approach to the loss of valuable nursing skills.  This loss of nursing skills is coming at a point in time when 76 million baby boomers will be retiring over the next two decades and as the US population’s longevity is expected to reach into the 80’s and beyond.

Organizations will need to reconsider their employment model to ensure that their workforce will be able to meet the competitive demands as baby boomers retire and remain in the workforce at the same time.