Phased Retirement

Read Time / 3 Minutes

Theme / Retirement

Phased retirement is growing in popularity.  It can be thought of as a broad range of employment arrangements that allow a retiree to continue working at a reduced workload while he or she gradually shifts from full-time work to full-time retirement.  About 10,000 baby boomers turn 65 each day.  The last of the baby boomers will reach retirement age by 2030 and many baby boomers plan to continue working in some capacity after they reach retirement age, leading to the rise of phased retirement.

There are a variety of reasons retirees may opt for phased retirement:

It increases retirement income.  When retirees believe they will run out of money or have to lower their desired standard of living in retirement, they may opt for part-time work to correct the situation.

It is realistic to continue working.  Some of today’s physically easier (technology-aided) jobs make phased retirement more likely.  Today’s retirees also tend to live longer, are more educated, and have broader work experiences, all of which combined provide a basis for staying employed longer.

It provides a better life balance.  Retirees may want to spend more time with family and on leisure activities, but still feel they have plenty of energy and a strong desire to contribute through working.  Conversely, part-time work may allow retirees to adjust for age-related reductions in stamina or ability.

It continues health insurance.  Under the right set of circumstances, phased retirement may allow the retiree to continue to have employer-sponsored health care.

Phased retirement may include the following:

Encore careers.  A retiree may start a new career at a different employer or start an entrepreneurial venture.

Downshifting.  A retiree may seek an encore career that has lower pay and fewer responsibilities than his or her previous employment.

Bridge jobs.  Bridge jobs span the period between full-time employment and full-time retirement after an employee has left the current employer but may not have started receiving retirement benefits.  The bridge job could be with a new employer or being rehired by the previous employer in a different or reduced role.

Phasing a little or a lot.  Phasing a little means working close to a full-time schedule by making only a modest change in work schedule and conditions.  Phasing a lot means work that is dramatically different from a full-time schedule (which may impact employer-provided benefit eligibility.)

Formal or informal phased retirement.  Some employers have formal workplace policies to allow an employee to phase his or her retirement.  Informal workplace arrangements and practices are more common for transitioning to part-time work. 

Phased retirement may be as old as Scripture.  In Numbers 8:23-26 we read that the Levites, who were responsible for working in the tent of meeting, had to retire at age fifty from their regular work, but they could assist the younger Levites in performing their duties. 

As Christian financial advisors we encourage you to be wise stewards of the Lord’s blessings in your life.  An abrupt transition into full-time retirement can be an emotional and financial rollercoaster so consider the benefits that a phased retirement may offer you.

Doug Hanson, MBA

Wealth Advisor

208.697.3699

doug@christianwm.com