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Have You Considered a Phased Retirement?

There is a lot of freedom in how you structure your retirement. One of the many choices you can make is whether to take a phased retirement. Haven’t heard of that before? Well, read on because it might be the perfect solution for you!


What Is a Phased Retirement?


It’s not necessary for every retiree to work one day and then completely step away from their career the next. A phased retirement allows professionals to gradually step down their hours and transition slowly from full-time employee to retiree.


There are several big benefits to a phased retirement, including:


  1. You have time to build an enjoyable, fulfilling life outside of work—something many retirees struggle with when they simply stop working altogether one day.
  2. You will continue bringing in an income, which means you won’t rely on your retirement savings as soon as you otherwise might.
  3. You may be able to continue contributing to individual and employer-sponsored retirement savings accounts.


When Considering a Phased Retirement


Before you approach your employer about the possibility of a phased retirement, consider what you’d like in terms of a new schedule and what your employer is likely to agree to. Some options to consider include:


  • Working part-time hours, five days per week
  • Working fewer days a week
  • Working seasonally
  • Switching to a training/mentoring role
  • Job sharing
  • Working as an on-call temp


No matter how you structure your phased retirement, make sure you and your employer can agree on several phases that allow you to make a gradual shift into full-time retirement.


Other Considerations


A phased retirement isn’t a good fit for everyone and could, in fact, be a bad choice for some. Things you need to consider before you take this step include:

  • Whether you’ll be able to keep your health insurance. If you work too few hours, you may not qualify for group coverage. If you’re too young for Medicare, this could introduce higher fees.
  • What your Social Security benefits look like. Since your Social Security benefits are decided by your 35 highest-income working years, a badly timed phased retirement could skew that average down.
  • Whether your retirement savings are on track. The last few years you spend working are a great time to really focus on paying off debt and socking away savings. If your retirement savings aren’t on track or you have a lot of debt still, then working full-time for a few more years can give you a more secure overall retirement.

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