Is the so-called “conventional” retirement age a relic of workforces previous? If a rising variety of child boomers and Gen Xers had it their means, it will be. And it’d get replaced with a extra gradual exit from the workforce that provides workers extra management over their departure.
In truth, one in three employees within the U.S. over age 50 needs a phased method to retirement, in accordance with the 2024 International Advantages Attitudes Survey of 10,000 employees carried out by advisory and brokerage agency WTW (previously Willis Towers Watson). The survey finds 15% of those employees have already began to section out of labor—by lowering hours or tasks, for instance—and one other 19% plan to sooner or later.
WTW’s analysis isn’t the primary to seek out that workers are more and more craving the versatile method to work and retirement. Earlier this yr, Fortune coated the phased retirement development, noting its rising recognition is because of recognition throughout industries that workplaces are altering, and the way in which 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 method to leaving the workforce.
A phased retirement lets employees unload some tasks or change to a much less intensive profession on the similar firm. Whereas general pay might lower relying on the precise phrases workers and employers comply with—transitioning from working 5 days per week to 4 days per week might include a proportional pay lower—it permits those that might in any other case have left the workforce altogether to nonetheless earn an revenue and keep office connections.
Employers, in the meantime, can proceed to learn from senior workers’ expertise at a lower cost level. It additionally permits for a smoother information transition to the corporate’s subsequent technology of employees by giving older workers alternatives to dump their experience on their phrases. It could additionally construct loyalty amongst youthful employees, 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 dimension matches all. Some employees are blissful to clock out and as soon as for all proper age 65, whereas many others by no means have the ability to absolutely retire in any respect. Some might not have a lot of a say in once they depart the workforce, and nonetheless others deal with saving as a lot as attainable in order that they’ll give up of their 50s—and even earlier. However for individuals who don’t wish to depart their jobs utterly however wouldn’t thoughts taking their foot off the fuel, a phased retirement may be an excellent method.
Monetary safety and well being have been the highest drivers behind opting right into a phased retirement, in accordance with WTW’s survey. And the curiosity within the development is rising at a time when 46% of employees age 50 and older anticipate to work previous age 70, the survey finds. Simply 30% stated the identical factor earlier than the pandemic.
Employees 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 nicely. Although many employees gleefully stay 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 workers is that 61% of firms—largely bigger organizations—have some expertise in implementing them, in accordance with Principal Monetary Group’s most up-to-date Monetary Nicely-Being Index. That stated, solely 16% of employers have expertise with phased retirements regularly.
“Becoming work into their life, relatively than their life into their work, is actually vital,” Chris Littlefield, president of retirement and revenue options at Principal, beforehand instructed Fortune. Corporations “want to begin serious about an intentional offboarding technique, as a result of folks staying someplace till 65 goes by the wayside.”