Older Workers Ready to Phase In Retirement

March 22, 2004 (PLANSPONSOR.com) - Plan sponsors concerned about the potential brain drain that comes with the mass retirement of Baby Boomers should know one out of three older workers would continue working longer than otherwise planned if their employer offered a phased retirement program.

When asked how they would like to phase into retirement, many older workers looking to become “phasers” said they hope to work part-time (63%) or work more flexible hours (48%) before retiring completely. Further, nearly two-thirds (63%) of current workers aged 50 and older indicated that they would like to phase in an entirely different career, according to the Phased Retirement: Aligning Employer Programs with Worker Preferences report by Watson Wyatt Worldwide.

“Worker attitudes about retirement are changing dramatically, and employers have some catching up to do,” Janemarie Mulvey, assistant director of Watson Wyatt’s Research & Information Center and one of the study’s authors said in a news release. “We found that a significant gap exists between what older workers are looking for and the opportunities employers provide.

As an example, Mulvey said even though a majority of the 1,000 workers polled between the ages of 50 and 70 would like to work fewer hours late in their careers, less than half of them expect their employer to offer this opportunity.

The low expectations of cooperation from their employers may account for the relatively low number of workers that have opted for phased retirement – only 24% of workers over the age of 50 phase in some capacity. Most of the workers that opt for a phased retirement (32%) fall in the 50 to 55 age range, followed by:

  • 27% – 56 to 59
  • 12% – 60 to 61
  • 12% – 66 to 70
  • 11% – 62 to 64
  • 5% – 65.

Of the group phasing into retirement, more than half (57%) were planned phasers, 32% retired completely from their jobs but later reentered the workforce after becoming disillusioned with retirement and 10% were forced phasers, those whose career jobs were eliminated.

Watson Wyatt found those opting for a phased retirement generally enjoy a higher standard of living than the group choosing full time retirement. The largest group of phasers (29%) have a household income of $50,000 to $74,999, compared to the largest group of full-time retirees (30%) falling in the $30,000 to $49,999 range.

Probing into what keeps phasers coming back to work, 42% of planned phasers said they enjoyed working, followed by 28% that need the income, 15% that needed medical benefits, 9% replying to other and 5% who were not yet eligible for their pension. Additionally, eight out of 10 (80%) work flexible hours and 79% work part time, with two-thirds (67%) saying they have less responsibility in their current job compared with their career job.

Employers do not have to go overboard either, Watson Wyatt found, even an informal phased retirement program can go a long way toward retaining experienced workers. Among workers currently in a phased retirement arrangement with their career employers, 82% had been offered the opportunity to work part-time and 71% had the opportunity to work a more flexible schedule. On the other hand, among those who left their career employer to phase elsewhere, only 16% would have been allowed to work part time for their career employer and only 20% would have been offered a more flexible work schedule.