Retirement is your time to kick back and relax or perhaps go on all the adventures you’ve been saving for this time in your life. Yet, as you start winding down, you may be wondering what your options are for retirement. For those who are nearing this life stage, a phased retirement may be the ideal way to make a smooth transition.
Retirement is changing. Many of us are living longer, healthier lives, and are making the decision to retire later. The opportunity of a phased retirement can provide you with more flexibility and control over this transition period.
So, what is a phased retirement you may ask?
A phased retirement is a work arrangement where an employee who is close to retirement can gradually transition by moving from full-time hours to part time hours, and then ultimately to full-time retirement. Phased retirement programs are more common in large organizations since they have the resources to coordinate them.
Discover the benefits of a phased retirement for you and your employer:
If your retirement is just around the corner, then you’re probably experiencing mixed emotions. After working hard for so many years, retirement has been a long time coming! But big life changes can also bring on feelings of anxiety. You’ll likely have to adjust to having more free time and may miss some of your colleagues as well as the comforts of your life in the workplace.
A phased retirement can help you gradually ease into retirement and make you more emotionally prepared for the shift. Imagine spending 20+ years at a company and then having plenty of spare time to fill. Working less hours can make the transition to retirement feel less abrupt, giving you time to adjust to your new reality.
Now more than ever seniors are active and engaged in their professional and personal communities, so the potential to slowdown the daily buzz of their work life can be both exciting and daunting. A phased retirement allows you to keep your mind active and busy at a more sustainable pace.
Phased retirements also serve other practical purposes. Nowadays, life expectancies have increased which means you may outlive your retirement savings.
In a survey from the Canadian Payroll Association, 46% of respondents said they put 5% or less of their pay into retirement savings, despite financial planning experts recommending 10% of pay going towards retirement savings.
A phased retirement can therefore help you put more money towards your retirement nest egg. Even if your salary is reduced compared to your full-time income, you may still be able to earn some money while retaining your benefits longer (depending on your employer).
This arrangement can help you pay for large expenses and debts like your mortgage, children’s post-secondary education, and more. So, when you do fully retire, you’ll have even more financial security to enjoy your retirement!
A phased retirement is not only beneficial to you but also to your employer. Businesses can maintain continuity of operations with skilled employees while retaining their knowledge and experience longer. This is ideal for people nearing retirement who are in roles that may be difficult to fill.
Soon-to-be retirees can train and mentor younger employees during their phased retirement to help them eventually fill their shoes at the workplace. This mentorship can reduce any costs associated with hiring and training new employees.
Employers can also benefit from phased retirements because of enhanced productivity from a motivated workforce. People nearing retirement will have increased work-life balance which will support their high performance even on a part-time basis.
If you’re nearing retirement, consider the benefits of a phased transition. This approach may be the financially sound and smooth progression to a new and exciting chapter of your life!