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Phased-Out Retirement

By now, you know the drill… that early morning regimen.  The alarm buzzes; you hit once, maybe twice – ugh, you have to get up or you’ll be running late.  Did you ever stop to think how many days of the same routine and how many days until you can retire?  I’ll bet you’d be surprised to find out many people don’t look forward to retirement, especially those in careers or jobs that they really love.  But, eventually, even if you’re in business for yourself, there is a time to shut it down and enjoy your golden years.

For people who don’t want to just quit their full-time job “cold turkey” because they are still healthy and enjoy their livelihood, and they worry about what to do with all their spare time, they might want to consider a growing trend in the workplace called “phased retirement” which is a form of job-sharing.  In a nutshell, it keeps the near-retiree viable and doing a job they love, plus allowing the opportunity to mentor an up-and-coming young person, who one day will take over their job, having secured all knowledge about the position from the person who did it best.  The new employee is happy, the elder employee is happy, and even the boss is happy since he does not have to worry about covering that position with an inexperienced worker.  It is a win-win situation all around.

One of the top legal questions posed these days is how does phased retirement work, and, if so, could it work for me?

Is this an H.R. nightmare?

Well, doubling up on paperwork might be the only drawback to senior employees participating in the phased retirement process.  The benefits outweigh the inconvenience as mentioned above.

The Transamerica Center for Retirement Studies discovered that more than six out of every ten workers (or 64%) “envision a phased transition into retirement that may involve shifting from full-time to part-time employment to keep earning income yet with more time to enjoy life” while “others may want to pursue work that is more personally satisfying and/or less demanding.  Some are even dreaming of encore careers.”

While workers may prefer to keep working on a less-demanding schedule, opting for a reduced paycheck for part-time work and the overall satisfaction of still working way past the usual retirement age, as well as mentoring a young person who eventually will take over their job, only 13% offered a variation of phased retirement, 4% offered a formal phased retirement program and 9% offered an informal program.

Baby Boomers are proactive

While the use of high-tech in the workplace does not faze the younger crowd in the least, many Baby Boomers might have been flummoxed by the sudden use of computers back at the turn of the this century.  After all, pencils, pens and paper and the electric typewriter were the tools of choice in the workplace for many years.  Suddenly, even the top executive had to transition to a computer age.  Clients, business colleagues, co-workers and even the administrative assistant were in constant touch via e-mail or text messages, so the need to keep up with trends found Baby Boomers ensuring they stayed abreast of any and all current trends, something they need not be concerned with before.  They had to essentially become modernized to remain a viable part of the “team” in the workplace.  It behooves those Boomers to keep abreast of current workplace trends, and this doesn’t just mean knowing what the best style khakis to buy for Casual Fridays is.

The Transamerica survey learned that older workers were not about to be pushed out the door by younger workers, and, if they were going to depart, they were going to phase out gradually “on their own terms”; so here is what they discovered:

  • 54% of baby boomer workers are focused on performing well at their current job;
  • 41% are keeping their job skills up-to-date;
  • 16% are networking and meeting new people;
  • 14% are scoping out the employment market and available opportunities; and
  • 5% are going back to learn new skills.

So, the Baby Boomers are probably being more proactive then you might think.  They look forward to a date when they can pass the baton and then spend the rest of their life soaking up the sun with nary a care in the world.  Hopefully, the extra years they might be permitted to have in a phased retirement gig will help them tuck away a larger nest egg.  For now, the concept of phased retirement might sound more simple on paper, than getting it accomplished.

The Feds already have a fait accompli

The Federal government already implemented a law regarding phased retirement in 2014, so that now federal workers can partially retire while continuing to collect a paycheck for working part-time.  These workers are allowed to work 20 hours per week and receive half their pay and half their retirement annuity.  The stipulation is that they must devote some 20% of their work time to mentoring other employees, especially the employee who will take over their position when they fully retire.

Many employers already have senior employees shadowing their junior employees

It is a smart boss who encourages a junior employee to be mentored by the long-time employee who is revered for his knowledge and ease in assimilating any task.  It makes both of their jobs more fulfilling, as the junior employee eventually morphs into the original employee.  An AARP survey of more than 1,000 H.R. directors found that employers keep their older workers on as a consultant 65% of the time, where others implement a “knowledge transfer program” as a form of mentorship 53% of the time.  More than half of the employers, however, sheepishly admit to encouraging their older workers to remain full-time employees for as long as possible.  With that kind of enticement, no wonder many older workers just keep pulling out that alarm clock knob every night and keeping the routine going awhile longer.

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