Benefits of Phased Retirements to Both Companies and Workers
As our workforce ages and there become less younger workers available to take the baby boomers’ place, some companies are looking to implement what is known as “phased retirement.”
Phased retirement is when employees work part time at a company instead of retiring completely. This allows a company to retain their skills, knowledge and expertise for a longer period of time. It also helps the near-retiree enjoy many of the benefits of retirement while still bringing in a paycheck and, perhaps more importantly, staying engaged and active.
A 2008 survey by Hewitt Associates found that, of the 140 medium-sized companies surveyed, 55 percent had already considered how a phased retirement program might affect their companies, while 61 percent said they already had or would put such programs aimed at those nearing retirement into effect.
The need for phased retirements could become more critical as boomers retire and the need to attract and retain skilled workers becomes ever more important. From the employees’ perspective, a phased retirement could be quite attractive because workers today tend to live and stay vibrant longer than their parents and grandparents and are facing increased medical costs. In addition, the stock market decline and recession have seen their retirement portfolios decline precipitously.
The survey found the following regarding companies’ perception of the benefits of phased retirement programs:
- 52 percent said it would help in replacing key skills.
- 72 percent said it would be great to retain the knowledge and skills of older workers.
- 50 percent said it would help transfer those skills from older to younger and inexperienced workers.
From the employees standpoint, the survey reported:
- That 82 percent of respondents said they could see the benefit of being able to transition to retirement.
- That 67 percent would enjoy the extra income.
- That 60 percent would enjoy having access to employer-provided/subsided healthcare benefits.
Researchers recommended that the first and easiest step a company could take as it explores a phased retirement program is to ask its near-retirees what type of arrangement would be most attractive to them.
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