If you’re like many employees approaching retirement age, you likely don’t want to just quit working and walk straight into retirement. Rather, either out of want or need or a little of both, you’ll likely want to transition into your golden years.
But what’s the best way to phase into retirement? With your current employer, is what many workers would like. Unfortunately, many firms don’t give workers the chance. Just one in four employers lets pre-retirees shift from full-time to part-time work, according to the just-released 17th annual retirement survey by Transamerica Center for Retirement Studies.
Why the disconnect? 2 words: Cha ching
“I suspect the real issue is that it’s expensive for employers,” says Kerry Hannon, author of Getting the Job You Want After 50 for Dummies. “They want to offer it to some cherry-picked employees on an individual-by-individual basis, so they aren’t stuck with a formal program that involves offering benefits like health insurance coverage, which can be expensive,” in addition to more administrative work and scheduling challenges.
So the best thing to do if you want to shift from full time to part time is to work for an employer that already offers that option. The federal government, for instance, is starting to allow civilian workers to phase into retirement. And some — mostly big — firms, Intel for example, also offer it.The transition from full-time worker to full-time retiree is a tricky one.
Don’t despair if your employer doesn’t offer a phased approach: You’ve got several options, depending on whether you want to work for pay or volunteer.
If you want to work for pay, it never hurts to just ask your current employer if you can phase into retirement on a one-off basis. “An employee in good standing (can) proactively negotiate a specific ‘reduced hours’ work arrangement directly with his or her boss,” says Tim Driver, president of RetirementJobs.com. Others agree. “There is no reason you can’t ask. Nothing ventured, nothing gained,” says Hannon. “The key is convincing your employer that the arrangement will be good for them. Remember it’s not about you. It’s about them, and what you can do for the company and to make your boss succeed.”
If you need help selling the idea, The Conference Board has a list of reasons you can use to make the case that phased-in retirement is a good thing for business.
If you’re denied? Make your own plan
If that doesn’t work, you might have to create your own phased retirement. For instance, many workers become consultants to former clients or to former competitors. And some go in a completely different direction. Most recently, for instance, many workers have become part-time drivers with Uber. Of note, Life Reimagined, a wholly owned non-profit subsidiary of AARP, in July announced a collaboration with Uber to provide flexible opportunities for members to earn income as Uber driver-partners.
Also consider using websites to search for a job or a career that will let you ease into retirement. Here are a few to take a look at:
Finally, you could start your own business, suggests Anna Rappaport, the chair of the Society of Actuaries Committee on Post Retirement Needs and Risks. But, she cautions, if you go this route, remember that it “can be a lot more difficult than expected.” Plus, it’s important not to use savings intended for retirement.
One bit of good news: Organizations are also spearheading efforts to promote phased retirement. Those include AARP, which offers its annual list of best employers for workers over 50 and its Life Reimagined website, and Great Place to Work has a list of the 30 Best Workplaces to Retire From.
Unfortunately, the number of firms that offer formal phased retirement to workers is unlikely grow in the near term for a host of reasons, including pension laws, even though the number of older employees in the workforce continues to grow.
“There are legal issues which would be helpful to clear up,” says Rappaport, who is phasing into retirement herself from her full-time career as an actuary by now working as a consultant. (Read Rappaport’s personal story about phasing into retirement,Perspectives from Anna – Some Insights into Phased Retirement and Retirement Decisions from the Retiree’s Point of View.)
Still, it can’t hurt to keep on trying to phase into retirement.
How to get your boss on board
Tips from Kerry Hannon, author of Getting the Job You Want After 50 for Dummies, on ways to convince your boss to offer you a phased retirement:
- Do your sleuthing. See if anyone else in your company has this kind of arrangement and ask them for advice on how they landed it.
- Have a blueprint in mind. Know what you’re asking for. Do you want to telecommute? Do you want set hours or a more project-based workload? Is it a shift to part-time work, starting with a four-day week, then a three-day workweek for a certain period of time, say, two years? This clear vision helps your boss develop a transition plan.
- Look at it from your boss’s perspective. Which of your job duties are you really great at and want to focus on, and more important, which of your skills are to the firm’s advantage to keep you on? Who can handle the responsibilities you want to step away from? Is there something that having you available to tackle, such as special projects that no one else has the bandwidth for, that will make it win for both of you to keep you on board to shepherd?
- Think through the numbers. Be prepared for a salary or benefits cut and to negotiate for what you feel comfortable accepting.
- Get a jumpstart. Once you have a clear idea of your ideal scenario (and one that will benefit your employer), meet with your boss. A year in advance is not too soon to start the dance. It can be a little tricky because you don’t want your boss to think you have one foot out the door already. The message is you want to help him or her make your retirement a smooth transition for the company. Mentoring your successor, of course, will be part of this discussion.
- Be flexible. If you start ahead of time, you can propose your phase-out on a trial basis, so nothing is written in stone. You and your manager can review how it’s going every few months to make sure it’s working and see if your plan needs to be tweaked.
According to Michael Herndon, vice president financial resilience, at AARP, there are several issues to keep in mind when considering phased retirement:
- If your current employer offers phased retirement and you are covered by a traditional pension, make sure that reducing your income in your last work years will not negatively affect your benefit calculation. If it will, explore the implications of retiring and taking your full pension benefits, and go back to your employer as a part-timer or independent contractor.
- If you are not Medicare-eligible, make sure reducing your work hours will not affect your eligibility for your health plan at work. If reducing hours would cut you out of your health plan, find out if you could pick up benefits through COBRA, and what the cost would be.
- Your Social Security retirement benefit is based on your highest 35 years of earnings. If phased retirement will reduce your earnings for several years, it could negatively affect your benefit calculation. Also, if you begin collecting benefits before your full retirement age, there is an earnings limit. Social Security withholds $1 for every $2 you earn over that limit, which is $15,720 in 2016.
Companies that offer phased retirement
- Mercy Health System, Janesville, Wis. Offers flexible work schedules and creates jobs friendly to employee and employer needs
- Stanley Consultants, Muscatine, Iowa. Outreach to retirees for short-term project and consultative opportunities due to labor shortage and project need
- Herman Miller, Zeeland, Mich. 60+ workers qualify for a six-month to two-year phase-in retirement, keeping full-time benefits with pay base matching worked hours; similar to the Federal program, retirees mentor younger workers)
- First Horizon National Corp., Memphis. Known for its flexible work arrangements for older employees; named by AARP in 2009 as one of the Best Employers for Workers Over 50.
- Cornell University, Ithaca, N.Y. offers a formal phased retirement program for faculty and staff, looking at mutually beneficial flexible arrangements, also named by AARP in 2009 as one of the Best Employers for Workers Over 50
BY Robert Powell, Special for USA TODAY
Robert Powell is editor of Retirement Weekly, c