Several reasons have contributed to the growing idea that
retirement may be a phase that stretches over several months or helps people
prepare for a second act, says Kerry Hannon, careers expert at AARP and author
of several books for job hunters, including “Great Jobs for Everyone 50+.” When
a near-retirement age employee cuts back hours or stays on as a consultant and
mentor to junior staff, it has so many benefits. It’s critical for companies to
hold on to some of the talent that would otherwise be lost.
But now that many people are living 25 or even 30 or 40
years in retirement, Cyndi Hutchins, director of financial gerontology, says it
is more common for people to ask themselves if they can really live a life of
leisure for such a long period. A bucket list can be exhausted within two or
three years. People then begin to think of other things they want to do to stay
relevant and mentally stimulated. They may not want to continue in the same job
or the same field, but may welcome an opportunity to try something different. Hutchins
agrees that the value of human capital is a contributing factor to the growing
attention being given to phased retirement.
One thing that came out of the Merrill Lynch Bank of America
study, “Work in Retirement: Myths and Motivations,” Hutchins says, is
that about half the people surveyed said they planned on taking a break of two
to three years, but then would re-engage in some kind of work for a longer
period. Their level of engagement varies between full-time and part-time and
many will likely cycle in and out of work, alternating periods of employment
with leisure.
The number of survey respondents who said they would like to
have some kind of work was even higher: 72% of people older than the age of 50
said they wanted to work. That statistic alone indicates a very high adoption
rate if phased option were offered by employers. Retaining retirement-age
workers might not suit all types of companies or all types of employees.
However, Hutchins notes that as the definition of retirement is changing, fewer
people seem attracted to a traditional retirement without any work. Phased
retirement for government workers will be a slow rollout, Hannon says.
According to the Congressional Budget Office, about 1,000 workers will take
advantage initially—out of the 2 million or so workers in the Federal
workforce.
Encore.org is a nonprofit that partners with industry to
provide programs for people who are retiring. Hannon explains that in one
instance, Encore.org establishes fellowships and Intel, the technology
manufacturer, pays benefits during an internship period. Often, the
internships turn into regular employment. It’s similar to a private/public
partnership designed to train workers who want to pursue a second act. It is
similar to phased retirement, because Intel provides some structure for workers
while they make their transition.
AARP’s list of best companies for workers older than 50 has
a number of innovative models. Scripps, for example, allows workers to phase
out and continue full benefits. In staged retirement, eligible employees ages
55 and older can collect full-time benefits and dip into their retirement funds
while working part-time. Some employees who work 16 or more hours a week are
entitled to full medical and prescription drug coverage, among other benefits.
Hutchins points out there can actually be a cost savings in
some cases, especially if the employer is keeping an older worker part-time. Hannon says smaller firms or nonprofits might
find it useful to have older employees remain employed on a contract basis. The
company won’t have to pay for benefits, but they can still retain the wisdom
and institutional knowledge of these older workers. This can also work for
startups that want to recruit older workers.
Phased retirement is evolving, and it’s an exciting
movement, Hannon says. Everyone’s trying to dip their toe in—they know there is
huge segment of population that is going to want to keep working. The question
is how to make it a win for everyone.
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