Please ensure Javascript is enabled for purposes of website accessibility

45% of Workers Plan to Ease Into Retirement, and Here's Why You May Want to Do the Same

By Maurie Backman – Jun 14, 2020 at 7:18AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

There are benefits to transitioning slowly rather than diving right in.

For some people, the transition from working to retirement is effectively a hard stop -- one day you're plugging away for eight hours at your desk, the next day you're a person of leisure whose days are completely devoid of job-related obligations.

It's a route many workers expect to take, and one that can be satisfying in its own right -- work hard up until you can no longer take it, and then retire and enjoy your freedom. But it doesn't make sense for everyone, especially those people who like their jobs, or like having a social outlet through work, but are reaching an age when holding down a full-time job is getting to be too much. If that's the situation you're in, a phased transition into retirement may be a better solution, and if so, you're in good company.

Smiling older man at laptop

Image source: Getty Images.

An estimated 45% of workers today envision that they'll transition slowly into retirement by reducing work hours rather than working full-time up until the day they call it quits, according to a recent Transamerica survey. Here are a few good reasons why it pays to take a similar approach.

1. You'll get a trial run

Some seniors count down the days until they're set to leave their jobs, only to realize that they're quite miserable being retired. The beauty of a phased transition is that you'll slowly but surely get a taste of what it's like to not have a job, and you'll be able to see how much downtime is too much. You'll also have an opportunity to adjust your retirement plans so you're not stuck with nothing to do after years of a full-time work schedule.

2. It may be easier on you mentally

While retirement is an exciting prospect for some people, it's mentally taxing for others. A lot of people lose their identity when they stop working, and lose their sense of purpose when their schedules suddenly become overwhelmingly clear. By opting for a phased transition into retirement, you can slowly but surely adjust your mindset and potentially ward off the mental health issues so many seniors face.

3. It could help you eke out more Social Security income

Your Social Security benefits are based on your earnings during your 35 highest-paid years in the workforce, and you're entitled to your full monthly benefit once you reach full retirement age, or FRA. Depending on your year of birth, FRA is either 66, 67, or somewhere in between. But you don't have to claim benefits at FRA, and if you delay them past that point, they'll increase by 8% a year up until age 70.

Now, say your FRA is 67 and you retire fully at that age. You may need to claim Social Security right away to cover your living expenses. On the other hand, if you simply cut your hours in half at FRA rather than retire fully, you might retain enough income to avoid claiming Social Security immediately, thereby growing your benefits -- for life.

Of course, not every company supports the idea of phased retirement, but if yours does, it pays to consider it. It's a good way to ease into a new stage of life in a much less mentally and financially overwhelming fashion.

The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
329%
 
S&P 500 Returns
106%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/27/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.