For many people, retirement goes something like this: You work a bunch of years (or, more likely, decades). You land on a retirement age. A few months before you want to retire, you submit your resignation, giving your employer minimal notice that you're on your way out the door. You then essentially go from a full-time work schedule -- and a full-time paycheck -- to suddenly having no schedule whatsoever and no job-related earnings to fall back on.
It's not the best system, frankly. When you go from being a full-time worker to suddenly being retired, it can be financially and mentally jarring.
Suddenly, you have to find a way to fill your days. And you have to figure out how to manage on a smaller income that may consist of modest retirement plan withdrawals and benefits from Social Security.
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It's not necessarily the best system for employers, either. If you've held down the same job for many years and give a month's notice about your retirement (or less), it's likely that they'll have to scramble to fill your shoes.
If only there were a better way.
But actually, there is. It's called phased retirement, and recent data from Principal shows that 61% of businesses have experience with this arrangement. And while that's more likely to be true among larger companies, the reality is that it's a trend that could start to catch on more and more in the coming years. So if you're nearing retirement age, it pays to see if your employer is willing to support phased retirement, too.
Benefits all around
It's not easy to go from having a full-time work schedule to suddenly having nothing to do with your time. And it's also not easy to see your income take a dive.
That's why phased retirement could be a much better idea than basically resigning from your career overnight and having to adjust on the fly. With phased retirement, you can gradually cut your working hours and see what that means for your schedule. You can also see your pay get reduced gradually, adjusting at each phase and figuring out what that means in terms of the bills you can afford.
Let's say phased retirement for you means going from 40 hours of work per week to 25. You may find that you're already struggling to fill those extra 15 hours week in, week out. If so, you have time to come up with a game plan before your hours are reduced even more.
Similarly, if you start to struggle on a reduced paycheck, you'll at least have a chance to make adjustments before your income is cut even further. Plus, with phased retirement, you may have the option to leave your retirement nest egg intact for longer. That could make your life more financially comfortable once your career truly comes to an end.
Don't hesitate to ask for your employer's buy-in
You might assume that phased retirement is something your employer isn't going to go for. But actually, that approach might benefit them to a large degree.
If you ease your way into retirement, your employer will have more time to train a replacement worker accordingly. They might also be in a better position to take advantage of your expertise by having you develop training materials for younger workers first entering your industry.
All told, phased retirement can be very beneficial to everyone involved. So it's an option worth pursuing if you're on the cusp of retirement and are feeling uneasy about the idea of resigning for good.
