For more than two decades, Elizabeth Conway worked for Abbott, a manufacturer of infant formula, medical devices and drugs in Columbus, Ohio.
About a year and a half ago, she began easing into retirement through the company’s phased retirement plan.
“It was a test to see if I was really ready to retire,” she said. “It allows me to enter this space at my own pace and on my own terms,” the 60-year-old global manager told Yahoo Finance.
Formal phased retirement plans that offer reduced or flexible schedules and reduced workloads are rare. Last year, only 7% of companies surveyed by the Society for Human Resource Management (SHRM) offered formal programs. A larger share (about 2 in 10) offers informal phased retirement plans, with employees often working with their managers to develop their own plans.
“While formal plans remain uncommon, interest in phased retirement plans is growing,” Paul Langcroft, senior vice president at Fidelity Workplace Consulting, told Yahoo Finance.
Read more: How much do you really need to save for retirement?
The data is clear: More and more workers want to move down one gear at a time. According to SHRM, more than four in 10 workers want to see wellness programs that address opportunities to phase out of the workforce and more part-time scheduling options.
Employers prefer to select workers for these opportunities based on a desire to retain specific skills, citing the cost or administrative hassles of formal programs.
“Older workers want and need to continue working beyond traditional retirement age,” said Catherine Collinson, CEO and president of the nonprofits Transamerica Institute and Transamerica Center for Retirement Research. “They are not financially ready to retire, and they may love what they do. But they can only succeed if their employers welcome and support them.”
Fidelity research shows that one-third of baby boomers working today are delaying retirement, and two-thirds of those are doing so out of financial necessity.
Millions of workers in their 50s and 60s say they are behind on their savings goals and must keep money in employer plans for as long as possible. In addition, they are acutely aware that they must stick with employer-provided health insurance until they are eligible for Medicare at age 65.
Finally, the income you earn from continuing to work, even at a lower level, can help you delay taking Social Security benefits, thereby increasing your future monthly payments.
Engineer technicians who operate complex equipment at electric power dispatch stations. ·Olga Rolenko via Getty Images
To qualify for Abbott’s “Work Free” program, employees must be 55 years or older and have worked for Abbott for more than 10 years. Managers must sign off, and workers can then reduce their work schedule to four days a week or choose to take up to five weeks off in addition to paid vacation days.
Each of these options would lower wages, but employees would still be eligible for all of Abbott’s full-time benefits, such as health care and retirement plans, as well as Abbott’s 401(k) match. In exchange, participants must agree to pass on their knowledge to more junior members of the team.
The formal program launched in 2008 and to date, more than 2,100 employees have used it to easily transition into the next chapter.
“As a result, we’ve seen our average retirement age go up from 58 when we designed the plan to around 61,” Abbott’s chief human resources officer, Mary Moreland, told me.
“We have a plan to retain people with skills that we want to continue to have for longer,” she added. “They do a great job and it’s a very natural and continuous way of transferring knowledge.”
Read more: Retirement Planning: A Step-by-Step Guide
Conway opted to take a few extra weeks off and worked with her manager to come up with a schedule that worked for both of them. “I’ve been working on a very complex project for the past five years and I couldn’t just walk away,” Conway said. “That’s going to be hard.”
The intentional extra hours allowed her to sell her house and find a new apartment, and as cliche as it sounds, she’s looking forward to spending more time on the court and learning to play pickleball. “Also, I hope I can take care of my elderly parents who want to stay at home,” she said.
If you work for a company that might be willing to do this, there are some early steps to take.
“Start laying the groundwork with your manager about a year before you want to slow down,” said Judith Ward, 63, a retired director at T. Rowe Price.
Ward retired in January after working part-time for two years. “I know it’s time when I enjoy my days off more than I do in the office,” she says. “It’s really helpful to be able to have that perspective.”
T. Rowe Price had no formal phased retirement plan, so she went directly to her manager to discuss possible options. “Something happened in my life,” Ward said. “My husband was very ill and I was in caregiving mode. I needed this change in work.”
However, before meeting with her manager, she researched the company’s benefits and learned that even if she reduced her hours to 20 hours or two and a half days per week, she could continue to receive employer health insurance and continue to contribute to her 401(k). “I ran errands and I had a great manager who was willing to work with me,” she said.
For Ward, phasing out retirement rather than a hard stop is primarily about income and benefits. However, she did reduce her 401(k) contributions to build up a cash cushion.
“I was struggling with what to do with my life after retirement,” she said. “What am I going to do? The past two years have given me time to figure it all out.”
Have questions about retirement? Personal finances? Is there anything career-related? Click here to leave a message for Kerry Hannon.
Here are other things to do:
Research Find out what you can gain by working shorter hours.
Ask your colleagues. Follow others in your company who have scheduled retirement to see how they did it.
Have a few options ready. Prepare two or three scenarios to present to your manager, and check in regularly to make sure everyone is satisfied.
Hone your skills. It helps to become a superstar at your job. Employers are more likely to say yes to their top performers.
Kerry Hannon is a senior columnist at Yahoo Finance. She is a career and retirement strategist and the author of 14 books, including “Retirement Living: Gen X’s Guide to Securing a Financial Future,“”Taking Charge in Your 50s: How to Succeed in the New World of Work” and “You are never too old to be rich. “Follow her and continue blue sky and X.
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