Older Workers: Phased Retirement Programs, Although Uncommon, Provide Flexibility for Workers and Employers

Abstract

As the large baby boomer generation retires, the workforce will lose much of its knowledge and experience. Encouraging phased retirement, in which older workers reduce their work hours with their current employer to transition into retirement, has been cited by retirement experts as one way to mitigate this loss. While about a quarter of workers aged 61 to 66 had planned to reduce hours as they transitioned to retirement, our analysis showed that fewer than 15 percent subsequently reported being partly retired or gradually retiring from their career jobs. While no nationally representative data on the prevalence of phased retirement exist, our review found that formal phased retirement programs are relatively uncommon. Of those that are offered, they are more common among employers with larger or technical and professional workforces—such as education, consulting, and high-tech—because their workers are hard to replace. Formal phased retirement programs present design and operational challenges for employers. Despite these challenges, our review demonstrated that most employers with phased retirement programs found them beneficial, providing benefits related to worker retention, knowledge transfer, transition into retirement, and workforce planning.