Transitioning into retirement can be both a thoroughly relieving and a stressful prospect.
You start a new life the day you retire; however, the transition from full-time employment into retirement may feel quite sudden.
Despite how much you may have looked forward to the idea of a relaxing post-retirement life, the thought of waking up on Monday without a job may be unsettling.
This is why people hire professionals like financial planners to help them navigate phased retirement, investment planning, or other financial matters.
What is phased retirement?
Phased retirement is a work arrangement when you gradually shift from full-time employment into part-time work or reduce your number of work hours or workload.
The idea is to start the process of retiring while still employed and enjoying the life of a working professional.
In the phased retirement period, the person might undertake a flexible workload for a certain period before finally calling it a day.
In doing so, the individual gradually starts experiencing retirement while still having a consistent stream of income, health insurance, and retirement savings benefits.
Factors to consider for phased retirement
Whether you decide to retire fully or partially, your lifestyle is certainly going to change leading you to newer experiences, hence, you need to be fully aware of your situation and preferences.
Financial situation
The transition is a gradual, conscious passage into retirement which is particularly helpful for people who are critical of their current financial situation and future plans.
Moreover, also consider if reduced work hours will still provide ample income to support your needs.
Health and wellbeing
Phased retirement is a good option for those prioritizing their health and well-being, or at least wanting to bring some work-life balance into their daily routine.
Fewer work hours will surely reduce your stress levels allowing you more time to bring back focus and enjoy relaxation.
Personal goals
What are the personal goals you wish to achieve through phased retirement? Do you intend to spend more time with your family and friends? Do you want to travel? Or are you interested in pursuing your passion, interests, and hobbies?
Phased retirement allows people to pursue their goals while still staying connected with their professional life and a source of income.
If you’re unsure of how to sort your post-retirement personal goals, consult a financial planner for further assistance.
Employer policies
It is important to understand your company’s policy regarding full-time and part-time work and phased retirement.
Not all employers provide this option, and the terms and conditions may differ from company to company depending on your location, work type, contractual terms, and other obligations.
Some companies have started to offer phased retirement programs
According to a 2021 survey, around 23% of companies are offering a few types of formal phased retirement programs.
And that percentage doesn’t include the people who’ve sought part-time work outside of an official program.
The trend will likely continue because phased retirement is also beneficial for employers—maintaining an on-job workforce while cutting down salaries, expenses, and other benefits and avoiding the time-consuming, costly onboarding process for new employees.
If you are interested in phased retirement but are unsure where to start, your best bet is an internet search for certified financial planners in your area. You can try searching for a “certified financial planner near me,” to get a list of options to start from. Or, if your “certified financial planner near me” results are too plentiful, try being more precise. For example, if you live in Chicago, you can search “financial planner Chicago,” to find a certified financial planner in Chicago is home to.
