As work dynamics evolve with the rise of hybrid and remote roles, discussions surrounding a four-day workweek, and the potential impact of AI on industries, retirement in America is also undergoing significant transformations in the 2020s. Some employees and employers alike believe it’s time to reconsider how and when people retire, paving the way for the concept of phased retirement.

Alicia Garcia, Chief Culture Officer at MasterControl, a life sciences software company, advocates for phased retirement as a mutually beneficial arrangement for near-retirees and businesses. This approach allows individuals to gradually reduce their workload and stress while continuing to earn income and maintain workplace connections, while companies can still leverage their valuable experience.

Although phased retirements are not entirely new, they are gaining traction as employees increasingly value flexibility. While only 16% of employers have experience with phased retirements on a regular basis, 61% of companies, mainly larger organizations, have some experience with implementing them, according to Principal Financial Group’s Financial Well-Being Index.

The desire for gradually decreasing hours is particularly prevalent among current workers, including Gen X, millennials, and Gen Z. As Gen Xers, in particular, navigate retirement planning primarily through personal savings like 401(k)s, they seek alternatives to the traditional retirement age of 65.

MasterControl’s implementation of phased retirements reflects a growing recognition of the need for intentional offboarding strategies. By offering various options tailored to individual needs, such as scaling back to four days a week or transitioning to contract status, the company ensures a smooth transition for employees approaching retirement.

Flexible offboarding structures also address considerations like health insurance, allowing employees to retain benefits until they qualify for Medicare and Social Security payments or rely on alternative arrangements. Additionally, transitioning to less demanding roles within the company or gradually reducing work hours facilitates knowledge transfer and maintains operational continuity.

For MasterControl, phased retirement not only preserves invaluable expertise but also fosters employee engagement and loyalty. By demonstrating a commitment to supporting employees throughout their careers, the company attracts and retains top talent, contributing to long-term business success.

As the youngest baby boomers approach retirement age, phased retirement emerges as a strategic solution for businesses seeking to retain experienced talent. With the workforce landscape evolving rapidly, embracing flexibility in retirement planning becomes essential for sustaining competitiveness and fostering employee well-being. Ultimately, phased retirement exemplifies a win-win approach that benefits both individuals and organizations in an era of change.

By Impact Lab