Thinking About Phased Retirement?

Posted Wednesday, June 27th, 2012  | Comments (6) rule
In this economic climate, you might want to think twice before signing up
Kevin E. Cahill, PhD
Research Economist
Sloan Center on Aging & Work, Boston College

Phone: 617.552.9195

One way older Americans consider combining work and retirement is to keep their jobs and reduce their hours. This is often referred to as “phased retirement.” Phased retirement is different from other kinds of job transitions later in life, such as bridge jobs (i.e., those that fall between career employment and complete labor force withdrawal) and re-entry (sometimes referred to as “unretirement”). Because phased retirement doesn’t involve a change in employer, ramping down is much easier. The advantages from an employee’s point of view are that there’s no need to interview for a new position and learn the ins and outs of a new environment and culture. The advantage from an employer’s point of view is that there are likely to be fewer disruptions from an aging workforce.

The gist of the retirement literature is that older workers in the United States may prefer phased retirement to a job change later in life, but the choice is simply not an option because employers are reluctant to offer such arrangements. As a result, researchers have focused largely on barriers to phased retirement from the employers’ end. What would discourage employers from accommodating older workers’ requests for reduced hours?

At least three reasons have been identified. First, employers might be constrained by legal and regulatory requirements, such as the Employee Retirement Income Security Act (ERISA) of 1974, which sets minimum standards for private-sector pension plans. For example, federal laws may prevent older workers from remaining with their current employers if they want to begin receiving pension benefits. Second, employers might have a financial incentive to let older workers go, because they’re expensive, both in terms of salary (even adjusting for their higher productivity relative to other workers) and in terms of their fringe benefits, such as vacation and sick-time accruals and health insurance costs. Third, from a practical standpoint, employers might simply find it cumbersome to juggle requests from older workers for part-time schedules, seasonal schedules, and occasional time off.

Human resources specialists have invested a lot of energy trying to removing these barriers. But maybe that’s the problem. Everyone has been so focused on barriers to phased retirement encountered by employers that no one has stepped back and asked, “Is phased retirement good for employees?”

The key to this question is the focus on phased retirement – staying with one’s current employer – as opposed to gradual retirement more generally. Older employees who request phased retirement are sending a signal to their employers that they’re ready to begin the transition to retirement. This is not to say the employees aren’t dedicated to their employers — just that they’re ready to focus on other aspects of life, as well. Many of us would consider that a good thing. The problem is, when push comes to shove and economic conditions necessitate job cuts, part-time jobs are often the first to go, because they are the least disruptive to operations. So, by requesting phased retirement, older workers might have just stepped forward to be first on the chopping block.

We’re still in the midst of a post-recession economy that has been more sluggish than most of us have ever experienced. Jobs are returning, but not quickly. While unemployment may be off its highs, it’s still above 8 percent and has been for more than three years straight, and counting. Now might not be the best time to express an interest in ramping down.

Bottom line – for many older workers who want to remain with their current employer, those persistent barriers to phased retirement could be a blessing in disguise.

Cahill, Kevin E., Michael D. Giandrea, and Joseph F. Quinn. 2011. “Reentering the Labor Force after Retirement.” Monthly Labor Review, 134(6), 34-42 (June).

ERISA Advisory Council. Report on Phased Retirement., accessed on June 21, 2012.

Kantarci, T., & Van Soest, A. 2008. “Gradual retirement: Preferences and limitations.” De Economist, 156, 113–144.

Quinn, Joseph F., Kevin E. Cahill, and Michael D. Giandrea. 2011. “Early Retirement: The Dawn of a New Era?” TIAA-CREF Institute Policy Brief (July).

Comments (6) for "Thinking About Phased Retirement?"

Busy Bees or Purpose Seekers?

Posted Wednesday, June 13th, 2012  | Comments (5) rule
Older adults’ search for meaning in the retirement years
Christina Matz-Costa, PhD
Senior Research Associate
Sloan Center on Aging & Work, Boston College
Assistant Professor
Graduate School of Social Work at Boston College
Phone: 617.552.1634

Deeply ingrained in American culture (and the cultures of many other countries) is the idea that being busy is a virtue. People tend to equate being busy with working hard and to equate working hard with success. Some form of this logic has probably driven most of us at one time or another to work harder than the tasks before us demand.

This emphasis on staying busy carries forward into retirement. According to the sociologist David J. Ekerdt, “There is a way that people talk about retirement that emphasizes the importance of being busy. Just as there is a work ethic that holds industriousness and self-reliance as virtues so, too, there is a ‘busy ethic’ for retirement that honors an active life. It represents people’s attempts to justify retirement in terms of their long-standing beliefs and values.”

Since Ekerdt’s article was published in 1986, the picture of retirement has changed. Increasing numbers of adults reaching the age of 65 can look forward to 10, 15, or even 20 more years of relatively healthy life. Many are looking without enthusiasm at the traditional options laid out for them and are deciding to take a rain check. Some discover that one of these options—a full exit from the workplace—is financially out of reach. Others who can afford to quit want something more from their retirement years than either sitting on the porch or finding things to do just to keep busy.

Both groups are coming up with some interesting alternatives to traditional retirement—options that emphasize the expression of one’s values and the opportunity for personal challenge and deep connection. Such a retirement path does not necessarily lead to the study of meditation in Nepal or bungee jumping off the Golden Gate Bridge. It can also lead to something as simple as discovering and nurturing meaning and value in everyday activities. According to psychologist William A. Kahn, personal engagement represents “the simultaneous employment and expression of a person’s ‘preferred self’” in ways that promote deep connections to one’s work (whatever form that might take, paid or unpaid) and to other people. Such engagement leads to active, full, and satisfying involvements rather than obligatory, passive, or emotionally anemic ones. We become personally engaged when we find that it is meaningful and safe to express our full selves and when we are psychologically ready to do so.

For older adults, personal engagement often develops organically, out of a lifelong interest that is recast in retirement, or by making small changes at work that allow for a deeper, richer experience.

A shift away from the traditional retirement ethic of staying busy to affirm instead the value of staying personally engaged signals an important change in American culture. As this shift gains momentum, can older adults teach the rest of us how to measure success in terms of the subjective quality of our experiences rather than whether we’ve checked everything off our to-do lists?

» Learn about recent work on this topic as part of Engaged as We Age, a project of Boston College’s Sloan Center on Aging & Work.

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