Older workers delay retirement with ‘phasing’

ONE OUT OF three older workers would continue working longer than otherwise planned if their employer offered a phased retirement program.

However, many employers have yet to establish formal or informal arrangements, such as shorter working weeks, flexible hours or the opportunity to try something new, that would encourage older workers to delay full retirement, according to research from Watson Wyatt.

In a recent US survey of 1,000 workers and retirees at or near retirement age, it was found that a significant gap exists between what older workers are looking for and the opportunities employers provide.

“Worker attitudes about retirement are changing dramatically, and employers have some catching up to do,” said Janemarie Mulvey, assistant director of Watson Wyatt’s Research & Information Centre and one of the study’s authors.

“For example, a majority of survey participants would like to work fewer hours late in their careers, but less than half of them expect their employer to offer this opportunity.”

According to the survey, 57 per cent of current workers in phased retirement entered into the arrangement voluntarily to have more leisure time. 42 per cent of these workers chose phased retirement because they enjoyed their work, while 28 per cent said they needed the income.

Thirty-two per cent of workers in phased retirement arrangements retired completely from their career jobs but later re-entered the workforce after becoming disillusioned with retirement.

In contrast to voluntary phasers, 40 per cent of this group said they returned to work primarily because they need the income, while only 34 per cent said they work because they enjoy it.

“What was once a three-legged stool of individual retirement income is quickly becoming a four-legged stool, with income from wages constituting the fourth leg,” Mulvey said. “But it is important to note that extra income is not always the key motivator for phasers – many work because they enjoy it.”

Preferred methods of phasing include part-time work (63 per cent) and more flexible hours (48 per cent) before retiring completely, while 63 per cent of current workers aged 50 and older indicated that they would like to phase in an entirely different career.

“Although some phasers leave their career employers to pursue an entirely different line of work, many leave to perform similar work with a competitor, but with more job flexibility,” said Valerie Paganelli, a senior consultant with Watson Wyatt. “This survey reveals that employers can still do a lot more to preserve the hard-won talent and experience of their career employees.”

The opportunity to phase has significant implications for the timing of workers’ retirement. Nearly one-fourth of survey participants already in phased retirement programs expect to work past 65, while another 20 percent do not plan to retire at all. In addition, one out of three older workers said they would continue working longer than otherwise planned if their employer offered a phased retirement program.

A recent report from the UK also found that phasing was important to older workers in their pursuit of ‘liquid lives’.

The concept of ‘liquid lives’ was born out of a two-year research project into the future of retirement, conducted by a charity called the Tomorrow Project and published by the Chartered Institute of Personnel and Development (CIPD).

The report, The Opportunity of a Lifetime – Reshaping Retirement, is based on consultations with 90 experts in labour market, pensions and savings issues and a series of focus groups.

The report presents a scenario of ‘liquid lives’, in which retirement is no longer a distinct phase of life, but people mix and match work, extended leisure and learning throughout their lives.

The report theorises that as people continue in part-time work after the ‘traditional’ retirement age, making the best of more leisure time and decent incomes, the rest of the population begins to look at older people in a new and more positive light.

Traditional approaches to career development would also change with ‘liquid lives’. Rather than being stuck in an unfulfilling career by the fear of impending retirement, people feel able to change career into their fifties and beyond.