Kathie Lingle's Work-Life Blog

Phased Retirement As A Retention Tool

March 17, 2008 — Jim Dwyer of American Express shared some issues last month that his organization considered in planning a phased retirement program.  I would like to build on the valuable foundation Jim has provided by highlighting the role that phased retirement can play as a retention tool of great relevance to any organization’s multigenerational workforce. 

What Is Phased Retirement?
An essential first step is to clarify what “phased retirement” is in the context of total rewards.  Briefly, it refers to a work arrangement that falls somewhere between full-time retirement and working full-time.  The intent is to allow employees to work on a modified basis as they approach retirement (pre-retirement phasing). It may also include the deliberate re-hiring of retirees (post-retirement phasing).  It should be designed to enable workers who are already eligible for retirement to collect some portion of their pension benefits while they work for pay. 

Phased retirement is generally geared toward getting “select” employees to stay on the job longer because they are valued – those who have critical skills, knowledge, contacts, or wisdom.  Such programs can also link with knowledge transfer and mentoring employees who want to move up in the organization.

Here are some key questions to stimulate thinking about the connection between phased retirement as a tool to enhance the retention of valuable talent: 

Have you asked your employees about their work preferences or intentions?  As the U.S. workforce ages and workers live longer, retirement has evolved from the way previous generations viewed it.  Many of today’s mature workers want or need to put off retirement.  That fact doesn’t necessarily mean that they want to stay in the same job or even at the same company.

As Jim said, you need to “know your population.”  Some research concludes that many organizations have not taken this step, but this does need to be a part of prudent workforce planning. 

Is there a business risk at your company?  Changing demographics and workforce trends suggest that today’s total reward initiatives may be misaligned with the needs of a dynamic mix of multiple generations, not just the mature workforce.  Workplace cultures may be oriented more toward “phasing out” than valuing and retaining employees longer, or in managing the eventual knowledge loss or need to transfer knowledge.

Do you have informal or formal programs geared to retain a multigenerational workforce?  There are many ways to retain multigenerational workers, depending on your company’s needs.  Click here to see a promising range of best practices.  Some of these initiatives include creating: an age-neutral culture, flexible career paths and schedules, financial and retirement planning programs, re-hiring retirees, diversity training to manage a multigenerational workforce, generational affinity groups, strategic workforce planning, mentoring up, down and across, engagement and knowledge transfer.

A formal phased retirement program offers the advantage of sustained viability.  “Companies use phased retirement to retain valuable skills and knowledge while providing mature workers with an alternative to the all-or-nothing approach to retirement.”   

What does the phased retirement program look like at your organization? 

The opinions expressed are solely those of the author and do not necessarily represent those of WorldatWork and its affiliate, Alliance for Work-Life Progress (AWLP).