Many full-time workers retire and cease working altogether as paid employees; this is known as “full retirement.” However, some individuals don’t stop working altogether; instead, they go through a process known as “phased retirement.” They quit working full-time, but continue working part-time or part-year for the same employer, a different employer in the same industry, or even find work in an entirely different field.
Over the next several decades, millions of skilled Baby-Boomer workers will exit the workforce. Employers may find it difficult to replace these employees with new hires of the same level of skill and expertise, and may need to keep some of them on the job on a part-time basis by offering them a phased retirement employment package.
Why would you consider going through a phased retirement? There are several benefits:
- Social interaction. A phased-retirement job can provide a natural environment for ongoing interaction with other employees and customers, and the potential for forming new friendships.
- Sense of purpose. Having a job in retirement creates a sense of daily routine, giving you a reason to “get out of bed” or "something to do today."
- Search for significance. After completing a career spanning 30 or 40 years of work, finding a job in a new field may allow you to give back to society, particularly if the work is in a nonprofit organization.
- Extra income. A part-time job with your current employer might generate enough income to make ends meet, particularly during the early years of retirement. You also might be able to add to your retirement savings to pay for future expenses such as health care. And the extra income could allow you to delay drawing Social Security retirement benefits, resulting in larger future benefit payments.