Phased Retirement

Learning how to set money aside and retire gradually

No matter your age, it’s never too early to start thinking about phased retirement. Perhaps one of the biggest issues retirees face is not having enough capital to get through retirement happily. In recent years many people have been turning toward phased retirement options as an answer to this problem.

The benefit to a phased retirement is that you will be able to maintain an income to support the life you are accustomed to but would normally not be able to afford with your pension or retirement savings. It also gives companies the ability to find qualified replacements for your position. This is why so many people with hard-to-replace skills will often get the offer of phased retirement pensions from their employers.

How Phased Retirement Works

There are no rules set by the government for these types of arrangements. For the most part, they are simply an agreement between you and your employer that enables you to work past the set age of retirement.

Depending on the agreement that you make with your employer you will most likely work less time than you had normally, or even drop down to part-time hours. This allows you to have an income to fund medical expenses or any other unforeseen events, but without having to maintain a rigorous work schedule. When agreed upon, phased retirements are usually something beneficial to both the employer and employee, which makes them increasingly popular with today’s workers facing retirement.

Why a Phased Retirement?

Many people, as they get closer to retirement, realize that they actually want to continue to work. While volunteering is always an option, a phased retirement allows people to continue to earn income while also taking advantage of the benefits of a pension. If a phased retirement is something you’re interested in and have never discussed with your employer, talk to him or her to find out if any phased retirement options are available to you. It’s better to find out earlier rather than later so you can use your phased retirement plan as a guideline for planning the rest of your retirement.

A decision on this subject is something that can affect your entire retirement, so it’s best not to rush in all at once. Take time to make sure you are certain a phased retirement is right for you. Some people may find they already have enough money set aside through a 401k retirement plan or other means and don’t need these plans, but for those who aren’t quite ready for complete retirement, they can be beneficial.