Is the so-called "traditional" retirement age a relic of workforces past? If a growing number of baby boomers and Gen Xers had it their way, it would be. And it'd be replaced with a more gradual exit from the workforce that gives employees more control over their departure.
In fact, one in three workers in the U.S. over age 50 desires a phased approach to retirement, according to the 2024 Global Benefits Attitudes Survey of 10,000 workers performed by advisory and brokerage firm WTW (formerly Willis Towers Watson). The survey finds 15% of these workers have already started to phase out of work—by reducing hours or responsibilities, for example—and another 19% plan to in the future.
WTW's research isn't the first to find that employees are increasingly craving the flexible approach to work and retirement. Earlier this year, Fortune covered the phased retirement trend, noting its growing popularity is due to recognition across industries that workplaces are changing, and the way companies think about retirement needs to change with it. A separate survey from Fidelity Investments found two-thirds of respondents plan for a gradual approach to leaving the workforce.
A phased retirement lets workers unload some responsibilities or switch to a less intensive career at the same company. While overall pay may decrease depending on the exact terms employees and employers agree to—transitioning from working five days a week to four days a week may come with a proportional pay cut—it allows those who may otherwise have left the workforce altogether to still earn an income and maintain workplace connections.
Employers, meanwhile, can continue to benefit from senior employees' experience at a lower price point. It also allows for a smoother knowledge transition to the company’s next generation of workers by giving older employees opportunities to offload their expertise on their terms. It can also build loyalty among younger workers, who may be more likely to stick around if they know they’ll be granted the same flexibility later in their careers.
Of course, retirement in the U.S. isn’t one size fits all. Some workers are happy to clock out and once for all right age 65, while many others never be able to fully retire at all. Some may not have much of a say in when they leave the workforce, and still others focus on saving as much as possible so that they can quit in their 50s—or even earlier. But for those who don't want to leave their jobs completely but wouldn't mind taking their foot off the gas, a phased retirement can be an ideal approach.
Financial security and health were the top drivers behind opting into a phased retirement, according to WTW's survey. And the interest in the trend is growing at a time when 46% of workers age 50 and older expect to work past age 70, the survey finds. Just 30% said the same thing before the pandemic.
Workers who have experienced phased retirements first-hand tell Fortune that not only is it helpful from a financial planning perspective, but from an emotional perspective as well. Though many workers gleefully look forward to retirement in the years prior to leaving, the truth is after decades of working, many people find it difficult to fill their time or be social. A phased retirement can make the transition easier, they say.
The good news for interested employees is that 61% of companies—mostly larger organizations—have some experience in implementing them, according to Principal Financial Group’s most recent Financial Well-Being Index. That said, only 16% of employers have experience with phased retirements on a regular basis.
"Fitting work into their life, rather than their life into their work, is really important," Chris Littlefield, president of retirement and income solutions at Principal, previously told Fortune. Companies "need to start thinking about an intentional offboarding strategy, because people staying somewhere until 65 is going by the wayside."
