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News » Phased retirement gains popularity among older American workers: WTW survey

Phased retirement gains popularity among older American workers: WTW survey

Photo from WTW

NEW YORK, UNITED STATES — Recent studies show a growing trend among baby boomers and Gen Xers opting for a gradual transition out of the workforce.

This “phased retirement” approach is gaining traction as workers seek greater control over their departure from full-time employment.

Survey reveals changing retirement preferences

The 2024 Global Benefits Attitudes Survey was conducted from January to March 2024, including 10,000 U.S. employees working at medium and large private sector employers.

The survey found that one in three U.S. workers over 50 desires a phased approach to retirement. Fifteen percent have already begun reducing hours or responsibilities, while another 19% plan to do so in the future.

A separate survey by Fidelity Investments found that two-thirds of respondents plan to gradually exit the workforce.

Advantages for employees and employers

Phased retirement offers advantages for both workers and companies. 

“Phased retirement can be a win-win for both employees and employers,” said Jonathan Sterbanz, Senior Director for Retirement at WTW. 

“Working fewer hours even with reduced pay can help employees transition into retirement both financially and emotionally. At the same time, companies want to hang onto experienced employees and encourage them to pass on their wealth of knowledge to younger employees. 

Chris Littlefield, president of retirement and income solutions at Principal, told Fortune the importance of this trend: “Fitting work into their life, rather than their life into their work, is really important. Companies need to start thinking about an intentional offboarding strategy, because people staying somewhere until 65 is going by the wayside.”

Financial security and health concerns

According to WTW’s survey, 76% of workers cited financial security as the top reason for considering phased retirement, followed by health concerns (50%) and the desire for more time with family and leisure activities (45%).

The survey also found that 46% of workers aged 50 and older now expect to work past age 70, a significant increase from the 30% who held this expectation before the pandemic. 

This change highlights the growing need for flexible retirement options as economic pressures continue to impact older generations.

Despite the increasing interest in phased retirement, only 16% of employers regularly implement such programs, although 61% have some experience with them.

“Utilizing available options within their defined contribution plans, along with other developments in the marketplace such as pooled employer plans and lifetime income solutions, will give employers the tools to enhance their benefits in order to provide employees with flexibility as they prepare to retire,” said Chris West, U.S. LifeSight PEP leader, WTW.

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