How to phase into retirement

Plenty of older Americans apparently want to do it. No, not that. They want to slowly phase into retirement.

In fact, more than six in 10 workers (64%) "envision a phased transition into retirement that may involve shifting from full-time to part-time employment to keep earning income yet with more time to enjoy life," said Catherine Collinson, president of Transamerica Center for Retirement Studies and author of the report, The Retirement Readiness of Three Unique Generations: Baby Boomers, Generation X, and Millennials. "Others may want to pursue work that is more personally satisfying and/or less demanding. Some are even dreaming of encore careers." You can read the full study here.

Unfortunately, not that many employers offer workers a way to phase into retirement. Just 13% of organizations offered some type of phased retirement, 4% offered a formal phased retirement program and 9% offered an informal program, according to the 2014 Society for Human Resource Management (SHRM) Employee Benefits Report.

Of course, that might change now that federal workers can partially retire while continuing to work part-time for Uncle Sam. In early August, after more than two years in federal regulation limbo, the phased retirement law for federal employees was implemented, according to a Government Executive report. Now, eligible federal employees can submit their applications for phased retirement beginning Nov. 6. You can read the Office of Personnel Management's final rules on the new program here.

According to Government Executive, the new law allows eligible federal employees to work 20 hours per week and receive half their pay as well as half their retirement annuity. Those employees who enter phased retirement must devote at least 20% of their work time, or about eight hours a pay period, to mentoring other employees, ideally those who will take over for them when they fully retire.

To be fair, it's not known how many private employers will follow suit.

"Although employers recognize the need to mitigate potential knowledge loss as older workers retire, relatively few employers report that they are considering phased retirement programs for the future," according to report just published by the Sloan Center on Aging & Work at Boston College. "Perceived barriers include legal and regulatory concerns, and rules related to modifying the distribution of pension benefits."

But what is well known is that some industries fear the brain drain and the loss of institutional knowledge that might occur if they don't offer phased retirement to their older workers.

Consider, for instance, the findings of a 2011 AARP survey of more than 1,000 human resource directors. More than half of the employers say that they will try to keep older workers on as part-time empoyees or consultants (65%), reports the survey. Other steps include use of a knowledge transfer program to allow workers who are approaching retirement age to mentor or transfer knowledge to younger workers (53%), and using a succession plan for critical positions (51%). Almost half (46%) will try to entice older workers to remain as full-time employees.

All that begs the following question: What should you do, or avoid doing, if you have designs on phasing into retirement?

For her part, Collinson says job No. 1 is to become proactive.

"Transamerica Center for Retirement Studies' most recent survey of workers found that 65% of baby boomers plan to work past age 65 (or do not plan to retire) and just 21% expect to immediately stop working when they retire," she said. "However, relatively few baby boomers are taking the necessary proactive steps to help ensure that they can continue working and transition on their own terms."

Collinson said the Transamerica survey found that:

•54% of baby boomer workers are focused on performing well at their current job

•41% are keeping their job skills up-to-date

•16% are networking and meeting new people

•14% are scoping out the employment market and available opportunities

•Only 5% are going back to learn new skills

What's more, she noted that only 21% of baby boomer workers say their current employers have programs in place to accommodate reducing hours or shifting from full-time to part-time work for their employees who are transitioning into retirement.

So, "while a phased retirement may sound simple, it will likely be more difficult to accomplish. In other words, it's easier said than done," said Collinson.

Here are her five tips for workers who are planning a phased transition into retirement:

1. Set aside time to do your homework — and expect to do a lot of it.

2. Keep your job skills up to date and relevant. Whether you hope to stay at your current employer or plan to switch employers, your chances for success are best if you possess the skills that are in demand. If needed, seek additional training, take continuing education classes, or go back to school.

3. Determine whether it's feasible to have a phased transition into retirement with your current employer — and be sure that your job performance shines. Even if your employer doesn't have a formal program in place, you have a much better chance at negotiating a "yes" to your transition plans if you're a consistently excellent performer.

4. Scope out the employment market and do a sanity check on available opportunities — find out what employers are looking for. It's still a tough job market and difficult for workers of all ages to find employment. The harsh reality is that it can be even more difficult for older workers.

5. Check out online resources for over-50 job seekers such as AARP's job hunting website or its LifeReimagined website, RetirementJobs.com, and Encore.org. Other sites include RetiredBrains.com and WhatsNext.com.

"One last word of advice," says Collinson. "Avoid falling into a false sense of security that working longer and postponing retirement can replace the need for careful planning and saving. Too often, life's unforeseen circumstances can derail the best laid plans."

In other words: "Be sure to have a backup plan for retirement income if forced into retirement sooner than expected for reasons of ill health, job loss, family obligations," said Collinson, who noted that the Transamerica survey found that just 26% of baby boomer workers have a backup plan.

Robert Powell is editor of Retirement Weekly, contributes regularly to USA WEEKEND, USA TODAY, The Wall Street Journal and MarketWatch and teaches at Boston University.