Retiring in phases
Stepping away from a career gradually can ease transition
After nearly 30 years working at MIT, Barbara Peacock-Coady was looking forward to having time to pursue her other interests. But she wasn’t ready to stop working altogether. So she approached her bosses in MIT’s Career Services Office and proposed a gradual retirement, in which she phased out her duties and hours over two years. She cut back to two days a week, leaving her time to volunteer, read, and relax.
“It really helped me understand that I didn’t want to do that anymore,’’ she said, “that I was ready to learn how to spend more time with myself.’’
Gradual exits from long careers are becoming increasingly attractive to older workers and employers as both try to navigate an uncertain economy, changing workforce, and evolving views of retirement.
For older workers - many of whom have invested identities into job titles - phased retirement is a way to stay active and engaged, providing flexibility while supplementing retirement savings that may have to last 30 years. For employers, it’s a way to manage projected labor shortages as some 78 million baby boomers leave the workforce.
The expected spike in retirements could provide particular challenges for employers in Massachusetts and, as a result, opportunities for workers considering phased retirement. By 2020, better than one in four Massachusetts workers will be 55 or over, requiring employers to manage rapidly aging workforces, according to a study by the Commonwealth Corp., the state’s quasipublic workforce development agency.
“There is concern about losing a very talented, experienced, and skilled workforce as people retire,’’ said Jacquelyn James, research director at the Sloane Center for Aging and Work at Boston College. “Much of what we know about our job is in our head, not written down on paper. Having older workers on the job will help transfer skills and knowledge to the younger employees.’’
Despite potential benefits to employers, workers interested in phased retirements still have to sell it, said James. They need to think carefully about the conversation with their bosses, and prepare a detailed plan on structuring their retirements. In some cases, it might involve cutting back work hours; in others, it could be shifting to less demanding and time-consuming roles, such as stepping down from management.
They also need to talk about how continuing to work might affect retirement and Social Security benefits.
Peacock-Coady, manager of workforce and career planning at MIT, began speaking with her boss about a phased retirement a couple of years before she planned to retire. She had helped design flexible work schedules at the university, so she knew it wasn’t out of the question. But that didn’t make it easier.
“I still needed to go into my boss’s office and talk about options,’’ she said. “It’s still daunting because you’re exposing yourself.’’
Peacock-Coady approached her superiors with a general idea. Over the next several months, they ironed out details such as how many hours she would work, what role she would play, when she would begin her reduced schedule, and when she would retire completely.
A number of factors are making it easier to for workers to retire gradually. Keeping an older worker on the job longer costs employers less than recruiting and training new talent, according to an AARP study.
In addition, today’s economy depends more on brain power rather than physical labor, meaning people are able to work past traditional retirement ages. Nearly 40 percent of workers in the health care and management services are phasing into retirement by reducing hours, according to a 2009 study by Boston College’s Sloane Center.
Companies need to reach out to older workers to develop exit plans that work for both employer and employee, said Nancy Snyder, chief executive at Commonwealth Corp.
Larger organizations may need to hold focus groups or conduct surveys; smaller ones, like MIT’s Career Services office, might just schedule face-to-face meetings.
After Peacock-Coady discussed options with her boss, Margaret Ann Gray, they decided the best course was for Peacock-Coady to step down as manager and focus on research and teaching classes on career planning. The transition to a new manager was on the administration’s mind, but with Peacock-Coady in the workplace, they had someone who could assist when needed.
“That’s what was in it for us,’’ said Gray, director for organization and employee development.
After Peacock-Coady left MIT’s payroll in 2007, she began volunteering with a committee in Wellesley to enhance the lives of older residents. Last year, she took a part-time job with the local Council on Aging.
“I need to stay engaged somehow but I don’t need a regular job to stay engaged anymore,’’ Peacock-Coady said. “It’s kind of nice. I can read a book now during the day and not feel guilty.’’