What is a Flexible Retirement and Why Should You Care?

A phased retirement is a win-win; good for the individual and good for society.
A phased retirement is a win-win; good for the individual and good for society.

No doubt about it, increasing life spans mean Americans will have to work longer. A recent NerdWallet study found rising rents and increasing student loan debt have pushed the retirement age to 75 for current college graduates. That’s an increase from NerdWallet’s last analysis, which used 2012 data and predicted an average retirement age of 73 for the Class of 2013.

It could pose a significant hurdle for older workers in physically demanding jobs—manual labor for example. One solution might be a more flexible, phased retirement; moving from full-time to part-time before heading for retirement.

The problem? Few employers support such a plan, and older employees face age discrimination. It’s something Transamerica looked into in a new report titled The New Flexible Retirement.

“Population aging is a global phenomenon,” said Catherine Collinson, president of Transamerica Center for Retirement Studies. “The shift toward a proportionally smaller working-age population and larger older population is disrupting traditional employment models and the fundamental economics of government-sponsored social security systems around the world.”

A flexible retirement, she adds, offers workers the ability to pursue their own “personalized transition,” and can create opportunities to work longer, continue earning income, and stay active and involved in society. Moreover, a new flexible retirement can create a win-win situation by serving as a powerful tool to help solve the government, social security, and employer-related retirement issues resulting from an aging population.”

How do workers envision their retirement?

“The concept of retirement is changing rapidly,” Collinson said. “As people live longer and in good health, retirement is becoming a more active life stage, with more people looking for the opportunity to combine work and leisure. Many workers have retired the notion of fully retiring at age 60 or 65.”

More than half of workers (56 percent globally; 61 percent in the U.S.) envision a flexible transition to retirement. Of those age 55 and older, 55 percent globally and 66 percent in the U.S. share this vision, with an even higher proportion of younger workers thinking they will have a flexible transition to retirement. The most common reasons for continuing to work to some extent in retirement include keeping active, enjoyment of work, and financial-related concerns.

Employers can do more to support a flexible retirement

“How workers can successfully extend their working lives is a complex issue,” said Collinson. “Workers in jobs that involve manual labor may find it difficult to continue in their current profession. Others may encounter workplace biases against older workers. Employers play an all-critical role and can make or break workers realizing their vision of a flexible retirement.”

John Sullivan
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With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.

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