The ongoing COVID-19 health crisis has done a real number on the stock market. As the markets continue to experience extreme volatility, many retirement accounts have been put in flux. This uncertainty has caused many workers to reconsider their retirement date. With the markets taking a bite out of many retirement accounts, some individuals are looking at ways that they can enjoy a part-time retirement while still earning a partial income before they leave the workplace completely.

Compounding the issue of the continuing market volatility, the unemployment rate in the age group of workers 55 and over was 11.8% in May. According to a recent survey from the Transamerica Center for Retirement Studies, nearly 60% of current workers would welcome the opportunity to employ a phased transition into retirement. A phased retirement is defined as a process that allows employees to gradually exit the workplace while giving the company time to find the right replacement.

Why Choose a Phased Retirement?

There are many benefits to a phased retirement, giving advantages to both the employee and the employer. This type of process allows the employer to teach all of the necessary skills to younger generations of workers while allowing the retiree to slowly reduce their workload. The seasoned worker can continue to delay accessing their retirement funds while putting away additional money in this uncertain time. Additionally, the hiring managers are able to keep their most experienced workers on hand to teach the new employees and make the transition easier for everyone. Lastly, this type of process reduces the emotional and mental stress that naturally comes with retirement. By taking a more gradual approach, it helps the new retirees to ease into this new season in life.

What to Consider for Your Phased Retirement

Before you take this leap, it is important that you consider the decision from all angles. Here are a few things to keep in mind as you wrestle with how to proceed with your retirement and if a phased retirement is the best choice for you.

• Carefully Examine Finances - The number one consideration to make when making this decision is to scrutinize your financial picture. Meeting with a professional financial advisor will help you to take stock of your retirement accounts, debts, lifestyle desires, and other considerations that will give you a good idea if this is a prudent financial decision at this point in your career.



• Look Into Health Benefits - The health benefits picture can get murky during a phased retirement. Because it can be a gray area when it comes to benefits coverage, you will want to make sure that you fully understand your Medicare options and when they will kick in. You do not want to make any rash decisions without fully understanding the entire scope of your benefits as you move forward. These decisions are particularly important if you are under the age of 65 and not yet eligible for Medicare.



• Employer Practices - Every employer will differ greatly on how they approach this type of retirement program. Before you decide how to proceed, you will want to meet with a human resource representative to make sure that they are supportive of the transition. A phased retirement may be a good idea for you if your employer is willing to be flexible with your working hours. If it appears that they are not willing to work with your salary and scheduling preferences, this may not be a good choice for your personal needs.



• Personal Mental Health - Deciding to take your retirement, whether it is full or partial, is a significant life transition. Before you pull the plug on your working years, it is crucial that you consider how this will impact your overall mental health. Many individuals experience a loss of identity when they retire. Taking steps to protect your mental health is a key component to a successful retirement transition.

A phased retirement approach can be an ideal solution for you if you are looking at retirement but still worried about the financial and emotional costs of this significant life transition, especially due to the uncertainty that comes with a global pandemic. By carefully reviewing all of your options, you will feel confident that you are making the right decision for your personal needs.