Trends in Phased Retirement for Older Workers
As many older working Americans postpone retirement due to financial worries, a notable number are opting for a phased approach. This trend has surfaced from recent survey research by WTW (NASDAQ: WTW), a prominent global advisory and solutions firm.
Insights from the Survey on Phased Retirement
The 2024 Global Benefits Attitudes Survey found that one in three workers aged 50 and above are either currently phasing into retirement (15%) by reducing their work hours or responsibilities, or they wish to do so (19%). Many of these individuals intend to transition over a longer period; those starting at age 59 expect to continue working for an additional nine years. Similar patterns are observed among those who plan to phase into retirement at older ages.
Factors Influencing Phased Retirement Decisions
A majority of workers who are phasing into retirement have modified their hours (61%) or responsibilities (41%). Fewer are looking for new roles or different job conditions. The key factors influencing their retirement timing include financial security (76%), health (50%), and the desire for more family or leisure time (45%).
Anticipation of Continued Employment
Almost half (46%) of older workers expect to work beyond age 70, a significant rise compared to previous years. Furthermore, 79% acknowledge they are not saving enough for retirement, and only 52% feel confident about their financial preparedness for retirement.
The Role of Employers in Phased Retirement
Jonathan Sterbanz, senior director of Retirement at WTW, emphasized that phased retirement is beneficial for both employees and employers. By reducing their hours, employees can better manage their financial and emotional transitions. Employers gain from retaining seasoned workers who can mentor newer employees. However, only 30% of respondents believe their employers effectively leverage the skills of older employees.
The Significance of Retirement Plans
The survey shows that 66% of employees consider employer-sponsored retirement plans essential. Additionally, 72% view these plans as their primary means of saving for retirement. More than half (55%) cite their retirement plan as a major reason to stay with their current employer, an increase from 48% in 2017.
Challenges Faced by Employers
As employees seek more flexibility, employers encounter challenges in addressing both immediate and long-term financial needs. Defined contribution plans can help bridge this gap, aligning employee needs with organizational objectives. Emerging options like pooled employer plans and lifetime income solutions are becoming crucial tools for enhancing retirement benefits.
Study Overview
The 2024 Global Benefits Attitudes Survey was conducted from January to March of this year, gathering responses from 10,000 U.S. employees working in medium and large private sector firms across various industries.
About WTW
WTW (NASDAQ: WTW) offers data-driven, insightful solutions related to people, risk, and capital, utilizing global expertise to help organizations enhance their strategies, resilience, and workforce motivation for optimal performance.
Frequently Asked Questions
What is phased retirement?
Phased retirement allows employees, particularly those nearing retirement age, to gradually reduce their working hours or responsibilities while transitioning to full retirement.
What percentage of workers want to phase into retirement?
The survey indicates that 34% of workers aged 50 and older have either started phasing into retirement or wish to do so.
What are the main reasons employees phase into retirement?
The primary reasons include financial security (76%), health (50%), and a desire for more family or leisure time (45%).
How important are employer-provided retirement plans?
The survey reveals that 66% of employees place a high value on their employer-provided retirement plans, considering them essential for retirement savings.
What role do employers play in phased retirement?
Employers can facilitate phased retirement by offering flexible working arrangements and utilizing the expertise of older employees to mentor younger staff, creating benefits for the entire organization.
