Once you hit your forties, retirement looms ahead like a coveted prize. But that doesn’t mean you have to relegate easing off work to your late fifties or early sixties. Phased retirement provides that bridge between a full work week and the more relaxed retirement days. You get to ease your foot off full-tilt work schedules and slide into something that allows you to enjoy the benefits of retirement well before the proverbial golden handshake.

And you’re not alone, as many as 47% of Americans think of retirement as a slow transition away from work. During phased retirement, you gradually reduce your working hours until you reach full retirement. This can happen as early as in your forties, or even once you’ve passed regular retirement age.

Choosing When To Step Back

There are many reasons to consider phased retirement, such as:

1. Health Reasons: If your retirement is still a long way off and you’re battling a terminal condition or physical constraint, phased retirement might work for you. For those who still need their healthcare benefits through an employer, scaling down hours might be a way to keep benefits but slow down the pace of work.
2. Cash Flow: Those who reach retirement age might want to hold on to a paycheck a little longer, especially if retirement funds aren’t sufficient to fulfill all their needs. A study by the Center for Retirement Research at Boston College showed that 47% of people experience income fragility at age 65.
3. Lifestyle: For many, phasing into retirement is a lifestyle choice as work/life balance becomes a strong topic. Those who are still a long way off from retirement may want more time to enjoy their interests while they still feel physically able to do so. They may also be in a demanding role that takes them away from core functions at home, and scaling down affords a more balanced lifestyle.

Tips for Balancing Work and Leisure

To get the most out of a phased retirement, ensure a smooth transition. These tips might ease you on the way:

Succession Planning

Whether you choose to stay part-time in your current role or you’re broadening your horizons to freelance or do contract work for someone else, it’s important to hand over the reins to someone else. Choose a successor and work through their roles and responsibilities. Set the person up in a way that would ensure a smooth transition.

Financial Planning

Work through your personal budget, retirement benefits, and other financial considerations before retiring. Work with your financial advisor to pinpoint holes in your budget and possible solutions.

Setting Up a Schedule

Phased retirement means that you still have to focus on work, even if it’s just a few days a week. A schedule will help you allocate days for work and days for leisure, which prevents overcommitment and the possibility of phasing back into a full work cycle.

Social Engagements

Work/life balance includes spending time with your loved ones. Make time for social engagements such as a round of golf or dinner with friends.

Legal Considerations

An attorney can help you work through your work contracts and benefits to determine how phased retirement might affect things such as vacation days, health care, profit share, and bonuses.

Work Options  

You can approach your existing employer to reduce your work hours. You can also look at other options such as contracting and freelance work.

Begin Your Transition Today

Ready to phase into retirement but still need to do the math? Our free-to-use Savvly retirement calculator helps you make quick work of what it will take to make it through the decumulation part of your journey. If you still need to build up your funds, Savvly has you covered. We offer the first market-driven pension fund that offers peace of mind and maximum protection for minimum investment.

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