When it comes time for your senior staff members to start seriously considering retirement, HR needs to take a look at what options make the switch as easy as possible for both the staff member and the organization. One of the newest methods is phased retirement, but what is phased retirement and how can it help these areas?
Phased retirement is a form of retirement where an employee gradually steps down instead of making the transition suddenly. This longer process helps retirees consider life after full-time work and also allows the company to groom a new employee to take over the soon-to-be-vacant role.
To explore this further, let’s take a look at how phased retirement can help HR departments - and the organization as a whole - while also benefiting the retiree.
How Does Phased Retirement Help Organizations?
This answer is pretty simple, though important.
Phased retirement can help organizations with succession planning by giving them ample time to train an employee to take over the role that the retiree will soon step down from. By doing so over the course of a few months, the organization can work with the retiree to understand who will be the best candidate to take over and then even lean on the retiree to mentor the upcoming leader.
In other words, it allows a seamless transfer of knowledge from one well-established leader to an upcoming one, saving your company a lot of headaches by retaining all of that talent and insight.
It stands to reason that senior staff members - some who have been working for the organization for years - are highly valued because they are experts at their jobs. However, having turnover due to retirement can be a good thing if the retiree transitions out of the company successfully and helps the organization with their side of the process.
Now, it’s important to note that this goes both ways. HR can sometimes ignore the importance of offboarding even when it comes to retirement. While there is no perfect answer as to why this happens, it seems like many HR departments have so much on their plates already that they don’t spend the right amount of time talking about those who are about to make their exit.
This is the wrong way of doing things, especially when it comes to retirement. Here’s why:
How Does Phased Retirement Help Retirees?
Before we jump in, consider this: You have worked for an organization for a number of years, possibly upwards of 30. You have grown at this job, made friends in the workplace, have structured your day around this job, and even shared a lot of your precious life moments with people that work there.
You’ve passed the traditional retirement age of 65. You still feel healthy and ready to work, but you’ve save up all of this money to retire and have been dreaming about it since you were in your 20s. The thought of stepping down, not having anything to fill that time with, and feel lonely and isolated in the world is keeping you working even though you’d love to stop.
This example is not too far from a lot of people’s realities. For far too long, retirement discussion has been dominated by financial planning advice, ignoring the fact that step down from a lifelong job can be taxing both emotionally and socially.
But what does this have to do with HR or phased retirement?
Well, a phased retirement plan can make all of this easier for the retiree, especially if retirement lifestyle planning is built into your phased retirement plan.
By having the employee step down gradually while also going through a retirement lifestyle program, you can set up both the retiree and your organization for success. Not only will the retiree ease into the transition knowing the ins and outs of life after work, your organization can continue marching into the future by fulfilling the role with the proper talent.
Things to Consider When Using Phased Retirement
While there are many, many great aspects to phased retirement plans, there are also many things that you need to consider before starting one.
The most important thing is to remember that you must follow all of your local, state, and federal laws. There are a lot of laws on the books that protect older workers from discrimination, making it vital that you work with your legal counsel to ensure compliance.
It’s also super important to keep in mind that the best phased retirement plans are ones that are flexible and not one-size-fits-all. For example, some people may not want to partake in a phased retirement plan if they have benefits that can be impacted by the move. Social Security is a good example because it is based on the amount of hours worked up until the point of retirement.
If a retiree doesn’t work a set amount of time, they can earn less when they retire from these programs. You need to make sure that you can get around these issues and allow your retiree to step down in a way that will not hurt them in the long run. After all, these individuals have given your company a ton of time, spending much of their life with your company. You owe it to them to help them with this sometimes stressful transition.
You can check out a simple phased retirement pros and cons cheat sheet here to help you better understand all of the issues involved.
The Final Say
The takeaway here is that phased retirement can be a great solution for both retirees and the businesses they are stepping down from. You want to make sure that you retain all of their expert knowledge, have a strong succession plan that helps a new leader fill the role, and keep your business moving forward.
On the other hand, you need to make sure that retiree can successfully transition into this new stage of life by offering them a way to do so gradually and with the help of retirement lifestyle coaching, which will ease tension across the board.
If you follow these steps and customize a plan for your business, both you and your exiting staff members will be better off in the long run.