Employers experience with Phased Retirement
In my last post, we introduced the concept of phased retirement, which allows employees to transition gradually from full-time employment to full-time retirement with a phased reduction in work hours or workload. A review of recent literature about phased retirement highlighted a few main themes regarding the popularity and structure of these programs. To understand more about how employers are using phased retirement in their companies, we decided to conduct our own survey regarding retirement benefits and phased retirement. This week, we will discuss our survey findings in the context of the major themes we presented last week.
We conducted a survey to ask about employer benefits and phased retirement. We received a total of 121 survey responses. To understand our population, we asked a few questions about employer demographics. About a third of respondents were in the healthcare/pharmaceuticals, education, or retail industries. Most respondents held positions in leadership/management, human resources, or benefits departments. Respondents were from companies of various sizes, although most (64%) were from companies with less than 1,000 employees. The most common benefits offered by these companies were flexible work arrangements (e.g, work from home, 51%), paid maternity leave (36%), and tuition reimbursement (33%). When asked about retirement benefits, 64% offered a 401(k) retirement plan, 27% offered retiree healthcare benefits, and 17% offered pensions.
One theme we have repeatedly seen in the literature is that individuals often feel financially unprepared for retirement. We found similar results when we asked survey respondents if they agree that employees over age 55 had adequate plans in place for their financial and healthcare needs in retirement. Only 31% of respondents agreed with this statement, while 39% of respondents disagreed and another 31% were neutral.
Another theme we found in the literature is that phased retirement is a new trend. Many studies have shown that formal phased retirement programs are relatively rare and features vary widely across companies. We saw similar results in our survey. Overall, 45% of respondents said they had some type of phased retirement program at their company; however, only 9% had a formal, written policy. Among respondents that said they had a form of phased retirement, the most common features were offering reduced hours in an individual’s current role (40%), requiring a minimum age to be eligible (38%) and requiring a minimum number of service years at the company to be eligible (35%). Our survey results also indicated that phased retirement is a fairly new offering at companies. Over half of respondents (58%) reported that less than 25 employees have participated in phased retirement at their company and the program had been offered for 2 years or less.
Another theme that appears in the literature is that phased retirement can be beneficial for both employers and employees. However, there can also be logistical challenges in implementing a phased retirement program, such as legal concerns and the challenge of coordinating benefits with existing healthcare and retirement benefits. Among our survey respondents, half (51%) of those that offer phased retirement found that phased retirement led to more effective business continuity at their company. Our survey found that the biggest challenge of implementing a phased retirement program was the lack of interest from employees (47%). Overall, both the literature and our survey found that formal phased retirement programs are still uncommon and it is more likely for employers to permit phased retirement informally on a case by case basis. Therefore, it is plausible that a portion of what is considered as a lack of interest may also be a lack of awareness about the availability of phased retirement.
Finally, we asked about retirement education in our survey. Here at Doctor’s Choice, our goal is to help employers and their employees with the transition to Medicare. An important first step is providing education about Medicare so that employees can plan and prepare for a smooth transition into retirement. In our survey only 33% of respondents said their company offers retirement education and among those companies only 40% offer education about Medicare. These findings suggest a great opportunity for employers to initiate those conversations with their employees so that they may feel supported and prepared for their transition into retirement.
As people are deciding to work longer into their sixties and even some into their seventies, programs such as phased retirement can offer a more defined path for the aging workforce to maintain a reasonable balance of work and life as their needs change. To learn more about best-practices for retirement trends, follow our posts here on LinkedIn.
Special thanks to Danielle Palms for playing a key role in orchestrating this survey and analyzing the insights for our employer partners.
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About Doctor’s Choice:
Doctor’s Choice is the 1-stop employer service for Medicare, making healthcare transitions easy for employers and their employees. Founded by a Brown University-trained Physician, they deliver best-in-class service to seniors before, during and after their transition to Medicare.
Offering coverage across the country and the #1 Medicare planning software, Doctor’s Choice makes Medicare easy for their members for life.
For more insights on retirement trends and employer strategies for an aging workforce, follow Doctor’s Choice on LinkedIn @DoctorsChoice, Twitter@DoctorsChoiceU, and Facebook @DoctorsChoiceUSA.