Is Phased Retirement a Win-Win?

Retirement is changing. Many employees no longer aim to quit work entirely when they reach a certain age. Instead, they simply want to dial things down by working fewer hours, gaining more flexibility in their schedules, and stepping off the high-stress promotion track.

Unfortunately for many companies, older workers often decide that the best way to achieve these goals is to retire from their current employer and seek part-time or contract work with another organization. That is, unless the employer offers a phased retirement program.

Phased retirement is nothing new. Companies and individual supervisors have long structured informal part-time or alternative work arrangements for valuable older employees who want to ease up as they approach retirement, says Steve Vernon, a vice president with Watson Wyatt Worldwide, a global consulting firm focused on human capital and financial management, in Los Angeles. Formal arrangements -- companywide programs with specific policies and procedures that must be followed in every situation -- are less common, though. "It's the formal programs that have not caught on, largely because of the pension issues involved and because many com-panies have not thought through how to accommodate a part-time workforce," explains Vernon.