phased retirement planning

Not done working? Why Phased Retirement May be for You

Whether for financial or psychological reasons, easing into retirement can provide stability when leaving the workforce.

If you’re like most people who are nearing retirement, you may be in the midst of a life-changing transition. This process can be jarring on both an emotional and financial level, so some individuals are opting for a “phased retirement” instead.

What is a Phased Retirement?

Phased retirement is exactly what it sounds like—a retirement plan that eases an employee from the workforce.

It often allows full-time employees of retirement age to work temporarily on a part-time basis while collecting a reduced salary and early pension benefits before retiring. Phased retirement can help ease an employee into full-time retirement. Employers may offer phased retirement plans to eligible employees, and these employees may voluntarily apply for and accept the arrangement.

Assessing the option of gradually easing into retired life could be a financially smart move for some. Let’s take a look where it could make sense for you.

Retirement Uncertainty

Are you retiring to obtain an ideal future or are you retiring from an undesired situation? If you’re like most people, you may not have a clear vision of what you want retirement to look like and what you want to be doing with your time. Most retirees are tired of the monotony of what they experienced in their later years of a career, but many are rightly concerned what their retirement will entail if they don’t decide now.

If you’re thinking about making a move to a phased retirement, you’ll be glad to hear that it can take the pressure off of figuring out what you want your golden years to look like. By opting for a phased retirement, you’ll get more time to explore new hobbies and travel, as well as volunteering in your community. You’ll also have time to get your head and habits prepared for a full retirement.

You Aren’t Ready to Tap Into Your Nest Egg

The best time to tap into your nest egg is when you have no other choice. If you can wait until you really need it, you’ll be able to take advantage of the market conditions and get the most out of your investments.

If you haven’t retired yet, don’t start dipping into your retirement account. You need that money so that it can grow and compound over time. While the return on investment may not seem like much right now—especially if you are just starting out in the workforce—the longer you wait, the more money you will earn from investing it in stocks or bonds over time.

If you’ve been affected by the current financial markets (more below), another perk of a phased retirement is you can give your investments time to recover. This is because you’ll have an additional stream of income so you can fully prepare for the retirement of your dreams.

You’re Behind on Retirement Savings

If your retirement nest egg isn’t where it should be when you reach the age you planned to retire, a phased retirement would be another instance that would make financial sense.

As mentioned above, working part-time in retirement would add income. Those who had financial setbacks or were unable to save for a full retirement could find the strategy helpful, or in some cases necessary. For those who have Roth IRAs, the extra income could allow them to defer drawing from those accounts. By allowing Roths to continue to grow versus withdrawing from them, it could add stability and increase overall cash flow in retirement.

If you’re thinking about phasing out of work and into retirement, consider these three options:

1) Keep working full-time but work less hours per day or week

2) Keep working part-time but work fewer days per week (i.e., every Wednesday)

3) Take a sabbatical while still having access to your company’s benefits

You Need More Time To Get Your Finances In Order

Everyone is different, and everyone’s retirement planning needs are unique. So why not take the time to figure out what works best for you?

A phased approach to retirement planning can give you more time to research your options or meet with a professional to come up with a plan that works for you. It can give you time to really understand all retirement funding options you may not understand — like fixed annuities for savings and for guaranteed income.

Finances aside, a phased-retirement will also give you time to explore what works for you. You could realize you’re really not ready for the retired life just yet, or you could end up dreading your part-time work days and decide it’s time to take the big leap.

Drawbacks of Transitioning to Retirement

If you already have plans for after retirement, such as volunteer work, a new retirement job, self-employment, or a move to a different state, a phased retirement might not be best suited for your situation. 

Aside from those reasons, the only main drawback of a phased retirement is if your company does not offer it as an option. Despite employers hearing that pre-retirement employees aren’t ready to leave, and a clear benefit to the company, surprisingly few companies embrace phased retirement. A study from the Transamerica Center for Retirement Studies (TCRS) found that 77% of employers believe that their employees plan to continue working after retirement. Still, only 31% of those companies embrace phased retirement.

However, for your employer there are perks, too. They’ll have an opportunity to keep a seasoned, talented employee around longer and time to find an eventual replacement whom you’ll train!

Final Thoughts

The nature of retirement is changing, and many workers do not wish to experience a sudden end to work, followed by the equally sudden onset of full-time retirement. Instead, they wish to ease into retirement, transitioning out of the workforce with a reduced workload.

If you’re planning to retire soon and want to maintain your current standard of living, it could be time to visit phased-retirement options. Let’s meet to discuss strategies to help protect your savings and address the main concerns posing a potential risk to your future.

At APO Financial, our goal is to demystify investing while helping to build real-life, holistic, sustainable income plans for our clients. We do this by focusing on retirement planning, wealth building, risk management and more. Our financial guide was designed for you and your family so you can easily navigate the path to retirement. 

Contact us here today to learn more about a pahsed retirement and how to help protect your assets and maximize your income so you can live life to the fullest.

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Information relating to annuities is intended for educational purposes only and should not be construed as comprehensive or all-inclusive. Therefore, it should not be regarded as a complete analysis of the subjects discussed and should not be used to make an investment decision.

Annuities can be an important part of an overall portfolio but may not be appropriate for everyone. Before purchasing an annuity, it is important to understand the details of the product. Certain products may not be available in your state. The terms of each indexed annuity varies. It is always important to speak to a financial professional. about an annuity’s features, benefits and fees, and whether an annuity is appropriate for you, based on your financial situation and objectives. Participation rates, cap rates and/or index spreads may be subject to change by the insurance company according to the annuity contract provisions. If the insurance company makes such changes, this could adversely affect the return. Guarantees of an indexed annuity are backed by the claims-paying ability of the underwriting insurance company. The surrender charge period for a product may be longer, and the surrender charges may be higher than other annuity products. Indexed annuities are long-term investments. If the annuity contract is surrendered early, there is the possibility of a surrender charge being imposed and/or the funds may be subject to income taxes. The IRS may also impose a 10% penalty on withdrawals prior to age 59 ½, depending on the circumstances. With indexed annuities, there is the potential to lose money, depending on the product charges and minimum guarantee contract provisions. For additional information on annuities, reference the following websites: The FINRA (, the Securities and Exchange Commission (, Insured Retirement Institute (, the National Association of Insurance Commissioners ( or your state's insurance department.

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