However, despite this growing interest from employees, the survey found that most employers do not have experience with offering phased retirement. Only 11% of small and midsized businesses (SMBs) reported they offer phased retirement on a regular basis compared to nearly one quarter of large businesses. Yet, 61% of businesses who don't offer phased retirement still have employees asking about it. While many SMBs don't currently have experience with phased retirement, 35% would be willing to consider it as an option. For SMBs looking to implement a phased retirement system, here are some steps to consider:

Communicate with employees nearing retirement age. Only 31% of recent retirees included in the survey felt their employer understood their needs as they moved toward retirement, yet SMBs are uniquely positioned to be able to understand the needs of their employees. Start the conversation early about how to prepare for retirement or about options to stay with the organization in limited capacity.
As an employer, consider if there are opportunities to provide access to financial professional advice for your employees, especially as they near retirement. Across all generations, most employees surveyed ranked saving for retirement as their number one financial priority; they must strike a balance between balancing basic needs with long-term financial planning. A financial professional can help employees navigate their personal situations – health care costs, dependent care obligations, Social Security decisions, and converting retirement savings into lifetime income.
Consider knowledge transfer and employee succession planning early. According to the WBI, most employers (77%) agree that the knowledge that older employees have about their company is crucial to their business's success. Employers concerned with "having valuable employees retire" are more likely to take actions to either retain them or hire employees who previously retired from other companies.
Establish a phased retirement plan for your employees. Work with older employees to keep them on part-time either permanently or temporarily to ease the transition. If your industry is more physically demanding, consider opportunities to transition to a supervisory or supportive office-based role.

Offering a phased approach to retirement not only has financial benefits for employees, but also allows them to stay mentally and socially engaged and provides a sense of purpose and fulfillment. Overall, semi- or previously retired people surveyed in the WBI indicated their primary reason for continuing to work as needing the income for living expenses (38%). However, other reasons included using the income for fun money, access to health care benefits, delaying Social Security benefit, and being mentally stimulated.

Instant Insights /

Phased retirement trend: How small business owners should respond

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