MUSCATINE, Iowa (AP) — There is an oft-told story about what happens when a worker at the Stanley Consultants engineering firm decides to retire.
“They say you have the retirement party one day and you come back to work the next,” said Mary Jo Finchum, spokeswoman for the Muscatine, Iowa-based company.
Stanley is among the U.S. employers that have offered workers a softer landing into retirement, allowing them to scale back hours as they prepare to take the plunge and move into part-time positions once it’s official.
“It’s really the best of all worlds,” said John Sayles, a 79-year-old planner at Stanley who cut his hours before formally retiring in 2003, but who has continued to work part time in the decade since. “I’ll probably do it as long as the company would like me to help out.”
Like most phased retirement programs, Stanley approves participants case by case. Those who take part before officially resigning must work at least 20 hours to maintain their health benefits. Once they’ve officially retired, workers can cash in shares through the company profit-sharing plan and make 401(k) withdrawals, even if they continue to work part time.
Dale Sweere, Stanley’s human resources director, said phased retirement gives employees a way to maximize their retirement savings and the company a way to retain a highly experienced employee who often has built close ties with clients.
It also slows costs and productivity losses tied to turnover, and responds to a desire from employees who want to remain engaged in work, just not as much.
“They don’t want to just walk away from the profession,” Sweere said. “And to try to replace these people, especially with the amount of experience they’ve gained, is very difficult.”
The phased retirement idea was born in Sweden in the 1970s and gained a foothold in the U.S. soon after.
Sarah Rix, a policy adviser at AARP who worked on the issue in its early years, said it has been hard to quantify how many people have taken part in such programs because most are informal. A 2010 study by AARP and the Society for Human Resource Management found that 20 percent of employers had phased retirement programs in place or planned to start them.
Companies that do embrace the concept often cite the wishes of older workers, who, surveys show, list flexibility as a priority in the twilight of their careers.
Businesses also see phased retirement as a way for employees to transfer knowledge to their replacements and to mentor younger workers.
It also is a way for them to reduce the payroll without losing a valued employee’s expertise and experience.
“We’re helping not only the retiree to transition, but the retiree is hopefully helping us to transition, too, by passing on that corporate memory,” said Judy Gonser, director of benefits and labor relations at The Aerospace Corporation, whose engineers have been at the helm of a variety of space-age projects, including missile defense.
The company lets employees take unpaid leaves of absence to give retirement a test run, switch to part-time status ahead of a full retirement, and gives retirees a chance to return to part-time work.
Phased retirement has been most widespread on university campuses and, to a lesser degree, among government and health care workers. It has been far less common among blue-collar workers.
“Some jobs are rather easy to split,” said Robert Clark, a North Carolina State University economist who has written about phased retirement.
For example, he said, professors teaching two classes a semester could easily trim their schedules. The salary savings might go toward hiring a less experienced, less expensive instructor.
Many formal phased retirement programs let employees maintain health insurance, vacation and other perks, and continue building up their retirement benefit. Others are more like consulting agreements, with retirees returning to work as independent contractors without benefits.
John Matzeder, compensation and benefits manager at the University of Kansas Medical Center, said phased retirement helps force individuals to think about their post-career lives and determine how they want to spend their time.
“You kind of want to transition into something and do something other than watch TV,” he said. “It’s a good transition. You’re still coming to work, you’re drawing a good income, your benefits are not going to change, but you really have to come up with a plan for when you’re retired.”