Imagine if 39.6% of your current workforce came to you and said that they wanted to retire in the next 3-7 years.  What would you do?  How would you make sure that you don’t lose key knowledge that runs your business? While this may seem like an unrealistic scenario, it is the future employers could be facing sooner than you think. Based upon the Bureau of Labor Statistics September 2023 study, 39.6% is the percentage of the American workforce that is age 55 and older.¹ 

To add to the worry, according to the Gallup July 2022 annual Economy and Personal Finance survey, the average employee expects to retire at age 66, but actually retires at age 61.² 

More and more of people are retiring in their 50’s and early 60’s. Whether due to COVID or other factors, the implications are significant. As the Baby Boomer generation hits 65 daily and Generation X approaches age 60, we face a substantial loss of intellectual capital from our economy. Employers need a solution, and offering a phased retirement program could be it.

Phased retirement is one way companies can help with the “Brain Drain”. Phased retirement allows full-time employees to work part-time schedules while beginning to draw retirement benefits. In doing so, employers are able to retain their tenured talent while onboarding newer members to the team. 

Despite the benefits outlined above, few companies have implemented structured initiatives. According to a Society for Human Resource Management survey in 2010, only about 6% of companies operate a formal phased retirement program. Fast forward to today, and the landscape is slowly shifting, with approximately 16% of businesses now offering such programs regularly.³

The need for these programs is underscored by employer and employee sentiment alike. A staggering 77% of employers agree that the knowledge older workers possess is crucial to business success. Similarly, over half of employees express a desire to gradually reduce their working hours rather than immediately transitioning to retirement.

Consider this scenario: Our team reviewed an employer’s participant analytics. This employer’s workforce boasted an average age of 48, but with demographic distribution resembling a barbell, indicated significant turnover potential. Without intervention, the employer can anticipate 100% turnover within eight years—a situation not uncommon in today’s workforce. The question is, what to do about it?

Taking care of those with long service not only helps with “Brain Drain” but could also foster a culture of care and inclusivity. Picture the ripple effect of positive feedback from employees participating in the phased retirement program. Their firsthand experiences will undoubtedly resonate with their colleagues, contributing to a vibrant company culture, ultimately increasing employee retention.

Moreover, these programs can help combat the “Grey Ceiling” effect, providing younger employees with a clear path for advancement within the organization.

Phased retirement programs represent a genuine opportunity—they offer a pathway to a future where knowledge is preserved, and opportunities abound for all generations. Let’s embrace this chance to shape a better tomorrow. For more information on phased retirement programming and if it’s right for your organization, we encourage you to contact us.