Not Retiring, but ‘Phasing Out’

First there was “unretiring.” Now companies are facing yet another trend from that massive demographic known as baby boomers: “phased retirement.”

According to a new survey, the idea of retirement as an end goal is losing favor among workers across age groups. Instead of seeing retirement as a bright line between working and not working, most people are hoping for a “phased retirement,” gradually reducing hours and responsibilities. Two-thirds of people in the study, which included all four current generations currently in the workplace, say they want, on the one hand, to be healthy and active enough to enjoy not working full-time; and, on the other, to remain engaged in their careers and do work they find pleasurable.

This hope, though, will likely create challenges for firms to manage people who want to be part-time—and who will not go along with the plan. Phased retirement also comes amid the so-called “unretirement” movement, where workers who retired are now deciding to come back, as one-quarter of people aged 62 to 85 say they have done. An additional 12% are planning to return to the workforce this year.

Miriam Nelson, a senior client partner in the Assessment and Succession practice at Korn Ferry, says the notion of phased retirement is a logical outgrowth of the shift to remote work and yet another piece of the talent puzzle for leaders to solve. “Careers aren’t linear anymore, they are more fluid,” says Nelson. The ability to blend work and life more seamlessly, the rise of independent contractors, the ongoing skills shortage, and other factors make it easier to stay on longer. At the same time, issues like inflation, debt, and soaring housing and living costs mean many people aren’t financially able to retire completely and afford the same lifestyle. To be sure, the ability to pay for retirement is still the top reason people keep working.

But just because workers want or need to work longer doesn’t mean firms will keep them on. As the recent layoff wave shows, companies in many sectors are keeping a tight lid on talent costs, with managers and senior executives losing jobs at twice the rate of the five-year average. Leaders are also focused on productivity and efficiency, and experts say the math involved in keeping someone on the payroll near or past retirement versus investing in AI or hiring a new full-time worker may just not add up. “Companies are coming out of a phase where they are no longer willing to accommodate employees, unless it is to their advantage,” says Dan Kaplan, a senior client partner in Korn Ferry’s CHRO practice.

Phased retirements could also create internal challenges for talent managers, says Carolyn Vavrek, leader of the North American Assessment and Succession practice at Korn Ferry. The longer a worker stays on, the more they are at risk of being a “blocker,” says Vavrek, meaning an obstacle to a colleague, team, or even the overall advancement of the business.

But, she says, if people interested in phased retirement are willing to move out of “critical feeder roles”—or jobs that develop leadership pipelines across units and functions—they could help solve some talent problems for firms. From a traits perspective, for instance, Vavrek says people who work longer generally exhibit a learner’s mindset, higher levels of agility and engagement, and are more driven by contribution than advancement. Their client knowledge could make them valuable advisors to younger managers. Their institutional knowledge positions them as cultural carriers for firms, and as coaches and mentors who could develop the next generation of leadership.

Nelson says with people living and working longer, talent leaders should be looking at phased retirements, unretirements, and other trends as part of a “longevity strategy” for their workforces. She notes that employers who are willing to experiment with new kinds of roles and structures could gain a significant competitive advantage. “Trends like this are a good thing from a talent perspective,” she says.

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