For more than two decades, Elizabeth Conway has worked for Abbott, the maker of infant formula, medical devices, and drugs, in Columbus, Ohio.
Roughly a year and a half ago, she began to ease into retirement through the company’s phased retirement program.
“It was a test to see if I really was ready to retire,” she said. “It allows me to step into it at my pace and on my terms,” the 60-year-old global manager told Yahoo Finance.
Formal phased retirement programs that offer a reduced or flexible schedule and a lighter workload have been few and far between. Last year, just 7% of firms surveyed by the Society for Human Resource Management (SHRM) offered a formal program. A larger share—about 2 in 10— offered an informal phased retirement program where workers typically create their own plan with their manager.
“Interest in phased retirement programs is growing, although formal programs remain uncommon,” Paul Rangecroft, Fidelity Workplace Consulting’s senior vice president, told Yahoo Finance.
Read more: How much do you really need to save for retirement?
The data is clear: A growing number of workers want to downshift one gear at a time. More than 4 in 10 workers would like to see wellness programs that address opportunities for a gradual transition out of the workforce and more part-time scheduling options, according to SHRM.
Employers cite the cost of formal programs or the hassle of administering them, preferring to cherry-pick workers for these opportunities based on the desire to retain their special skills.
“Older workers want and need to work beyond traditional retirement age,” said Catherine Collinson, CEO and president of nonprofit Transamerica Institute and the Transamerica Center for Retirement Studies. “They’re not financially ready to retire, and they may enjoy what they do. However, they can only succeed if employers are welcoming and supportive.”
Fidelity research shows that one‑third of baby boomers working today have delayed retirement and two-thirds of those do so out of financial necessity.
Millions of workers in their 50s and 60s say they’re lagging behind their savings goals and must keep socking money away in their employer plans for as long as possible. In addition, they’re keenly aware of the necessity of hanging on to employer-provided health insurance until they’re eligible for Medicare at 65.
Finally, the income you earn from staying on the job, even at a reduced level, can help you push back claiming Social Security benefits, boosting your monthly payout down the road.
An engineer-technician operating complex equipment at an electrical dispatching station. · Olga Rolenko via Getty Images
To qualify for Abbott’s “Freedom to Work” program, employees must be 55 or older and have worked for Abbott for more than 10 years. A manager must sign off, and then the worker can reduce their work schedule to either four days per week or opt for up to five weeks of time off on top of their paid vacation days.
Each of these options comes with a reduction in salary, but employees remain eligible for all of Abbott’s full-time benefits, such as the healthcare and the retirement plan, plus Abbott’s 401(k) match. In exchange, participants must agree to pass their knowledge on to more junior members of their team.
The formal program launched in 2008, and, to date, more than 2,100 employees have used it to ease into their next chapter.
“One result is we’ve seen a drift upward in our average retirement age from 58 when we designed the program, to about 61,” Mary Moreland, chief human resources officer at Abbott, told me.
“We have the program to retain talent that has skills that we would like to continue to have longer,” she added. “They’re doing their jobs well, and it’s a way to do knowledge transfer very naturally and have continuity.”
Read more: Retirement planning: A step-by-step guide
Conway opted for the extra weeks off and worked with her manager to come up with a schedule that works for both of them. “I’ve been on a very complex project for the past five years and can’t just walk away,” Conway said. “That would be tough.”
The intentional extra time on the job has allowed her to sell her home and find a new condo, and although it sounds cliché, she’s looking forward to spending more time on the links and learning to play pickleball. “Plus, I expect that I will be caregiving for my aging parents who want to stay in their home,” she said.
If you work for a company that might be up for it, there are some early steps to take.
“Start laying the groundwork with your manager roughly a year before you’d want to slow it down,” said Judith Ward, 63, a retired director for T. Rowe Price.
Ward, who retired in January, worked part-time for two years. “When I enjoyed my days off more than I did my days in the office, then I knew it was time,” she said. “Being able to have that perspective was really helpful.”
T. Rowe Price does not have a formal phased retirement program, so she went directly to her manager to discuss what might be possible. “I had some life events,” Ward said. “My husband was very sick, and I was in a caregiving mode. I needed this work change.”
Before she met with her manager, though, she researched the firm’s benefits and knew that she could stay on the employer health insurance and continue contributing to her 401(k) even if she culled her work time to 20 hours a week or two and a half days. “I did the legwork, and I had a great manager who was willing to work with me,” she said.
For Ward, phasing into retirement instead of a hard stop was mostly about the income and benefits. She did, however, dial back her 401(k) contributions to build up a cash cushion.
“I used to agonize over how I was going to fill my days when I retired,” she said, “what was I going to do? These past two years gave me the time to figure all that out.”
Here’s what else to do:
Research to see what benefits are available to you with a cut in hours.
Ask your colleagues. Track down other people at your company who have arranged to step into retirement gradually and see how they did it.
Prepare a few options. Prepare two or three scenarios to present to your manager, and hold regular checkups to make sure everyone is happy.
Keep your skills honed. It helps to be a superstar at your job. Employers are more likely to say “yes” to top performers.
Kerry Hannon is a Senior Columnist at Yahoo Finance. She is a career and retirement strategist and the author of 14 books, including “Retirement Bites: A Gen X Guide to Securing Your Financial Future,” “In Control at 50+: How to Succeed in the New World of Work,” and “Never Too Old to Get Rich.” Follow her on Bluesky and X.
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