More workers are taking a phased approach to retirement — and employers are starting to contribute

For more than two decades, Elizabeth Conway worked for Abbott in Columbus, Ohio, an infant formula, medical device, and pharmaceutical manufacturer.

About a year and a half ago, she began easing into retirement through the company’s phased retirement program.

“It was a test to see if I was really ready to retire,” she said. “It allows me to take action at my own pace and on my own terms,” ​​the 60-year-old global executive told Yahoo Finance.

Formal phased retirement programs that offer less or less flexible scheduling and less workload are few and far between. Last year, only 7% of companies surveyed by the Society for Human Resource Management (SHRM) offered a formal program. A large portion—about 2 in 10—offered an informal phased retirement program where workers usually worked out their plan with their manager.

“Interest in phased retirement programs is growing, although formal programs remain uncommon,” Paul Rangecroft, senior vice president at Fidelity Workplace Consulting, told Yahoo Finance.

Read more: How Much Do You Really Need to Save for Retirement?

The data is clear: an increasing number of workers want to downgrade one gear at a time. More than 4 in 10 workers want to see wellness programs that address opportunities for gradual transitions out of the workforce and part-time scheduling options, according to SHRM.

Employers, citing the cost of formal programs or the difficulty of managing them, prefer to cherry-pick employees for these opportunities based on their desire to retain specific skills.

“Older workers want and need to work beyond the traditional retirement age,” said Catherine Collinson, director of the nonprofit Transamerica Institute and the Transamerica Center for Retirement Studies. “They are not financially ready for retirement, and 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 are delaying retirement and two-thirds are doing so out of financial need.

Millions of workers in their 50s and 60s say they are lagging behind their savings goals and should keep money away from their employer plans as much as possible. In addition, they are acutely aware of the need to hang on to employer-provided health insurance until they are eligible for Medicare at age 65.

Finally, the income you get from staying on the job, even at a low level, can help you claim Social Security benefits, boosting your monthly payments down the road.

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 workers can reduce their work schedule to four days a week or choose up to five weeks off on top of their paid vacation days.

Each of these options comes with a pay cut, but employees remain eligible for Abbott’s full-time benefits, such as health care and a retirement plan, and Abbott’s 401(k) match. In return, participants must agree to pass on their knowledge to other junior members of their team.

The official program began in 2008, and to date, more than 2,100 employees have used it to facilitate their next season.

“One result is that we could see our average retirement age go up from 58 when we designed the program, to about 61,” Mary Moreland, director of human resources at Abbott, told me.

“We have a program to retain talent that has the skills we want to continue for a long time,” she added. “They do their jobs well, and it’s a way that knowledge transfer is more natural and sustainable.”

Read more: Retirement Planning: A Step-by-Step Guide

Conway chose to take extra weeks off and worked with her manager to come up with a schedule that worked for both of them. “I’ve been on a complicated project for the last five years and I just can’t get it to go,” Conway said. “It’s going to be tough.”

Intentional overtime at work has allowed her to sell her house 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 able to take care of my elderly parents who want to stay at home,” she said.

If you work for a company that might be for it, there are some basic steps to take.

“Start working with your manager about a year before you want to slow down,” said Judith Ward, 63, a retired T. Rowe Price director.

Ward, who retired in January, worked part-time for two years. “When I started enjoying my vacations more than my days at the office, I knew it was time,” she said. “Having that perspective was really helpful.”

T. Rowe Price doesn’t have an official retirement plan, so she went directly to her manager to discuss what might be possible. “I’ve had some life events,” Ward said. “My husband was very ill, and I was in caregiving. I needed a job change.”

Before she met with her manager, though, she researched company benefits and learned that she could stay on employer health insurance and continue contributing to her 401(k) even if she reduced her work hours to 20 hours a week or two-and-a-half days. “I worked, and I had a great manager who was willing to work with me,” she said.

For Ward, the retirement phase was mostly about income and benefits rather than a hard stop. However, she dialed back her 401(k) contributions to build a cash cushion.

“I’m going to be worried about how I’m going to fill my retirement days,” she said. “What do I want to do? These two years have given me time to figure it all out.”

Have a question about retirement? Personal Finance? Anything career related? Click here to leave a note for Kerry Hannon.

Here’s what else to do:

Research To see if there are any benefits to you by reducing the hours.

Ask your colleagues. Follow other people in your company who are gradually approaching retirement and see how they did it.

Prepare a few options. Prepare two or three scenarios to present to your manager, and conduct regular reviews to make sure everyone is happy.

Maintain your skills. It helps you become a superstar in your career. 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 author of 14 books, including “Retirement Bites: Gen X’s Guide to Securing Your Financial Future,“”In Control at 50+: How to Succeed in the New World of Workand “Never be too old to be rich.” Follow him Blusky and X.

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