In today’s economy, many workers are electing to work past 65—and many employers are reluctant to lose older workers’ expertise. They’re putting out to pasture the practice of shoving older employees out the door with a gold watch and a “Thanks, see you later.”
According to the Bureau of Labor Statistics, 32% of workers aged 65-69 are still working, up from 18% in 1985.
The best-prepared employers have a succession plan designed to ensure that skills and institutional memory don’t walk out the door with retirees.
For example, the federal government started a phased retirement system three years ago that allows participating employees to work and be paid for 20 hours a week and receive half their retirement pay. In return, phased retirees mentor a replacement.
Private companies have been reluctant to codify retirement benefits out of fear of regulation. However, less formal arrangements made on a case-by-case basis may provide the flexibility that both employer and employee need.
In many of these arrangements, employees opt for reduced schedules at a correspondingly lower salary. Like Uncle Sam’s program, employees can draw some retirement benefits to cushion the income drop off. Health benefits typically remain in force to the extent allowed by Medicare rules.
To implement a phased retirement program, identify employees with critical skills that other employers do not possess. Begin negotiating arrangements with them to ensure they can ease into retirement and pass along the knowledge your company needs.