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  • Writer's pictureJohn A. White

The Future of Work: Embracing Flexible Work Options and Phased Retirement

In today's rapidly changing workforce landscape, employers face the challenge of realigning their practices to accommodate their employees' evolving needs and expectations. With the global population of individuals aged 60 and above projected to double by 2050, a significant demographic shift is underway. People are living longer than ever before and seeking a different kind of later life.

According to Mercer's Global Talent Trends data, the desire for traditional retirement is decreasing, with only 16% of employees planning to stop working at retirement age. 84% of employees anticipate continuing to work by reducing hours, phasing into retirement, or adapting their work arrangements.

In this article, we will explore employers' pivotal role in facilitating a more flexible, inclusive, and effective older workforce. We will delve into the concept of phased retirement, examine the benefits of flexible work options, and discuss how employers can navigate the challenges and opportunities associated with this shifting paradigm.

The Importance of Phased Retirement

Redefining Retirement

Retirement is no longer a one-size-fits-all concept. The traditional notion of retiring at a certain age and ultimately exiting the workforce is no longer the norm. Instead, individuals seek a more gradual transition, where they can continue working in a capacity that suits their needs and preferences.

Phased retirement offers a flexible approach to retirement, allowing individuals to gradually reduce their working hours or transition into different roles or projects. This approach provides numerous benefits, both for employees and employers. Employees can maintain mental agility, find purpose in their work, and address financial concerns. On the other hand, employers can retain valuable talent, leverage the expertise and experience of their older workforce, and mitigate the loss of institutional knowledge.

The Impact of Phased Retirement on Business Performance

Contrary to common misconceptions, older workers are not less productive. Mercer's research, which analyzed objective performance measures, including financial indicators, operational effectiveness, and customer referrals/retention, found that worker age does not impact these business performance measures. As employees' average tenure rises, financial and operational business results improve.

Furthermore, work groups with diverse ages perform just as well as those of similar-age employees. This highlights the value that older workers bring to teams despite the potentially higher cost of their experience and expertise.

Implementing Flexible Work Arrangements

Living Pensions: Addressing Financial Concerns

One of the critical factors driving employees to continue working is inadequate retirement provision. Many countries struggle to provide pensions that meet the 65-80% pre-retirement earnings benchmark. This is particularly true for women who earn and save less while working.

To address this issue, employers can play a pivotal role in establishing "living pensions" for their employees. Mercer has developed a methodology that helps organizations define their corporate perception of a living pension, taking into account basic, minimum, and comfortable levels of retirement income. By offering fair pension parameters, employers can alleviate financial concerns and create a more secure future for their employees.

Rethinking Retirement Benefits

Employers need to review and adapt their benefit programs to facilitate phased retirement. This includes considering eligibility for and the level of disability and life insurance benefits. Additionally, employers must support retirement planning and create a culture where employees feel comfortable discussing their retirement plans and work preferences.

Health insurance is often a concern for individuals considering phased retirement. While the Affordable Care Act (ACA) provides access to coverage for those under 65, the future of the ACA and its consumer protections remains uncertain. Employers can explore options for providing health benefits to phased retirees, possibly through a phased retirement health benefit program that extends coverage with additional subsidies.

Establishing Flexible Work Options

Flexible work arrangements are vital for attracting and retaining older workers. Employers can offer various options, such as part-time work, telecommuting, flexible hours, or project-based roles. These arrangements not only accommodate employees' needs and preferences but also provide business advantages and opportunities for organizations.

By implementing flexible work options, employers can effectively manage varying workloads, accommodate seasonal demands, and retain employees with personal or caregiving obligations. Additionally, flexible work arrangements can help bridge skills gaps and ensure a diverse and inclusive workforce.

Phased Retirement: A Win-Win Solution

Creating a Phased Retirement Program

While formal phased retirement programs are still relatively uncommon in the private sector, employers can take steps to establish programs tailored to their specific needs. This includes gaining buy-in from managers and key stakeholders, aligning the program with the organization's culture and performance incentives, and streamlining the approval process for flexible work arrangements.

Employers can also consider creating retiree pools or tapping into existing pools to access experienced individuals for temporary assignments or special projects. Retiree pools can be managed in-house or through outsourcing, providing a valuable resource for organizations that need to fill skill gaps or address fluctuating work demands.

Leveraging the Expertise of Major Contributors

Significant contributors, individuals with critical institutional knowledge and specialized skills, present a unique opportunity for phased retirement programs. Organizations can create tailored arrangements that allow these employees to continue making vital contributions while gradually reducing their workload or transitioning into advisory or mentoring roles.

These significant contributors often have invaluable contacts, expertise, and firm-specific knowledge that cannot be easily replaced. By retaining them through phased retirement, organizations can ensure a smooth knowledge transition, maintain key relationships, and leverage their experience for continued success.

Empowering Highly Skilled and Rank-and-File Employees

In addition to significant contributors, organizations should consider how phased retirement can benefit highly skilled employees and rank-and-file workers. Organizations can retain valuable talent, bridge skills gaps, and create a more inclusive and diverse workforce by offering flexible work options and phased retirement opportunities to these employees.

Flexible work arrangements can be particularly beneficial for industries with seasonal demands, varying workloads, or projects that require specialized skills. By tapping into the pool of phased retirees, organizations can address these needs while providing meaningful work opportunities for employees nearing retirement.


The future of work lies in embracing flexible work options and phased retirement. Employers have a pivotal role in shaping this new reality as they navigate the challenges and opportunities an aging workforce presents. By redefining retirement, implementing flexible work arrangements, and creating tailored phased retirement programs, employers can unlock the potential of their older workforce, retain valuable talent, and ensure a smooth transition of knowledge and expertise.

As the workforce continues to evolve, employers need to adapt and embrace new models of work. By prioritizing the needs and preferences of their employees, organizations can create a more inclusive, flexible, and productive work environment that benefits both individuals and the business as a whole. The future of work is here, and it's time to embrace the possibilities of flexible work options and phased retirement.

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