Nearly three-quarters of employers surveyed indicate that some form of phased retirement could be worked out for white-collar employees aged 55 and older. Workers’ willingness to take advantage of this option, however, may diminish when employers\u27 terms and conditions are factored in. In other words, the majority of white-collar workers are presented with constrained opportunities for phased retirement when the possibility arises

Chen, Jennjou

Hutchens, Robert  M.

English

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Cornell University ILR School 
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ILR Impact Briefs Key Workplace Documents 
March 2006 
ILR Impact Brief - Phased Retirement: Opportunities for Some but 
Not for All 
Robert M. Hutchens 
Cornell University, rmh2@cornell.edu 
Jennjou Chen 
National Chengchi University, Taiwan 
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ILR Impact Brief - Phased Retirement: Opportunities for Some but Not for All 
Abstract 
"Nearly three-quarters of employers surveyed indicate that some form of phased retirement could be 
worked out for white-collar employees aged 55 and older. Workers’ willingness to take advantage of this 
option, however, may diminish when employers' terms and conditions are factored in. In other words, the 
majority of white-collar workers are presented with constrained opportunities for phased retirement when 
the possibility arises." 
Keywords 
phased retirement, retirement, worker, opportunities, employee, white-collar, work, condition 
Comments 
Suggested Citation 
Chen, J. & Hutchens, R.M. (2006). Phased retirement: Opportunities for some but not for all (Impact Brief 
#3). Ithaca, NY: School of Industrial and Labor Relations, Cornell University. 
http://digitalcommons.ilr.cornell.edu/impactbrief/3/ 
The ILR Impact Brief series highlights the research and project based work conducted by ILR faculty that 
is relevant to workplace issues and public policy. The Briefs are prepared by Maralyn Edid, Senior 
Extension Associate, ILR School. 
Required Publisher Statement 
Copyright by Cornell University. 
This article is available at DigitalCommons@ILR: https://digitalcommons.ilr.cornell.edu/impactbrief/3 
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B R I E F # 3  /  M A R C H  2 0 0 6  /  I L R  S C H O O L  /  W W W . I L R . C O R N E L L . E D U
The Impact Brief series highlights the research and project-
based work conducted by ILR faculty that is relevant to
workplace issues and public policy. Please visit http://
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Phased Retirement: Opportunities for Some but Not for All
Research question: What opportunities are available to
white-collar workers for phased retirement, that is, for
gradually reducing full-time work hours prior to retire-
ment while remaining with the same employer?
Conclusion: Nearly three-quarters of employers sur-
veyed indicate that some form of phased retirement
could be worked out for white-collar employees aged 55
and older.  Workers’ willingness to take advantage of
this option, however, may diminish when employers’
terms and conditions are factored in. In other words,
the majority of white-collar workers are presented with
constrained opportunities for phased retirement when
the possibility arises.
Workplace impact: Phased retirement remains a rare
phenomenon despite employers’ apparent embrace of
the concept. Employers often prefer informal policies
and arrangements for their inherent flexibility; i.e., the
opportunity to make a decision based on business con-
ditions, the type of work performed by the employee,
scheduling issues, and the like. Employees may shun
phased retirement because they do not like the terms
under which it is offered; for example, the employer
may require the worker to formally retire and then be
re-hired, take a different job, and/or accept modified
health insurance coverage.
Abstract: The idea of phased retirement has long been
popular with policy experts and older Americans. But
for all its seeming appeal, phased retirement has yet to
catch on. One possible explanation may be lack of op-
portunity. The research literature offers few clues about
what kinds of white-collar workers have the chance to
choose phased retirement and, secondarily, what form
that semi-retired status would take. Indeed, a variety of
worker characteristics (such as age, gender, and educa-
tion) and establishment characteristics (such as indus-
try, type of pension plan, and size of the worksite) may,
in combination or singly, influence employers’ willing-
ness to permit white-collar workers to ease into retire-
ment once they turn 55.
General policies about phased retirement are often set
by a parent company but in practice are interpreted and
implemented locally. Regardless whether the establish-
ment (one single location where business is conducted)
is an independent entity or part of a larger organization,
managers consider the impact on co-workers and the
business when considering a white-collar employee’s re-
quest for phased retirement. Employers may therefore
stipulate conditions under which phased retirement is
possible, which, from the employee’s point of view,
may foreclose the opportunity.
The researchers used results from a survey conducted
for this project in combination with another data set to
examine how opportunities change when phased retire-
ment is defined in alternative ways. The most expansive
approach has the employer simply responding affirma-
tively to a request for reduced hours. In this case, 51%
of older white-collar workers have the opportunity to
ADVA N C I N G T H E WORLD  OF  WO R K
by ROBERT M. HUTCHENS
Professor of Labor Economics (ILR)
JENNJOU CHEN
Dept. of Economics, National Chengchi University, Taiwan
ease into retirement. But this affirmative response may
come with conditions. Employers could, for example,
require the employee to shift to a different job or retire
and then be rehired as a part-timer. Research results in-
dicate barely 30% of older white collar workers could
take phased retirement without having to accept these
conditions. Then there is the matter of health insurance.
Because phased retirement usually involves part-time
work, many employers may opt to cut off the coverage
entirely or somehow limit its scope. Here, the research
suggests less than 10% of white collar employees have
an opportunity for phased retirement that does not ne-
cessitate a loss of, or change in, health insurance; does
not require taking on a different job; and does not entail
retiring and subsequent rehiring.
The survey used in this study found that certain types
of establishments are more likely to sanction phased re-
tirement. The opportunity is more prevalent within the
fields of health, education, and social services and less
common at all levels of government. Opportunities for
phased retirement are greater at establishments that are
in a hiring mode and that employ part-time white-collar
workers. Smaller organizations are associated with
more opportunities for phased retirement while union-
ized establishments are associated with fewer. In these
latter two cases the researchers speculate the results
may reflect employers’ preference for informal agree-
ments on phased retirement; that is, larger organiza-
tions and those with labor contracts may favor a level of
formality and consistency in policy and practice that
may be incompatible with informally-arranged phased
retirement.
Individual worker characteristics likewise affect oppor-
tunities to reduce work hours. In other words, some
white-collar employees are better candidates for phased
retirement than others. Favorable variables include
holding a professional job rather than a managerial po-
sition, being in a non-union job, and being at least 60
years old. Gender and education seem to have little ef-
fect. Employees with defined benefit pensions also en-
counter obstacles on the path towards phased retire-
ment, partly because of Internal Revenue Service
regulations. In addition, pension payouts are often
based on wages earned in the final years of employment
and phased retirement inevitably reduces pay.
Methodology: The researchers surveyed 950 establish-
ments, generating a response rate of 61% and complet-
ing surveys with 89% of the establishments that satis-
fied the screening qualifications (e.g., at least two
white-collar employees aged 55 and older). Using multi-
variate analysis, the survey results were combined with
data drawn from the University of Michigan’s biannual
Health and Retirement Study.


ILR Impact Brief - Phased Retirement: Opportunities for Some but Not for All

The ILR Impact Brief series highlights the research and project based work conducted by ILR faculty that is relevant to workplace issues and public policy.  The  are prepared by Maralyn Edid, Senior Extension Associate, ILR School."Nearly three-quarters of employers surveyed indicate that some form of phased retirement could be worked out for white-collar employees aged 55 and older. Workers’ willingness to take advantage of this option, however, may diminish when employers' terms and conditions are factored in. In other words, the majority of white-collar workers are presented with constrained opportunities for phased retirement when the possibility arises."ImpactBriefHutchens.pdf: 567 downloads, before Oct. 1, 2020

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ILR Impact Brief - Phased Retirement: Opportunities for Some but Not for All

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