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Easing Into Retirement

Jai M. Dev

The idea of “phased retirement” - gradually reducing hours and workload - has quietly been gaining steam. And not only for financial reasons. 

Half of respondents polled in a national AARP study described the ideal job as one that offers phased retirement. Almost three-quarters of workers between the ages of 35 and 50 plan to keep working in retirement, according to the Ameriprise Financial Retirement 2.0SM
study. Why? Working fewer hours provides you with more family and leisure time — while retaining mental stimulation, social engagement and income.

Perhaps most important, phased retirement offers an easier transition from full-time work to full-time leisure, according to Amy Florian, CEO of Corgenius, who trains professionals to effectively support and interact with clients experiencing loss and grief after a life transition. Florian points to a tool known as the Holmes and Rahe Stress Scale, which measures how 43 stressful life events correlate to developing an illness. The top stressors are the death of a spouse and the ending of a marriage. No. 10 on the list is retirement.

Florian cites four major grief triggers specifically related to retirement:

Material loss. Not only do retirees lose the security of a paycheck, they may also be losing their family home through downsizing or moving to a retirement community.

Relationship loss. Retirees no longer have daily interaction with co-workers, which can mean loss of camaraderie and friendships. Even a marriage changes because daily dynamics need to be renegotiated.

Identity loss. Losing a title can make a retiree feel stripped of prestige and status.

Dream loss. Perhaps the retiree didn’t accomplish everything hoped for, or is retiring with fewer financial reserves than expected. Retirees may also have to let go of post-retirement dreams due to financial or health reasons.

What do these triggers have in common?
They can all be lessened by phased retirement, according to Florian. You can also reduce your stress with good planning. Ideally, the first step
to a phased retirement begins many years before retirement age. “Instead of having a midlife crisis, take a midlife inventory and start envisioning
what is important in your life,” Florian says. “Ask yourself, ‘What have I accomplished? What do I still want to do? What impact do I want to have? How can I make that happen?’”

If you’re considering working part time into your late 60s or early 70s, your advisor can present various scenarios showing how working longer will impact your financial planning. For example, you may wish to delay drawing on your Social Security, resulting in higher benefits later. Or you may want to invest some of your retirement income in a Roth IRA, which is not subject to required minimum distributions at age 70½.

Once you achieve clarity on what you’d like your work-life balance to look like, work with your advisor to create a financial plan. With the right preparation, phasing into retirement can help ensure that your post-work life arrives as a natural transition instead of a shocking change.

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