Tuesday, September 16, 2014

Six Steps to a 'phased-in' retirement. Start negotiating now.

"Retirement is not in my vocabulary. They aren't going to get rid of me that way." - Betty White American actress, comedian, singer and author (1922 -   ).

Retirement fact: Six out of 10 older Americans want a phased-in retirement while only 13 percent of employers have a program to allow that to happen.
If I could have had it all my way, I would have gradually moved from full-time employment into that something else place that we call retirement.
Instead, my work mates hosted an office farewell party with cake and lots of well wishes as I went cold-turkey out the door with an “early buyout” in hand. It was a deal that many in my newsroom over the age of 60 had already accepted.
In hindsight, I should have negotiated a gradual glide path to the end of the job I’d held for more than 25 years. But my employer had no plan for that so I took the buyout and left.
It was scary. Giving up a regular paycheck with a 401(k) match took my breath away but I'm  risk taker and it seemed like the right move. Four years later, it still does. The fact is that I didn’t retire. I work from home as a professional journalist with a bunch of clients. I balance time at my desk with family, travel and work on my 20-acre property. Yes, my income is half what it was before I left the job but I'm doing nicely, thank you. Get the idea?
However, it would have been financially better for me if I could have waited at least until my "full retirement age" at 66 (as determined by Social Security) before I started tapping monthly retirement benefits to bolster my income. It would have been better if I’d not had to draw money out of my long-term savings account to help my Rollover IRA get where it needed to be. But that's what I did and I'm OK with it.
(Ironically for many, the five years from age 60 to age 65 when Medicare kicks in or 66 when Social Security says you're at full retirement age can be tricky. I often wished that I were older.)
Now, plenty of older American women are hoping to phase into retirement just as I wished that I had. Something like six out of 10 want that gradual adjustment with fewer work hours, continued health insurance coverage and more time to build up the nest egg before starting Social Security or tapping into savings.
The bad news, according to a Society of Human Resource Management report, is that few employers (only 13 percent) offer workers such a phased-in retirement opportunity.
There’s hope that things are changing as the economy continues to recover and employers gain more flexibility in how they let go of valued (higher-paid) long-time employees. A recent change in federal employment regulations may help.
New rules (starting in November 2014) allow workers to move to a 20- hour work week, receive half their pay but also start receiving half their retirement annuity. In other words, their take-home income doesn't change even though their work hours are cut in half.
It may be a bit more complicated in private industry but it seems to me that there are incentives for employers to set up such programs. This year, the last of the baby boomers are turning 50. A work place brain drain could gain momentum.
With a phased retirement program, employers can gradually allow long-time employees to hand off their knowledge and expertise to younger workers and at the same time reduce their payroll costs.
At bankrate.com, writers analyze five factors that can affect your phased retirement planning: Pensions distributions, health insurance coverage restrictions, scheduling flexibility, profit-sharing incentives and Social Security issues.
A survey by the Transamerica Center for Retirement Studies found that 65 percent of baby boomers plan to work past age 65 (or do not plan to retire) and just 21 percent expect to immediately stop working when they retire.
Negotiating your retirement
If you are an older worker looking ahead to retirement, it likely will be up to you negotiate a plan. Here’ are tips from the retirement studies center:
No. 1 Plan to do your homework. What will a part-time employment plan look like for you? Can you avoid taking Social Security benefits? Are your household expenses in line with a reduction in household income? Can you let your 401(k) nest egg grow a few more years? A one-time visit to a fee-for-service financial planner might help.
No. 2 Network. What’s going on in your industry? What are your employment opportunities beyond your current job? Are you meeting new people who might have a need for your skills?
No. 3 Keep your skills up. This may mean taking a class on social media or staying up to speed in your area of professional expertise or acquiring new skills. Do you know how to use Twitter, Instagram?
No. 4 Preserve your health. As we age, it is important to manage our health by staying fit, seeing your physician and staying on top of any chronic problems.
No. 5 Have a back up plan. Set up an emergency fund in case you are forced into retirement sooner than expected for reasons of ill health, job loss, family obligations. Do not assume your employer will go along with your phased-in plan or that health problems might interfere. Plan for the unplanned.
No. 6 Talk confidentially to your HR department. A phased retirement plan may mean negotiating with your employer. While baby boomers have intentions of transitioning from full- to part-time work, their employer may not have a program to accommodate such a change. Be the first to talk about it. Make sure your job-performance ratings are top notch and that you are in a good position to negotiate a workable plan.
“Baby boomers who are envisioning a transition into retirement that involves working should do a reality check whether their current employer will support them,” says Catherine Collinson, president of the Transamerica Center for Retirement Studies. “The best intentions to continue working and fully retire at an older age can be easily derailed with a lack of planning.” Collinson said. Job No. 1 is to be proactive.
As for my own semi-retirement, I now work at my own pace, sometimes in my bathrobe. I have fewer work-related expenses --- gasoline, clothes, lunches out, networking. I have more time for family and for travel. I go to a lot fewer meetings. I write about stuff that is interesting to me. Life is good.
For more online resources:
LifeReimagined.com, click here.
RetirementJobs.com, click here.
Encore.org, click here
RetiredBrains.com, click here.
WhatsNext.com, click here.

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