reader poll

Phased Retirement

Phased retirement could be helpful to employers who want to preserve access to their most experienced human intellectual capital; and to employees who want to lighten their workload while earning additional pension credit for several years. The Treasury Department has circulated draft regulations on which comments are sought. The press release and 37-pages of full text on proposed regulations are found at www.treas.gov/press/releases/js2094.htm.

Without changes to the Employee Retirement Income Security Act, U.S. IEEE members who are about to retire are faced with a difficult choice: if they want to continue working after retirement, while drawing a full pension from, say, Lockheed Martin, they can't continue to work for Lockheed, but can take a job with Northrop-Grumman or another competitor. They can also work as a consultant for anyone, but can't earn added pension credit while doing so. With phased retirement, these obstacles are overcome.

As Workforce 2020 noted, the declining birthrate will create two problems in the future: with fewer young workers entering the workforce, companies will have to find ways to retain older workers — a 180 degree reversal from today's practice of encouraging experienced workers to retire at age 60 or 65.

When the legislation to enact Social Security was signed in 1937, the retirement age was set at 65. At that time, the life expectancy wasn't much greater than 65. Now it's at 85 (83-male, 88-female) and counting.

Outliving a retirement nest egg becomes a real threat for healthy retirees. Working part time can help by adding income and reducing the rate at which retirement savings are drawn down. Many baby boomers have not saved enough for retirement, and freely admit that they will have to work as long as they are able.