What Is Retirement?

Employees Have the Option of a Phased or Semi-retirement, Too.

Retirement Party Group of Employees
Retirement Provides Many Options for Employees. Image Source/Image Source/Getty Images

Retirement is the point in time when an employee chooses to leave his or her employment permanently. Retirement generally coincides with the employee's eligibility to collect retirement resources such as Social Security, a company pension, or distributions from a 401(k) or another retirement plan.

Eligibility for public and private retirement resources varies from country to country as does the retirement age.

In the US, the retirement age is gradually increasing, sitting at age 67 now for receipt of full benefits, for employees born in 1960 and later.

An employee may choose retirement for reasons other than the wish to stop working. Employees may suffer ill health or debilitating physical problems that require retirement because the employee is no longer able to perform his job. Family problems and responsibilities may require retirement.

Most frequently, the goal when an employee retires is to participate in different activities and hobbies and to pursue other interests. Travel is a goal of many retirees as is spending winter months in warmer climates. More time with family and friends is frequently on the retirement agenda.

Early Retirement 

An employer may require employees to take early retirement in order to cut costs and preserve the business. In other cases, employers who seek to cut costs and headcount may ask for employees to volunteer to retire.

In these cases, the employer generally has a solid financial offer on the table that incentivizes the employee to accept the payment and take early retirement.

Whatever the reason, retirement from employment marks the start of the next chapter of an employee's life.

Working Options in Retirement

Employees choose diverse methods of retirement.

They may leave employment completely or start a second career or participate in part-time work while retired. They may semi-retire or pursue phased retirement during which they gradually decrease the number of hours worked.

Some employees retire and then return to work for their same employer in a part-time, temporary, or consulting role.

Fortunately for retiring employees, many options exist to meet their financial, emotional, and social needs in retirement. 

With sufficient financial resources, the employee may decide to pursue interests other than work and career in retirement. But, a common choice, at least for a couple of years, is the semi-retired or phased retirement option. The employee still wants income and her retirement interests are not full time.

Semi-retired or Phased Retirement

Semi-retired or phased retirement occurs when an employee elects to reduce his or her hours of employment. This might cover a period of time while the employee wants to continue working but wants to reduce the number of hours in the workplace to gradually add in retirement pursuits.

The semi-retired employee may work part-time or begin working more frequently from home. The employee who opts for phased retirement gradually reduces the hours that he or she works over time until he or she qualifies for and wants to retire.

Semi-retirement or phased retirement are options for employees who have saved substantial financial resources for retirement, but still wish to work part time.

Semi-retired or phased retirement is an option when an employee's skills are needed and desired by an employer. The options may also exist when the employer has no need for a full-time employee in a particular function.

The reduction in hours must benefit the employer as well as the employee in a phased retirement situation. For example, if the employer must hire a full-time employee to pick up the work of the employee working gradually reduced hours, this solution might not work for the employer. He would be employing two people for one job.

If the employer has job duties that an employee must cover in a 40 hour week, phased retirement might also not work.

However, job sharing may sometimes work. But, all of the options make coverage decisions more difficult for employers.

Many employees work following retirement to obtain additional financial resources and to fulfill social interaction needs. Semi-retired employees may have retired from full-time employment and sought part-time employment in a second career or job.