Every working individual must retire someday; it is inevitable. The traditional concept of retirement in India is people work for several years until they attain their retirement age and eventually leave their employment one day forever. Today, however, a new retirement concept is gaining popularity, which is called phased retirement.
While phased retirement is popular in the US and other western countries, it is yet to gain ground and prominence in India. It is a unique concept wherein instead of stopping the work abruptly, you can make a slow and steady transition into retirement. In phased retirement, you can make arrangement with the employer and cut back on the work hours or switch to a flexible schedule for a few years before eventually ending the employment.
- If you find the phased retirement intriguing, let us know more about it.
Retirement is one of the most important phases of life. And phased retirement allows you to get used to life after retirement even before retirement. During this period, you can start doing the things that you would like to do after you fully retire.
For example, you may want to spend more time with your grandchild after retirement. You may have certain skill, which you would want to teach other and start a small business. So, in a nut shell, phased retirement allows you to practice the retirement experience.
- It can minimise the use of retirement funds
Depending on how long you want to stretch the phased retirement, this arrangement can help you have sufficient time for retirement planning and adjust your investment portfolio in a way that you need not use up the funds at once. Although phased retirement may reduce your income due to the reduced working hours, you may still have a steady income nonetheless. You can use the amount for your expenses instead of relying fully on your retirement funds.
Once the income from the profession stops, you may inevitably rely on other source of income or your savings to take care of the regular expenses. A gradual reduction in earned income will allow you to minimise the pressure on your portfolio and other income sources.
- Helps reduce anxiety
Having a continued income source can help reduce some of the mental anxiety and stress associated with the monumental life-changing experience like retirement. Many people tend to their identity and self-worth to their career and productivity. If you have a successful career, which lasted for decades, it can be challenging to cope with the jarring change when you no longer must work.
So, phasing retirement can help you get adjusted to the less rigorous schedules and lower your work load over a period. This way you can get accustomed to the retirement lifestyle instead of jumping into in a single day like the traditional retirement way.
- Succession planning
Phased retirement can also be of immense help to your employer. This approach can allow your team and the employer to acquire all your knowledge that you have gained throughout your career. In the traditional retirement way, someone must pick up from where the retiree left off, and they may take a few months to come up to speed.
With phased retirement, the future retiree can prepare and groom someone for their position over a period with training and mentorship. And, when finally, it is time to announce full retirement, the person is ready to take up the mantle.
Thus, phased retirement has many benefits, and experts consider that it is soon going to be a global trend.