What Is Phased Retirement — and Is It the Right Move for You?
If you're thinking the road to retirement may take longer than you expected, you're not alone. According to a Transamerica Center study, nearly half (48%) of U.S. workers say they expect a "phased retirement."
Phased retirement means gradually stepping back from full-time work — whether by reducing hours, shifting to part-time or moving into a less demanding role — rather than stopping work cold. It's less of a finish line and more of a slow fade.
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Read on to find out whether phased retirement is the right move for you and how to start preparing now.
Why Is ‘Phased Retirement’ So Common?
The short answer: The way people work has changed, and retirement planning is catching up.
Per Annie Cole, EdD, money coach and founder of Money Essentials for Women, more people are doing gig work, freelancing, juggling multiple jobs or building their own businesses. That blurs the line between "working" and "retired" in ways the traditional model never accounted for.
“Not only are more people becoming freelancers, but we’re also seeing a generation of people who won’t have enough to follow the traditional retirement path,” she added. “I think it makes perfect sense that more people plan to have a phased retirement. It’s a natural adjustment that people are making that fits their financial and work-type reality.”
Marguerita Cheng, certified financial planner and CEO of Blue Ocean Global Wealth, told MoneyLion she has several clients who are pursuing "phased retirements." According to Cheng, they’re doing so for a number of reasons:
They recognize that their earnings in their 60s help increase their Social Security (SS) benefits at full retirement age (FRA).
They're managing their income carefully around SS earnings limits.
They’re in good health.
They like what they do.
They are highly compensated.
They can work remotely.
Here's Who Phased Retirement Actually Works For
Phased retirement isn't a plan for everyone; it works best when you've done the financial groundwork first.
According to Cody Schuiteboer, president and CEO of Best Interest Financial, phased retirement works best for people who have prepared themselves financially for retirement and are able to cut some of their monthly financial obligations once they decide to leave their jobs behind.
“For example, I remember a client who decided to refinance his mortgage to a lower interest rate and reduced the loan duration to pay off everything before 63,” Schuiteboer said. “As a result, he could get rid of his housing expenses altogether, and his fixed costs were low enough to let his part-time consulting income cover them. He was not under pressure regarding retirement timing because of such an arrangement.”
How To Set Yourself Up for a Phased Retirement Before You Need One
The biggest edge you can give yourself? Time. Schuiteboer is direct about it: People who plan five years out end up in significantly better shape than those who start thinking about it at 63 or 64.
His core recommendations:
Cut fixed monthly expenses before you retire. The lower your baseline costs, the more freedom part-time income buys you.
Delay Social Security for at least two years. Every year you wait past 62 increases your monthly benefit — up to age 70.
Treat phased income as a bridge, not a destination. Part-time or consulting work should be buying you time, not locking you in.
Phased retirement isn't a fallback plan — it's a strategy. The earlier you start reducing debt, building flexible income streams and mapping your Social Security timing, the more options you'll have when you're ready to start winding down.
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This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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