Jan 28, 2025
When you think of the traditional retirement, you may think of an old person blowing out the candles on a cake, getting a gold watch as a parting gift, and heading off to the golf course.
That's not what retirement looks like for many, though, and it's not what a growing number of future retirees want.
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Vanguard recently published an article titled "Retirement is changing – Are you prepared?" which addresses how people are changing their mindset about retirement.
While it was written by one of the company’s European executives and is based on a survey of British savers and investors aged 50 to 70, many American retirees will be able to relate.
So, what is the big change Vanguard is talking about? Retirees no longer want to quit working cold turkey. They want to retire gradually for a mix of financial and social reasons.
Unfortunately, while this may be the dream for many, it's not always the reality.
Nearly 60% of American retirees stopped working earlier than they had planned, according to one study. Future workers must be prepared in case it turns out their ideal retirement ends up being off the table.
Workers hope retirement will be a more gradual process
Vanguard said that the majority of future retirees are not interested in just completely stopping work on a set date. Only 24% intended to adopt the cliff-edge view of retirement, working one day and then being retired the next.
Most either planned to scale back hours slowly at their existing job (27%), "mostly" stop work on a set date (21%), or switch to a different job (14%). The reasons cited included not feeling ready to completely retire, to top up their income, and social reasons.
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This finding is very similar to that reported by TransAmerica Center, which said that 54% of U.S. workers plan to keep working in some capacity in retirement, including 16% who plan to work full-time and 38% who plan to work part-time. Forty-seven percent of workers also said they plan to reduce hours and phase down gradually, while just 24% immediately plan to stop working at a certain age or after saving a specific sum.
These plans for part-time work mean that life could look very different for tomorrow's seniors — but it's also worth noting that making your financial plans based around this dream could lead to problems.
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Retirees must be prepared in case a phased-in retirement isn't the reality
Vanguard has an important warning for those who plan to retire gradually — it's not always going to happen.
It found that of those who had already retired, only 38% retired gradually, much lower than the 62% of non-retired people who plan to retire gradually. Pew Research also noted that only around 19% of adults ages 65 and over in the U.S. were working either full-time or part-time in 2022.
This means it becomes very important to prepare for the reality that you may not be able to retire gradually as planned. To make sure you're prepared:
- Save enough money to support yourself by the traditional retirement age of 62 even if you hope to retire later
- Consider your health status and job skills when deciding whether a phased-in retirement is likely to be possible
- Focus on finding an "age-friendly" employer who has plenty of older workers on staff and who appears to value experience as much as youth
- Take good care of your health with exercise and regular preventative care to maximize the chances you'll be healthy enough to phase into retirement gradually
- Set realistic expectations for your retirement, which likely means working until 70 is probably not in the cards
Retirement doesn't have to look like it once did — you can try to set yourself up for the gradual retirement so many dream of. However, you must be ready in case that doesn't happen and proactive about saving the money you need for a secure future even if you retire at a younger age.
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Christy Bieber has 15 years of experience as a personal finance and legal writer. She has written for many publications including Forbes, Kilplinger, CNN, WSJ, Credit Karma, Insurify and more.
