Think it’s time to retire? Not so fast

Many economists predict there will be a skilled labor shortage in the years ahead, so what better answer than already-skilled seniors?

While it makes sense for the economy at large, there are lots of things you need to keep in mind when pondering whether to quickly or slowly head over to the big comfy rocking chair.

“Most employees do not have a good understanding of loss of benefits upon retirement, like life insurance, or additional costs to the retiree to keep benefits in place,” says Darrin Farrow, president of Pension Builders and Consultants.

He recommends employees organize a conference call with their financial adviser, if they have one, and their firm’s benefits department, “to fully understand options before any decisions are made."

"Most decisions are binding and cannot be changed once elected and retirement has commenced," he says. "In many instances, I have seen people seeking advice after they have made benefit elections they didn’t fully understand, only to find they made the wrong decision and cannot go back.”

Bob Skladany, vice president of RetirementJobs.com, an online jobs site for people over 50, says there are three key issues: Financial, health and social.

Ask yourself, he advises, “Can I afford to stop working?” Look at your post-work income —Social Security, pension, personal savings, etc. With the number of traditional pensions declining, many individuals will have to rely on other forms of income in order to make ends meet.

The second factor to consider is health insurance. If you decide to retire at age 62 and your company doesn’t offer retirement benefits, which is typically the case, you’ll be on your own buying expensive insurance on the open market until you’re eligible for Medicare at 65.

“We find a lot of people making retirement decision around the availability of heath care coverage,” Skladany explains, and that means staying with an employer mainly because they can’t afford insurance, or relying on a spouse’s coverage.

If money and health insurance are not an issue, social and emotional fulfillment then comes into play, he adds. “Lots of people want to stay with their companies, and still others change careers. You’ve got the school librarian who is now working for Borders doing a bit lighter duty, and no one is throwing paper balls at her.”

So let’s say you decide to keep the daily grind and want to phase into retirement. Skladany suggests approaching your boss or human resource manager and proposing a plan for how you can stay employed but scale back on the hours or workload. Your firm doesn’t have to have a formal phased-retirement plan in place: You can help your employer craft a one-off kind of program or establish something for a group of aging workers.

But beware you don’t get pegged a slacker. If you suggest scaling back your hours and you still haven’t reached the retirement age of 65, making such a suggestion when you haven’t had a great performance history could have a negative impact. Your managers might think you’re just trying to bow out of hard work and you may end up losing your job before you’re ready. “That’s the dark underbelly of this,” Skladany says.

That means taking into consideration the relationship you have with the higher-ups, and also the nature of your skills and job. The more your employer wants you the more flexibility they’ll be open to when you’re ready to "Whoa!" your workhorse.

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