Retirement researchers often highlight the challenges of achieving "phased" or "partial" retirements, noting that many individuals end up retiring between the ages of 60 and 65 due to factors beyond their control. However, a recent story in Financial Planning sheds new light on this view.

Consider this. Sharon Carson, an executive director and retirement strategist at J.P. Morgan Asset Management, argues that this view can be misleading. According to Carson, while individual phased retirements might be statistically unlikely, household-level data shows that coordinated retirement strategies among married couples make partial retirements more feasible.

A new survey report from Chase Bank, analyzed by Carson, reveals that over half of American households do not retire all at once. According to Financial Planning, this statistic includes individuals working part-time during retirement and spouses retiring at different times. These households tend to spend more both before and after retirement compared to those who retire fully at once, a trend that Carson finds significant for financial planning.

Carson notes that while some partially retired households may benefit from a combination of work income and retirement savings, others may spend more out of necessity due to rising living costs, healthcare expenses, and caregiving responsibilities. Retirement spending patterns, therefore, vary widely among households, especially those with pre-retirement incomes below $150,000, which often experience a "spending surge" post-retirement.

Carson emphasizes that these spending patterns have broad implications for retirement solution providers. Partially retired households, which spend more and retire later, may do so due to financial necessity. Therefore, it is crucial to help savers manage their debt and spending early to enhance retirement readiness and foster financial stability.

By understanding these insights, financial professionals can better advise clients on retirement timelines and strategies, helping them balance longevity risks and spending volatility to achieve their retirement goals.

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