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Originally published Sunday, February 27, 2005 at 12:00 AM

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Redefining "retirement"

When Nancy Norton took early retirement after 26 years at Monsanto to care for her terminally ill mother, she thought she had left the corporate...

Chicago Tribune

CHICAGO — When Nancy Norton took early retirement after 26 years at Monsanto to care for her terminally ill mother, she thought she had left the corporate world for good.

But three months after her mother passed away, the 53-year-old audit manager received an offer from Monsanto that she couldn't refuse. Through a program aimed at tapping retirees' skills, she took an assignment that allowed her to resume working without being thrust back into a full-time job and without giving up her retiree benefits.

Monsanto's program — a rarity in the business world — is a harbinger of a future in which retirees and older workers will be offered the chance to leave work gradually, opting for more flexible hours and less responsibility until they're ready to retire altogether.

Such programs represent a dramatic shift in a society that for decades devised increasingly rich incentives to replace older employees with less-expensive younger workers.

Now, with the oldest of 76 million baby boomers turning 60 next year, employers face a new challenge. The mass retirement over the next three decades threatens to drain companies of vital skills while hammering the nation's already-strained pension system.

For every five working-age adults in 2000, there was one person age 65 or older; that ratio will be lower than 3-to-1 by 2030, according to U.S. Census Bureau projections.

"It's an incredibly serious problem," said retirement expert Rudolph Penner, a senior fellow at the Washington-based Urban Institute. "Almost every projection of economic growth has quite a substantial slowdown in coming decades because of the slowdown in the rate of growth of the labor force."

One solution is to keep people working longer — a move in step with surveys indicating that many older employees want to continue working out of financial need or a desire to stay engaged.

Many would be encouraged to postpone retirement longer if they could cut back gradually, according to Penner and others who advocate making phased retirement a routine benefit.

A case in point is Norton, who had planned to retire at 55 before her mother's illness moved up her timetable. The 53-year-old no longer has a target date for full retirement.

"I'm so happy as a retiree working," said Norton, who traveled five weeks in Africa last year, stopping in to complete an assignment for Monsanto in Johannesburg. "It's so stress-free."


One reason employers have steered clear of phased retirement is the potential barrier posed by pension rules and age-discrimination laws. Programs such as Monsanto's get around regulatory and legal constraints by requiring that retirees be gone from the company at least six months before hiring on again part time.

Monsanto's program is open to employees of all ages who leave in good standing. A pending rule change by the Internal Revenue Service would give companies far more flexibility by allowing workers to start drawing pension benefits at age 59-1/2 while working fewer hours. Their pension payments would be prorated based on how many hours they work.

To collect benefits under existing rules, workers age 64 or younger must leave, forcing those who need pension payments to quit and take part-time jobs elsewhere.

"Staying at their career employer is far superior," said retirement expert Sylvester Schieber, director of research at human-resources consultant Watson Wyatt Worldwide.

"They're probably going to be more productive and create more value for the economy and themselves using what they've learned in their jobs."

Employers in industries facing critical labor shortages are at the forefront of phased retirement. In health care, for instance, studies indicate half of all working nurses will reach retirement age by 2015.

"These employers know they will have to do something to attract a labor pool that will be older, but I think [phased retirement] is something that will become more universal," said Deborah Russell of AARP, the advocacy group for people 50 and older.

Among the pioneers is St. Louis-based SSM Health Care, one of the country's largest Catholic hospital systems.

SSM won an exemption from the IRS to allow employees to retire as early as age 60, then return to work the next day while drawing retirement benefits.


Nancy Norton took early retirement after 26 years at Monsanto. Later, the 53-year-old audit manager took an assignment with the company that allowed her to resume working without giving up her retiree benefits.

Carole McDonald, an administrative assistant at St. Francis Hospital and Health Center in Blue Island, Ill., retired two years ago after 30 years but still shows up to work 45 minutes before her 8 a.m. starting time.

The 68-year-old likes working while drawing a pension because she can afford to sock away more money in a tax-deferred 403(b) retirement account.

SSM's insurance plan — richer than Medicare — is a big help in paying her husband's drug bills, which would run $1,000 per month without insurance.

Even without these financial incentives, McDonald says she would continue working.

"This is almost like my family," she said of St. Francis. "When my husband was ill, I got a lot of support."

Other big employers are devising ways to hire a select group of highly skilled retirees. Procter & Gamble and Eli Lilly founded YourEncore in 2003, a service company that signs up retired scientists, engineers and product developers, and makes them available to prospective employers on a contract basis.

YourEncore handles marketing, placement and billing for 450 retired experts from 150 companies.

Bob Sturm, 59, registered with the company when he took early retirement in 2002 after more than 30 years at P&G, where he was a director of corporate research and development. The Loveland, Ohio, resident is on his second P&G assignment — a project training younger executives.

"It's a real joy" working with former colleagues while no longer "going 100 miles per hour every day," Sturm said.

"This gives me an awful lot of flexibility," he said. "If I want to work from 8 to 5, I can do that. If I want to work from 8 p.m. until 2 a.m., I can do that too."

Norton, the Monsanto retiree who lives in Creve Coeur, Mo., worked 60-hour weeks as an audit manager overseeing Latin America and Europe.

Her new flexible schedule will take her on a three-week assignment to Argentina, then to Brussels.

"I don't have to worry at all about goals for the year," she said. "I can still mentor younger people. You don't give up anything. You just gain."

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