Managing Retirement in Higher Education

Paul J. Yakoboski
Principal Research Fellow
TIAA-CREF Institute

April 2009 |

Managing retirement patterns in higher education, already a challenge for many colleges and universities, has only become more challenging in the current economic environment where drops in individual wealth resulting from the downturn in the financial markets create the incentive to remain on campus as opposed to retiring. This report synthesizes existing research on retirement incentive programs offered by colleges and universities with survey data on faculty interest in such programs. Subsequent studies will examine the impact of the downturn in the economy and financial markets on the decisions of higher education employees regarding their preparations for retirement and the timing of their retirement, as well as institutional responses to these pressures.

Thirty-two percent of institutions have a phased retirement program in place, and one-third of these implemented their program since 2000. The likelihood of faculty participating in a phased retirement program if available when they are ready to retire is quite high; 40% say they would be very likely to take advantage of a phased retirement option and an additional 29% say they would be somewhat likely. Faculty are less enthused about early retirement buy-out programs; 22% of faculty report being very likely to take advantage of such a program if available a few years before their planned retirement. Forty percent of institutions have offered at least one early retirement buy-out program since 2000.

A phased retirement program may be attractive to faculty who had planned to retire near-term but have seen their savings drop with the financial markets. Buy-out offers would also be attractive in that regard, but the size of the buy-out that would induce interest has surely risen for many given the market downturns. Given that phased retirement programs typically require faculty to secure administrative approval to participate, they also provide a degree of institutional control over faculty retirement patterns that early retirement buy-outs do no

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