Key insights
- A Fidelity study indicates a shift towards phased retirement due to rising living costs and a desire for continued engagement. This trend may lead to a more flexible labor market and potentially dampen consumer spending as retirees prioritize income generation over leisure, posing a slight headwind for equity valuations.
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Retirement used to mean decades of saving, then stopping work on a specific date.
According to Fidelity's 2026 State of Retirement Planning Study, released Wednesday, 61% of respondents plan to transition into their golden years instead.
“Retirement is being reframed,” said Rita Assaf, vice president of retirement offerings at Fidelity Investments, in a release. “It’s no longer a single date and instead is an adaptable stage in the next chapter."
The most popular options include taking on gig work or side hustles (35%), starting a small business (29%), consulting part-time (26%), and switching industries (20%).
According to the study, 72% of respondents expect to retire on their own terms, up five percentage points from last year. The survey was limited to Americans with retirement accounts, investments, health savings accounts, or a pension.
For many retirees, retirement doesn't mean quitting their full-time jobs. Financial necessity or a desire to keep working is pushing many toward phased retirement, including through freelancing or part-time work.
Sometimes called phased or semi-retirement, the transition can mean fewer hours at a current job or moving to part-time work. For many, work also provides identity and social connection.
Carolyn McClanahan, a certified financial planner and founder of Life Planning Partners, said she encourages clients to think through what retirement will look like before they leave their jobs.
"Before people retire, like within five years, we start having conversations with people about what they're going to be doing," McClanahan told Investopedia last year.
For many, a gradual exit is financially necessary. In the Fidelity survey, 51% of Boomers and Gen Xers said the rising cost of living was eating into their retirement savings.
Inflation has hovered near 3% over the past year. Add in economic uncertainty from tariffs and geopolitical conflict, and retirement planning has gotten more complex. Yet having a strategy in place, even if it's a loose one, can still improve your confidence about retirement.
According to the Fidelity study, those with a financial plan were more than twice as likely to feel confident (83% vs. 38%).
"As Americans lean into this new retirement playbook, the importance of planning becomes even more pronounced," Assaf said. "Knowing what a phased or transitional path can look like in your situation...can be a differentiator in achieving the retirement you envision.”