Imagine this scenario: Tracey from Regina is going on 62 and while her friends are talking about retirement, she’s not quite ready to walk off into her golden years just yet.
Mentally she’s still sharp as a tack. She loves having structure and purpose to her days, as well as the mental challenge of work. Since she’s divorced and her adult children have their own lives, she also looks forward to social interactions at the office. She’s even become an informal mentor to some of the younger employees.
But her health isn’t what it used to be, and she wouldn’t mind having a bit more time to putter around the garden and babysit her grandkids. Plus, she’s tired of the daily commute to work. She isn’t quite ready for retirement, nor does she feel she’s saved enough money to do so.
Ideally, Tracey would like to cut back her hours to part-time work and slowly make the transition into retirement, perhaps over several years. But she’s worried about how that could impact her overall retirement savings, as well as her pension.
She’s also worried about how to broach the topic with her boss. She doesn’t want to appear as though she’s no longer committed to her role or the company, nor does she want to be relegated to less important ‘busy work’ until she officially retires.
What to consider before reducing your hours
Reducing your hours or working part-time is an option for older workers who aren’t quite ready for retirement, whether financially or emotionally (or both). For Tracey, part-time work would allow her to stay mentally sharp, continue saving for retirement and gently ease into her golden years.
Some employers may even offer this as an option through partial or phased retirement, so it’s worth checking in with HR. You’ll also want to crunch the numbers — perhaps with the help of your financial advisor — to see how a reduced salary would impact your retirement savings goals.
Like many Canadians, Tracey probably hasn’t met her retirement savings goals just yet.
Fifty-nine per cent of unretired Canadians don’t think they’ll ever be able to retire, according to the Healthcare of Ontario Pension Plan (HOOPP) 2025 Canadian Retirement Survey. Almost half (49%) haven’t set aside any money for retirement in the past year and 39% have never saved for retirement.
Working part-time means you’ll have less to put aside in your retirement savings accounts and/or brokerage accounts — so that’s something else Tracey will want to consider.
As you get older (and earn more money), you can play catch-up with your contributions to tax-advantaged accounts such as Registered Retirement Savings Plans (RRSPs) and Tax-Free Savings Accounts (TFSAs).
With RRSPs, you can contribute up to 18% of your previous year’s income annually. But if you haven’t used up all of your contribution room from previous years, you can carry it over and boost your savings. The same goes for TFSAs. You have an annual limit of $7,000 in 2025, but you can also carry over unused contribution room from previous years.
Going part-time could also impact your pension (if you have one). Each pension plan has different rules; for example, some may have a provision for annualizing part-time earnings. So it’s best to talk to the HR department about your options.
If Tracey reduces her hours and still makes enough to live on, she could potentially delay taking her Canada Pension Plan (CPP) benefit until she reaches age 65, at which time she’d receive 100% of her benefit. You can take a reduced benefit as early as age 60, but your cheque will be reduced by 0.6% each month until you turn 65.
The amount of your CPP pension depends on how much you’ve contributed and for how long, as well as your average earnings. If you transition to part-time work (and earn less money), you can maximize your CPP pension by excluding up to eight years of your lowest earnings.
Working it out with your employer
Before you talk to your boss, research your company’s policies around part-time work and then prepare a proposal, which should highlight the benefits of this arrangement (not just for you, but for your employer) and address any potential concerns.
“Your supervisor may worry about how the reduction of your work hours might result in a loss of work or impact your colleagues negatively. Try to validate these concerns and offer your supervisor options for overcoming any potential challenge,” Global online employment marketplace Indeed advises.
For example, perhaps you have institutional knowledge that can help train the next generation of workers.
If you’re able to negotiate part-time work, it’s advisable to sign a new employment agreement (or amend your current one) that outlines the change in hours, pay and benefits.
However, it’s possible that — despite a stellar proposal — your boss may not go for it. If that’s the case, you could discuss the possibility of working for the company as a freelance consultant, which gives you control over which projects you take on.
If Tracey can’t negotiate an arrangement with her current employer, she could also consider looking for part-time work elsewhere. This might be a good option for someone who still needs to save for retirement, but finds their current job too stressful or toxic.
If you have a spouse, you’ll also want to discuss these options and how going part-time could impact your shared retirement goals.
Sources
1. HOOPP: 2025 Canadian Retirement Survey by HOOPP and Abacus Data (June 17, 2025)
2. Government of Canada: CPP Retirement Pension: How much you could receive
3. Indeed: How To Reduce Your Work Hours (With Decision-Making Tips) by Indeed Editorial Team (June 6, 2025)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.