Retirement has generally been portrayed as a full stop to employment, often celebrated with a party. But this view has begun to change as workers have struggled to shoulder more and more of their retirement expenses on their own. Many fear they'll run out of money early or never be able to leave the workforce.

In these situations, avoiding a traditional retirement in your early 60s is probably wise. But there is an alternative approach you could try that gives you some of the benefits of retirement without compromising your financial security.

Retirement doesn't have to happen all at once

Stopping work entirely can place a significant strain on your nest egg. Even if you apply for Social Security, you'll likely still have expenses you must pay on your own.

The Social Security Administration estimates that benefits will cover about 40% of pre-retirement expenses for average workers. Even if your expenses drop to 80% of your pre-retirement income, that'll still leave you with about half of your monthly bills to pay out of pocket.

Say you have $100,000 saved in a retirement account earning a 5% average annual rate of return. You receive $2,000 monthly in Social Security benefits and expect to spend about $40,000 in your first year of retirement. You think these costs will rise 3% annually due to inflation. At this rate, your nest egg would be gone in just seven years, leaving you in a tight financial spot.

But what if you remained in the workforce part-time for 10 years, earning about $2,000 per month, adjusted for inflation? Then, your total income would be adequate to cover your remaining expenses, so the $100,000 you have saved could continue to grow.

After a decade, your nest egg would climb to nearly $165,000. Even if you stopped working entirely then, that amount would last you about 12 years.

This still might not be enough for everyone, but it illustrates an important point. Remaining in the workforce part-time will allow to stretch your retirement savings for much longer.

This is due to your slower withdrawal rate during your years of part-time employment, which allows the savings you have to continue growing. You'll still get to enjoy some of the freedoms of retirement when working fewer hours.

How to make a phased retirement work for you

Phased retirement means different things to different people. It could simply be cutting back your hours but remaining with your current employer. It could mean transitioning to more of an advisory role, rather than doing hands-on work.

It might mean trying out a new field altogether, or it could be a chance to finally start that business you've always wanted to build. All of these are valid options.

It's worth exploring a few before deciding how you'd like to move forward. If your current employer won't allow you to drop to part-time work, you can rule that out. Those thinking about trying out a new job altogether should explore the opportunities in the area where they plan to retire to get an idea of what's out there and how much it pays.

Once you've settled on a tentative second act, estimate how much you'll earn from that job. Use this estimate to help you figure out how much of your retirement expenses you must cover independently.

Don't forget to weigh any costs associated with your new job as well. This is especially important when starting your own business but can also apply to traditionally employed people, too.

For example, you may have to commute to and from your job or need to budget for business expenses. Make sure to subtract these costs when determining how much you'll actually earn from your job.

Whatever you ultimately decide, the big takeaway here is to remember you have options if you're nervous about your retirement finances.

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