- Semi-retirement has become increasingly common as more people slowly transition to life after work.
- People may pursue their passion, work part-time, or consult instead of stopping work altogether.
- This article is part of the “Re/Thinking Re/Tirement” series focused on inspiring financial planning for a different type of future than the 9-to-5 life allows.
Under the traditional idea of retirement, you work for decades, all the while saving up enough money to ultimately cut the career cord and live a life free from work. The dream is to be able to visit family, travel, volunteer, maybe pursue a favorite hobby. Full retirement was the ultimate goal, representing freedom and stress-free living.
There was a clear separation between working and retiring. You either did one or the other. That was then. Nowadays, more people nearing or at retirement age are choosing a lifestyle known as semi-retirement, which combines the two.
What is semi-retirement?
When a person works full time and decides, instead of fully retiring, to work part-time, become a consultant, or work at a more fun or meaningful, they are considered semi-retired. Rather than diving into retirement, they’re wading in slowly.
A person might choose semi-retirement for a variety of reasons.
Justin Stevens, a CFP® professional with O’Keefe Stevens Advisory, points out that financial necessity is often behind the decision. With increased wealth, education, and advancements in medicine leading to longer lives, “retirement today might be a four-decade endeavor,” he says.
“Coupled with a steadily rising cost of living, there is a higher probability today of running out of money later in life,” Stevens says. “Some people prefer to work longer and delay spending their hard-earned savings, delay taking Social Security, and let their money continue to compound.”
Jordan Grumet, author of “Taking Stock: A Hospice Doctor’s Advice on Financial Independence, Building Wealth, and Living a Regret-Free Life,” notes that just a small amount of income during semi-retirement can make a big difference.
“Even funding 25% of yearly spending with outside sources can make a previously shakey retirement portfolio rock solid,” Grumet says. “Furthermore, employer-sponsored healthcare and access to retirement savings vehicles like 401(k)s with an employer match make semi-retirement an even a wiser choice.”
Others choose semi-retirement simply to remain active. The thought of retirement may strike them as boring. They want a reason to get up in the morning and like a routine.
Some retirement-aged people leave their regular jobs and take positions that give back or make a difference, even if the pay is a fraction of …….