Semi-Retirement: 5 Steps To Do Now To Enjoy More of Your Golden Years
Written by
Stacy Sare Cohen
Edited by
Zuri Anderson
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Scaling back from full-time work without fully retiring can feel like a breath of fresh air for some seniors compared to an all-or-nothing exit. For many, it can mean working fewer hours while gradually drawing income from savings and part-time earnings, while living a more relaxed lifestyle and enjoying time off.
That’s what Maria Reyes did when she turned 67. This enabled her to spend more time with her family while contributing to retirement savings.
“I worked full-time for a major retailer for over 20 years, contributed to a 401(k) with a 5% company match,” she said. “Now I work three days a week, four hours a day, and can still grow my retirement savings for when I decide to stop working.”
However, other retirees are on the fence about giving up their full-time income.
Brian Seymour, CEO and founder of Prosperitage Wealth, said that retirement can feel scary simply because it’s unfamiliar. He said, “Doing anything for the first time can be scary, and retirement is no different.” He said retirement is like marriage: People only plan to do it once.”
However, with some insight and careful planning, a semi-retirement lifestyle can help you live better. Here are five steps to take now to enjoy more of your golden years in semi-retirement.
Treat Semi-Retirement as a Trial Run
Rather than jumping straight into full retirement, Seymour suggests testing the waters to “see what the next phase might look like.” It’s a way to dip your toe into the pool rather than dive into the deep end. Seymour uses the metaphor of dating to explain semi-retirement, saying it’s an opportunity “to experience the next phase before fully committing.”
Consider Flexible Work Options
Semi-retirement doesn’t look the same for everyone, Seymour said.
“The ability to downshift, teach, freelance or work seasonally allows you to explore the world of possibilities while maintaining the flexibility to investigate [your] other passions,” he explained. “One of the best parts of my job is hearing about my clients’ newest hobby, latest travel or rundown of the little league team they started coaching.”
Focus on What You’re Retiring To Early
Seymour recommends having foresight into what your life will look like in retirement. Semi-retirement can help clarify what will fill those days once full-time work is no longer the anchor.
“Most people are so focused on retiring from their jobs that they haven’t put enough effort into what they are retiring to,” he noted. “This period of semi-retirement allows clients to get a clearer assessment of their spending, which, in turn, helps clarify their savings goals.”
Use Semi-Retirement to Assess Your Spending
Another advantage of semi-retirement is that it allows you to get a clearer picture of your spending, said Seymour.
“How much gas do you actually use when you’re not commuting for an hour each way five times a week? We can use these periods to stress-test their lifestyle against lower-income scenarios as well,” he said
“That might mean living on 60-70% of [your] current income and investing the rest aggressively, or using bonuses and variable pay to accelerate savings rather than inflate [your] lifestyle.”
This allows you to build confidence in your retirement plan, said Seymour, and “create some additional buffers for the inevitable ‘rainy day.’
How To Plan the Transition From Saving to Spending
After years of focusing on saving, many people struggle with the transition to spending their money.
“One of the biggest psychological hurdles my clients face is the shift from saver to spender. After saving religiously for 30 years, it is often difficult to conceive of seeing your account balance start to go the other way,” according to Seymour.
“As you start to approach retirement, the focus often shifts to adding stability. Calculating Social Security (and pension) filing strategies, building taxable investment accounts, Roth conversions, sufficient cash reserves and a plan for tax-efficient withdrawals.”
The idea of just saving more that has served you for the last few decades is not a plan you can rely on in retirement, Seymour added.
“Both semi- and full retirement should be intentional, not reactive,” the expert said. “Having a plan in place allows you to take control of your time, your energy, and your priorities, without giving up your purpose or financial security. That is empowerment.”
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