(Editor’s note: Welcome to the second installment of the Bold Boomer Series, which will delve into various topics affecting the “Baby Boomer” generation. Check out the first installment, which explored innovative solutions for healthcare expenses in retirement, here!)
Each year, millions of adults reach retirement age and are faced with some important life decisions. Some cannot wait to enter this new phase of their lives for which they have anxiously awaited. But not everyone is ready to completely forego job-related responsibilities and activities. For some, they enjoy the added financial perks provided. Others value the sense of purpose a job offers. For these reasons, many are choosing a semi-retired life over full retirement. Instead of no longer working altogether, they transition into their later years through a process of semi-retirement. This trend is actually much more common that many might appreciate.
According to recent statistics, there will be over 13 million older adults who’ll remain in the workforce in 2024. While some of these individuals will persist in their full-time careers, many will embrace a semi-retired life. In this regard, semi-retirement refers to those adults who continue to work in a more limited capacity. This often means working fewer hours with less stress and commitment to a job. However, some decide to pursue new endeavors on their own that are more personally fulfilling. Regardless of the rationale, it’s clear that trends among many older adults favoring semi-retirement are increasing.
“After a lifetime of hard work and the stress of the daily grind, retirement can be a daunting concept…How they will invest their time and continue to have meaning in their lives is a real and emotional challenge…” – Tim Golas, partner, Spurstone Executive Wealth Solutions
The Attraction to a Semi-Retired Life
When it comes to the allure of semi-retirement, there are a number of reasons would-be retirees choose this option. By far, the most common motivations are financial ones. For example, those who have limited retirement income or rely on Social Security alone enjoy the additional income. Working part-time allows them to supplement their regular payments and enjoy a better lifestyle in the process. Others do so in an effort to delay taking out retirement funds or to continue retirement savings for later years. The financial advantages that a semi-retired life offers encourage many to pursue this route.
While financial motivations are strong for the majority, these certainly aren’t the only reasons to pursue semi-retirement. Some older individuals enjoy being productive and working on a regular basis. Though they might want to work less and reduce workload demands, they aren’t quite ready to forego employment altogether. Jobs offer them a sense of purpose and can boost self-confidence and self-esteem. At the same time, others see semi-retirement as an opportunity to pursue a new business that more fulfilling. Whether it’s a small business or a non-profit, they cherish the chance to focus on something they value. Each of these reasons explain why many choose a semi-retired life over a fully-retired one.
“Working into retirement or opting for semi-retirement can be great for longevity and quality of life, not only because it helps a person maintain their mental faculties, but it also generally increases social interaction…” – Matthew J. Ure, Vice President, Anthony Capital, LLC
Semi-Retirement Work Opportunities
Despite many people choosing a semi-retired life, the way they go about varies significantly. The easiest option for semi-retirement is to simply cut back hours and/or responsibilities with an existing employer. Working only a few days or hours a week, or taking a much larger amount of vacation time, is one approach. Others leave their current jobs and become consultants in their fields of expertise. Depending on one’s experience and area of knowledge, consulting gigs can be quite lucrative. Plus, consulting roles naturally allow semi-retired professionals to limit just how much they work.
Other people interested in a semi-retired life take the opportunity to create a new chapter in their lives. Some may start a small business, leveraging what they have learned in past endeavors. In fact, the rate of small business success is higher for older entrepreneurs than younger ones. Others are taking advantage of current work-from-home trends and pursuing contract labor positions. Various opportunities related to writing, marketing, accounting, and web design exist in this regard. Lastly, some work part-time in community organizations in an effort to create new social networks. This can be quite helpful in avoiding social isolation after leaving one’s longstanding place of employment.
“The culture is changing. More people want to stay active and continue contributing to society. A semi-retirement could be the best of both worlds.” – Patrick Traverse, Investment Advisor Representative, MoneyCoach
Important Considerations in Semi-Retirement
Notably, many of the reasons people choose a semi-retired life are certainly worthwhile. But at the same time, it’s important to consider some important aspects that might be readily apparent at first. Most importantly, the income received from part-time employment or new jobs can affect other retirement income. For example, if one retires before retirement age, incomes over $19,560 can start to reduce Social Security benefits. The same is true for incomes exceeding $52,000 for those past retirement age. This may mean that some retirement planning is needed in order to maximize advantages.
In addition to these financial effects, other considerations may also be relevant. For example, if income from semi-retirement is substantial enough, it could place someone in a higher income tax bracket. Therefore, knowing how your choices affect overall income tax amounts is important. Likewise, health plans might be affected by working a semi-retired life. Continuing to work with an existing employer might allow you to keep accessing company health plans. This could be advantageous of disadvantageous if one if Medicare age. Knowing all the potential ramifications is thus something that’s worth investigating.
Personalized Decision-Making in Retirement
When it comes to retirement, everyone will have their own set of preferences. Some will be more than ready to leave their jobs behind and pursue a life of leisure. But others may not, and for them, a semi-retired life is quite attractive. Notably, there are many options when it comes to semi-retirement, and choices must be individualized. Likewise, there are several considerations to take into account. But many today are opting for this type of lifestyle in their post-retirement years. For them, the benefits are simply too appealing to pass by.