Retirement looks different for everyone. What is semi retirement? The term refers to a hybrid form of retirement where an individual goes from full-time work to part-time work.
There are certain milestones that are the hallmarks of modern life. When you are born, when you reach adulthood, when you find an industry to work in, and when you retire.
All of these hallmarks have been ingrained in our collective psyches since the time we could walk and talk.
However, this well-defined and traditional path is no longer the one many people can take. Unfortunately, the world has changed, and people who should be able to retire at 66 peacefully are no longer able to do so.
As such, many people are looking for easier alternatives to help with this, including what is called semi retirement. But what is semi-retirement? Is it worth it?
In this article, we seek to explore this new phenomenon and show exactly what deal you can get out of being semi-retired.
What Is Semi Retirement?
Semi retirement is when you actively commit to a kind of early retirement lifestyle while working part-time on the side.
This means that you won’t be grinding yourself into a pit until you can afford to retire at a full-time position, but you also won’t have to live within a very small means while you are fully retired.
It provides a nice flexibility to the situation. For starters, fewer hours and normal hours at your convenience is a bonus, and you simply aren’t doing as much during the day, which leaves more time for you to do what you want.
One of the most interesting things about people who transition from working full-time to semi-retirement – with the eventual idea to retire fully – is that they normally do not fully retire until they absolutely have to.
The reason is that the benefits of working only a little bit of the time often outweigh the benefits of retiring totally, not in financial terms but in mental and physical terms.
Since we have been working our entire lives, it is uncommon to have no plans – even on our days off, we have something to do.
It is really hard to transition from that mindset to having nothing to do, and it can often make people feel terrible, as they feel no longer needed.
However, working just a little bit not only gets people out of the house, but it also provides the necessary mental and physical stimulation that people need to keep functioning.
It keeps you up to date on the world and allows you to interact with other people when you might otherwise struggle to do so.
It can also give you social opportunities that you might struggle to find when you get older – after a certain age, we tend to lose more friends than we gain.
Some people find this aspect really fulfilling, and many people who transition to semi retirement never stop working because it gives them a reason to keep going and doing things daily.
Is Semi-Retirement For Everyone?
Semi retirement is not for everyone but can be great for many people. Some people can take retirement, as they have financial privilege, and relax with it, as they can keep themselves stimulated.
However, for many people, this is too much and too big of a transition, but they still want to take it easier than they currently do.
Therefore, semi-retirement is normally for people who work on a grind and those who work corporate jobs with little ends or breaks.
An extreme example of this is the recent spate of salarymen in Japan, who have up and quit after saving for years and bought farms in rural regions away from their jobs.
While this is not terribly common, it is an example of this kind of idea that while people like work, they need a transition away from it.
How To Prepare For Semi-Retirement?
So, you first need to check how much money you have saved or invested for retirement in general.
You can do this by taking all the money and investments you have saved for retirement and seeing how much you would be able to withdraw a year from your fund reasonably.
You do this by dividing the entire thing by 100, and then you times it by 3 or 4 – to get 3% or 4%.
For example, if you have $500,000, you would divide it by 100 to get 1% – in this case, $5000 – then you would times it by 3 or 4, which would equal $15,000 to $20,000, and this would be the amount you have to live off per year.
If the money you have saved for each year covers your cost of living, then you would be considered financially independent, and you wouldn’t need to do a semi retirement plan, but you could get a blast from doing it.
However, if you don’t have enough, a semi-retirement plan might be just the thing that you need to aid you through this.
Risks Of Semi-Retirement
As with everything in life, there are always risks to going part-time instead of keeping working or retiring fully. The first danger is timing.
If you are sacrificing full-time employment for early retirement, then you need to know that this may come with dangers, and one of them is that you retire too early and rob yourself of more money.
If you go part-time when you don’t yet have the financial ability to live off your pension, you may work twice as long as you thought you had to.
Now instead of working due to wanting to, you have to work.
Another factor to consider is if you have to go back to full-time employment, you may find it harder. Your previous employer will be less likely to give you more hours, and new employers will look at your age and write you off.
As such, be cautious before choosing this as an option.
Conclusion
Semi retirement is not for everyone, but it can be a great way to begin the retirement journey without putting too much pressure on yourself financially, socially, or physically.
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