Many Americans prefer to transition into semi-retirement instead of fully retiring – and the number of semi-retired Baby Boomers has been on the rise in recent years. There are many benefits that go along with semi-retirement, as we’ll discuss later, but semi-retirement isn’t without its potential drawbacks as well.
What Exactly is Semi-Retirement?
Before exploring the pros and cons of semi-retirement, it’s important to understand exactly what it means to be semi-retired. It simply means a person is no longer working a full-time job or running a business full-time, but they have decided not to fully retire.
So, semi-retirement can come in countless different forms, including continuing to work your existing job part-time or quitting your job and setting up a small business.
What Kinds of Jobs Are There For the Semi-Retired?
In some cases, your boss will be willing to allow you to keep your job and reduce the number of hours you work each week, so you can semi-retire while keeping your current job. However, for many of us, this is not an option – and you may well need to enter a field you’ve never worked in before.
Some people may decide that they don’t want to work for someone else anymore and instead choose to set up a small business of their own. This might be something they’ve been wanting to do for a long time but couldn’t as they had other commitments and limited time as a result.
Consulting is an increasingly popular job for people who are looking to semi-retire, as it gives you the flexibility to work as many or as few hours as you want and allows you to draw on your decades of experience in a given industry.
Aside from consulting, there are countless other businesses you can set up or part-time jobs that you can do from home. These include things like blogging, starting an online store, or starting an agency business based on the experience you gathered while working in a previous career.
The Pros of Semi-Retirement
There are two main reasons people decide to continue to work instead of fully retiring: they want to supplement their retirement income and/or they are concerned that they will get bored if they go from having a full-time job to full retirement without at least a transitory phase of semi-retirement.
Any extra income in the first few years of retirement can go a long way toward giving you a better standard of living in your twilight years, so from a financial perspective, semi-retirement is a smart move.
Many Baby Boomers are choosing semi-retirement and starting online businesses that give them the freedom to live where they want to live, travel, work their own schedule and still produce some helpful cashflow.
The Cons of Semi-Retirement
There are a number of potential disadvantages of semi-retirement which you should be aware of before you decide to delay your full retirement.
First, if you decide to start your own business, you should be aware that it’s very easy to end up working many more hours every week than you had initially planned. In some cases, you may even end up working more hours than you did at your last full-time job. On the other hand, if you’re doing something that excites and motivates you, working a lot of hours could be desirable.
So, if you’re goal is to work fewer hours, setting up your own business isn’t necessarily the best option for you.
Furthermore, you should avoid investing a lot of your savings into a new business, as there’s no guarantee it will succeed and turn a profit, so you could end up losing money and reducing the size of your retirement fund. Be sure to set a start-up budget that is sufficient to cover costs but doesn’t allow you to hurt yourself with overspending (unless of course, you can afford that.)
Finally, while semi-retirement can be a good way to stay busy, you may later regret working all these extra hours when you could have instead spent them doing something else you love like traveling or spending time with family and friends.
Final Thoughts
Deciding to semi-retire – and figuring out when and how is the best way to go about it – is no easy task. You’ll need to think about your motivations and priorities and consider how this decision could impact you later on in your retirement, especially if you are setting up a business that requires a significant upfront investment in money and/or time.
Having said that, semi-retirement can still be a great course of action and can help you bridge the gap between working full time and completely retiring from work.
A Quick Summary
- Being semi-retired means a person is no longer working a full-time job or running a business full-time, but they have decided to reduce the time spend working a job and while giving themselves the option to move toward full-retirement later.
- Many Americans decide to semi-retire, as they want a supplemental income to help them save for their twilight years.
- Another benefit of semi-retirement is it keeps you somewhat busy and prevents you from getting bored.
- However, it’s easy to work more than you had initially planned, especially if you decide to set up a business, so you should be realistic about how many hours of work a new venture will need.
- You should also be wary of the cost of launching a business and consider how it might adversely impact your retirement planning if it fails.
- There are other ways to retire aside from setting up a business, such as continuing to work your same job part-time.