4 Challenges To Meet Now If You Plan To Semi-Retire
More and more Americans are pursuing semi-retirement rather than just quitting their careers at 65, collecting a gold watch, and heading home. However, semi-retirement has its own challenges that must be planned for in order to do it successfully. What are some of these challenges and how can you meet them? Here are a few to consider.
1. Finding a Semi-Retirement Gig
Semi-retirement includes working part-time at something that produces income. For some, this part-time gig is in their chosen field — such as consulting work or a part-time position. However, it could also be a simple shift job, turning a hobby into a business, or doing a gig job. You may need to build up this side work before you retire, though, to make sure you'll have a working income when you do trigger semi-retirement.
2. Planning for Longer Withdrawals
If you leave your full-time job early in order to downsize your work life, you may need to rethink how long your retirement nest egg will last. Smaller withdrawals can help stretch it out, but that advantage could be eaten up if those withdrawals aren't small enough or start much earlier. While still working full-time, you may need to increase contributions to make up for this.
3. Covering Gap Costs
Depending on your age when you trigger semi-retirement, you may need to cover a few key expenses on your own. Health insurance is one of the biggest concerns for retirees who plan to downsize their work before age 65. The good news is that a semi-retirement gig can pay for health insurance coverage. However, that will reduce your disposable income and it doesn't account for other gap expenses such as life insurance.
4. How Long to Work
While many people put a lot of thought into the shift from a career to semi-retirement, what about the other end of the equation? How long do you want to — or how long can you — continue to work? One good way to ensure a smooth retirement is to identify financial milestones when you'll be able to afford full retirement. Once you reach these milestones, the choice to work is solely up to your mental and physical health.
Where to Start
Ready to start addressing these four challenges of the semi-retired life? Begin by meeting with a financial planner, such as Compass Financial Group, that specializes in retirement planning in your state. As you address each concern, you'll create a stronger retirement portfolio and make yourself freer to pursue the type of retirement that makes you happiest.