Retiring in stages is retiring in style. 46% of Americans think they’ll still have debt by the time they retire. Full retirement, in fact, may not be a possibility for many people. The psychological blow that comes with filling your days without a job can be softened with a partial retirement plan.
What is partial retirement?
Partial retirement is when you still have a source of income. The simplest form of partial retirement is turning your full-time job into part-time hours. Unfortunately, not all companies will allow you to slash your hours, and instead insist on full-time work or none at all. Still, you could transition to part-time work in the same field at a different company, or maybe take the opportunity to try something new—especially if your financial need isn’t pressing (more on that below).
Why partial retirement might be right for you
For many, the biggest reason to phase out of work in stages is that full retirement is simply not a financial possibility. The idea of partial retirement allows workers to still have a source of income, with the added benefit of softening the psychological blow that comes with filling your days without a job. Here’s what to know about how and why you should consider transitioning out of work with a partial retirement plan.
Maintain expanding your savings
With a partial retirement, the concept is that you’ll still be earning enough of earnings to delay taking advantage of your 401( k) or IRA. As a matter of fact, it implies you can keep expanding your IRA. While there’s no age limitation for IRA payments, you do need made earnings. The internal revenue service explains that in 2022, a person age 50 or older can add approximately $7,000 or 100% of earned earnings (whichever is less).
Enhance your social security payment
If you were birthed in 1960 or later on, your complete retired life age for Social Security advantages is 67. If you start payments at that age, you’ll get 100% of what you’re entitled to … yet if you can push settlements off until age 70, they’ll raise to 124% of that age-67 repayment, according to CNBC.
A retirement strategy that works for you
Partial retirement can be an excellent strategy if you want to ease into your post-work life while still maintaining some semblance of a career. It can also be a great way to keep your foot in the door of your industry if you’re not quite ready to leave it behind completely. Whether you’re looking to cut back on hours or simply want to change gears to a less demanding role, a partial retirement might be the perfect retirement strategy for you.
Lifestyle perks of partial retirement
For many, retirement brings about emotional whiplash, especially if work has actually been a substantial part of your identification throughout your life. There’s an abrupt loss in exactly how you fill-up the majority of your days, along with your feeling of day-to-day function. Retiring in stages buys you a moratorium to adapt to your brand-new lifestyle– you can delight in newfound flexibility without completely diving into an extraordinary quantity of leisure time.
Partial retirement is a great way to transition into your post-work life. It can help you keep your foot in the door of your industry, continue to grow your savings, and optimize your social security payout. Plus, there are lifestyle perks that come with a partial retirement—it can give you time to adapt to your new lifestyle and ease into your newfound freedom.