Why Semi-Retirement Might Be the Key to Financial Freedom
Why choose between working 40-hour weeks and leaving your job forever? Semi-retirement may be the happy middle ground that offers the key to financial freedom.
More late-career professionals are pursuing semi-retired life as it lets them work fewer hours while still making money and having a routine. If you’re eager for more flexibility in your work life, read on for the benefits of this growing trend — and how to make it a reality for yourself.
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The financial benefits
Working part-time allows you to still collect a paycheck to help cover your expenses and grow your investment portfolio. And some part-time jobs offer health insurance, which can help you avoid a large expense.
Having some income also provides you with more options when it comes to withdrawing from your savings and investment accounts. Instead of following the 4% withdrawal rule early, you can live on your part-time earnings and let your portfolio continue to compound.
Lifestyle upside: Freedom with purpose
A semi-retirement will give you more time to work on hobbies and other areas that give you joy than if you stick to working full time. Some people use the extra time to volunteer and mentor others, or learn new skills.
Some semi-retired workers pursue remote positions, which can give them the opportunity to travel and take part in activities that require a more flexible work schedule.
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Real-world examples
There are several ways to pursue semi-retirement. Part-time freelancers — such as some consultants, writers and social media managers — can work and build their client pipeline according to their own schedules. This route may require more effort to find clients, but freelancers can end up with multiple income sources on top of a semi-retired lifestyle.
Some freelancers pivot to entrepreneurship if they get a lot of demand for their services. Business owners can offer digital services, physical services or both. Some entrepreneurs start multiple businesses and view them as passion projects that can make some extra money.
You can also become a seasonal worker — especially during the holiday season — to make extra money. Seasonal workers have full-time schedules for short stretches. This option can be a great way to make extra money, and free your schedule for portions of the year when the season ends. It’s a way to make money without committing to a long-term job.
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The smart middle path
Semi-retirement can offer the best of both worlds. You don’t have to work 40 hours per week and endure a grueling commute every weekday, but you continue to earn money and maintain any sense of purpose that's tied to your work.
If you only work for 20 hours each week, that comes to four hours per day, which allows for other activities. Remote workers with flexible schedules may be able to clock in and clock out at any time they please, allowing them to work around family get-togethers and vacations.
Reviewing your finances and determining when you can semi-retire can help you capitalize on this opportunity sooner. Instead of retiring at 65, you might be able to semi-retire at 60, but it is important to review your budget before making that type of decision.
People who want to take the freelance or remote work route may want to experiment with this work while having the security of a full-time income. That way, the pivot from full-time employment to semi-retirement will likely be easier.