What is Semi Retirement and Should You Consider It?

William Lloyd
5 min readMay 20, 2022

Many people find that semi-retirement is preferable to full retirement. Reasons can range from the frequently claimed necessity for additional cash to simply wanting to be occupied. Whatever the reason, a sizable portion of retirees intend to work part-time once they stop working. In reality, 13 million Americans 65 and older will be employed by 2024, according to figures from the U.S. Census Bureau and the Bureau of Labor Statistics.

Retirement can be a difficult transition, and many retirees experience a period of loneliness after leaving the workforce. Only a small percentage of people have enough money saved for retirement that they wouldn’t benefit from a little extra income from a side business or consultancy employment.

However, there are many benefits to considering semi-retirement even if you have been saving and investing diligently for a long time and are in solid financial standing.

Here’s why many people choose to go into retirement gradually rather than immediately:

1. Their Career is Fulfilling

Sure, after 30 years in the same field, your job could be a drag. But the fact of the matter is that the majority of people find some enjoyment in their jobs and feel good about their contributions to society. Work keeps people engaged with the outside world and makes them feel helpful. It is challenging to deviate from the norm in our society, which views labor as the only way to prove one’s worth.

Semi-retirement allows people to continue working and experience the results of their efforts while simultaneously freeing up more time for leisure pursuits. They can always find something more enjoyable to do if they don’t like working in the same industry.

2. It Gives Them a Chance to Feed Their Passion

With extra time in retirement to follow their passions, some people even manage to make a living doing what they love. Many retirees publish a book, start an internet blog, or start consultancy businesses. The ideal retirement scenario frequently involves earning some money while doing what you enjoy.

3. An Opportunity to Give Back

When someone retires entirely, knowledge can be lost. Older workers could benefit greatly from the experience and knowledge that retirees have behind them. It’s regrettable that those abilities are being lost. Communities would benefit greatly if retirees helped guide the younger generation. Instead of retiring, seniors could work part-time as consultants or join a mentoring organization to assist young people in starting their careers.

4. A Way to Stay Active

Sadly, a lot of retirees choose the option that presents the least amount of resistance. They don’t exercise enough and watch too much television. Working part-time keeps brains active, encourages folks to get up and walk about more, and add some activity to their day. Numerous studies have demonstrated that adults who maintain their level of engagement and activity are more likely to fend against memory loss and other age-related impairments.

5. Improved Finances

People can create some income while in semi-retirement and put off taking distributions from their retirement accounts. The payouts from Social Security will be larger the longer they wait to claim them. Delaying withdrawals will give retirement funds a few more years to develop if 401(k) and IRA accounts don’t have enough money in them to cover 30 years of retirement. Because people will be in full retirement for a shorter period of time, they’ll also lessen the likelihood of depleting the fund.

According to a survey by the Pew Charitable Trust, 40% of men and 31% of women who are retired indicated they choose to work part-time. 2 Some people choose to work part-time jobs because they don’t want to sit around all day. With longer life spans comes what some refer to as a “re-imagining” of later life that places greater emphasis on activity than on unwinding and “going slow”.

Important Factors to Consider

You might still have access to the retirement plan and health insurance offered by your employer, depending on how many hours you put in each year. Depending on your past wages, there is also a chance that your Social Security benefits will grow.

If semi retirement is on the cards, it’s important to consider the following:

1. Social Security Benefits

Anyone who begins receiving Social Security benefits prior to reaching full retirement age, keeps working, and earns more than the exempt maximum ($18,960 in 2021 and $19,560 in 2022) will have their monthly payments cut in half for every additional $2 earned until they reach full retirement age. Their payments would be lowered by $1 for every $3 over a cap of $50,520 in 2021 and $51,960 in 2022 in the year they reach full retirement age. However, when they reach full retirement age, they would receive credit for that money again.

2. Choosing Healthcare Plans

A healthcare plan offered by an employer may also be an alternative for retirees who are qualified for Medicare but are still employed. Delaying Medicare Parts B and D may make sense depending on the strategy. Medicare Part B subscribers will pay a regular monthly premium of $170.10 in 2022, an increase of $21.60 from the $148.50 in 2021. The annual deductible will rise by $30 to $233 in 2022 from $203 in 2021. Enrolling in Medicare Part A shouldn’t be difficult because it’s generally free for everyone.

3. The Effect on Income Tax

Some people’s combination of retirement income and part-time income places them in a higher tax bracket. The simplest way to get out of that trap is to change your working hours or 401(k) withdrawals.

When you’re in your 50s and 60s, semi-retirement is a fantastic idea for some. Even though you can’t work indefinitely, there are many physical, psychological, and financial advantages to working part-time while your health permits. The monetary reward is tremendous if your nest egg isn’t quite adequate, and a part-time work pushes you to remain active and interact with new people. When you are no longer able to work, there will still be plenty of time for a full retirement.