Part-Time Retirement: Is It Right for You?

For many, retirement feels tantalizingly close. Every day, you wake up knowing that you only need to put in a few more years before you reach the joyous moment of handing in your official resignation. However, those last years leading up to retirement can be exhausting. You may have toiled away at the same job for many years, and you would love nothing more than to retire early.

While many don’t believe they can retire early, there are more options for transitioning into retirement than you might think. One method that can help bridge the gap between full-time work and full-time retirement is switching to part-time work before fully retiring. In this guide, we’ll dive into how part-time retirement works, how to determine whether or not it’s the right fit for you, and the next steps you should take to explore your retirement options.

How Does Part-Time Retirement Work?

There are many reasons why you might hold a specific age in your mind as the point at which you can finally retire. Your concern might be that without a full-time job and without being old enough to be eligible for Medicare, you won’t have access to the healthcare coverage you need. Another fear is that retiring too early will mean digging into retirement funds too early, jeopardizing planning for years down the road.

However, after sitting down with an experienced financial team, many people are discovering a potential new solution — working part-time for a few years before transitioning into full-time retirement.

How exactly does this work?

For starters, by transitioning to a part-time job, many people become eligible for subsidized healthcare plans. Through the open marketplace, many early retirees can find a suitable healthcare plan to bridge the gap between today and the day they can sign up for Medicare.

Secondly, those who have planned carefully for retirement can often draw on their assets while working part-time, preventing the need to use their Social Security benefits too early. After a few years of working part-time, these folks can fully retire and transition into their initial retirement strategy.

Finally, many people’s tax liability will go down by working part-time rather than full-time. The savings on taxes help to balance out the lower income.

What Are the Benefits of Part-Time Work Before Retirement?

Part-time work before retiring can provide you with numerous benefits. For starters, you can pursue a path you enjoy or have always wanted to try. Instead of feeling trapped in your current role for a few more years, you have the freedom to pursue a part-time job that makes you happy. For some, this transforms the years leading up to retirement into one of the best chapters of their lives.

Additionally, for those who have hit a wall with their full-time job, opting for a part-time job instead of retiring early can help contribute to a stable full-time retirement strategy. In some cases, you might even be able to transition your current position into a part-time consulting role for your company. This offers improved flexibility while providing an income flow in the last years leading up to full-time retirement.

Is Part-Time Work the Right Fit for Me?

If you are interested in whether or not part-time work could be the pre-retirement solution you are looking for, there are a few key questions you’ll need to consider.

  • What is the quality of your work life? If you love what you do, there’s no need to dip out early. However, if you are looking for a change, there are options. The key is to explore these options with a trusted financial advisor.
  • How much do you have saved? In many cases, if you have enough set aside for retirement, you can draw on some of your assets while working part-time. While your portfolio might take a slight dip, you can build this back up once you reach retirement. A financial planner can help determine how early retirement would impact your plans.
  • Are you in your highest income-earning years? If you have a pension, the amount you are paid after retiring might be based on an average of the last few years you have worked. In this case, retiring early might not be worthwhile if you are earning more income now than in previous years. However, if your retirement is not based on this calculation, you might not affect your future as much as you think by opting for a part-time job instead.

Your Next Steps

If you have been eagerly awaiting retirement, but it feels impossibly far off, don’t spend the next few years counting down the days. Instead, consider how an alternative path, such as choosing to work part-time, could be the right fit for you.

Our team at Williams Financial will work with you to assess your situation and determine whether or not part-time work is a viable option for your situation. We will help you measure the impact this will have on your overall retirement strategy and provide data points to help you weigh your options. Ready to begin? Reach out to our team today to discuss if transitioning to a part-time position may be an option for you.