For many retirees, being semi-retired offers a more appealing alternative to fully retiring. Whether it’s for financial reasons or a desire to stay active and engaged, a significant number of retirees are choosing to work part-time after retiring from their full-time careers. The U.S. Bureau of Labor Statistics predicts that the labor force among people aged 75 years and older will grow by 96.5% by 2030. So, what does a semi-retired life look like?
Reasons for choosing a semi-retired life
- Financial need: Many retirees find that their Social Security benefits alone aren’t enough to cover their expenses, especially with the decline of defined-benefit pensions. Part-time work provides additional income to supplement their retirement funds.
- Staying busy: Longer life expectancies have led to a shift in the perception of retirement. Many retirees want to remain active and engaged rather than simply relaxing. Working part-time allows them to continue contributing and finding fulfillment in their work.
- Pursuing a passion: Some retirees take the opportunity to start their own businesses based on their hobbies, interests, or expertise. This allows them to turn their passion into a source of income and fulfillment.
Types of work available to the semi-retired
- Switch from full-time to part-time: Transitioning to part-time work within the same field or with the same employer is a common choice for those who find it difficult to completely retire. It offers familiarity and a smoother transition.
- Become a consultant: Retirees can leverage their expertise by becoming consultants in their respective fields. This allows them to work independently and share their knowledge with others.
- Start a small business: Many retirees turn their hobbies or interests into startup businesses. While this can be fulfilling, it’s important to carefully manage the time and resources invested to avoid jeopardizing retirement savings.
Factors to consider
- Income tax implications: Adding part-time income to retirement income can push retirees into higher tax brackets. Adjusting work hours or carefully planning 401(k) withdrawals can help mitigate the impact.
- Social Security considerations: Retirees who receive Social Security benefits before reaching full retirement age and earn above certain limits may experience a reduction in their monthly benefits. However, these reductions are credited back once full retirement age is reached.
- Healthcare plan decisions: Retirees eligible for Medicare while still working may have the option to choose between company-provided healthcare plans and Medicare coverage. It’s important to understand the implications of each option and consult with insurance providers to make informed decisions.
In conclusion, semi-retirement offers retirees the opportunity to continue working while enjoying a more flexible and balanced lifestyle. Whether it’s for financial reasons, a desire to stay active, or pursuing personal passions, working part-time can provide a sense of fulfillment and additional income during retirement. By carefully considering factors such as taxes, Social Security, and healthcare plans, individuals can make informed decisions and enjoy the best of both worlds in their semi-retired life.