Tips To Semi-Retire Successfully
If you’re not sure whether you can live off your social security benefits only, then you might want to consider semi-retiring, rather than retiring completely. In fact, semi-retirement has become quite a widespread thing nowadays. However, it looks like the main reason of semi-retiring is the finances. It looks like people don’t really have a lot of choice left, but to find another, less demanding, job that will enable them to live their golden years as stressfree as possible.
If this is your case, and if you’re going to semi-retirement because you can’t live off your retirement income, then it will probably be wiser to plan ahead and make sure you are completely prepared for the following period.
However, there is another way to semi-retire. It might simply mean that you would like to retire earlier, but since you can’t you can just gradually plan out everything so you can work less while still getting some income to pay your bills.
No matter which one might interest you there are some ways you can prepare yourself for either of them. So, let’s see what are the basic steps you have to undergo in order to be successfully semi-retired.
1. Plan Ahead
The first thing to do before semi-retiring is to plan ahead and analyse your finances. You should think about your current savings and should make a long-term savings plan. If this looks too complicated, do not skip this step. Instead, contact a financial advisor that will take all important elements in consideration ( taxes, income, savings).
Your financial advisor will be able to tell you if it’s the right moment to consider semi-retiring, or if you should wait a bit. Here are some things you should think about: for how long are you planning to be semi-retired? What will it look like when you retire? Can you afford to stop working?
2. Use Your Money Wisely
If you would love to semi-retire in the near future, you might want to cut back on your expenses. By reducing your financial footprint, it will be easier to afford cutting back on work and easing into a slower paced life. When you’re still getting a safe income is the right time to start thinking about savings and decrease how much you spend.
3. Understand Your Health Care Costs
This is especially true for people that are deciding to semi-retire earlier than they should. Inform yourself on how Medicare works. It doesn’t cover 100% of your medical expenses, so it is crucial to take this potential expense into account. For instance, according to a 2018 Fidelity Investments analysis, a healthy 65-year-old, retired couple would need around $280,000 just for covering their health care during retirement.
4. Consider A “Bridge Job”
Instead of going straight from full-time work to retirement, consider starting a “bridge job”. For most retirees, this could mean becoming a consultant in your field of expertise. It won’t require as much time as a fulltime job, but it will provide you with a significant income boost before finally retiring. Also, if you are really good you can actually earn quite a significant amount of money if people appreciate your advice.
The bridge job will ease you into retirement in a stressfree way, and will keep you active and engaged with others.
5. Be Sure Of Your Decision
If you need to keep working because of your financial situation in your retirement, than you don’t have a lot of options left. You can just find the best employment solution for yourself and that’s it. But if you think you are kind of addicted to work and want to continue working in order to keep yourself engaged in social and business life of your living town.
It might not be the ideal retirement life if you’re semi-retired, but be aware that working in your senior years can actually keep you younger and give you a sense of structure and purpose.
6. Pay Attention To Your Taxes
Most semi-retirement professions will require a 1099 form. This means that quarterly tax payments to the governments won’t be the same as with the regular jobs. Another thing you should consider is how will your semi-retirement (including early withdrawals from IRA, 401(k) or 403(b))affect your income.