Key Points
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A lot of people go from working full time to retiring overnight.
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That transition can be difficult emotionally and financially.
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A phased retirement may be a better approach, and there are different ways to pull one off.
For many people, retirement is viewed as a finish line. You work full-time for decades, reach a certain age or savings goal, and then leave the workforce for good.
But retirement doesn’t have to be an all-or-nothing decision. Rather than work a regular schedule until you suddenly just don’t work at all, you may be better off retiring gradually from both an emotional and financial standpoint.
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The upside of a phased retirement
With a phased retirement, rather than quit working cold turkey, you gradually reduce your hours. That could mean spending six months working 25 hours a week, spending the next six months working 15 hours a week, and then retiring for good.
Or, it could look different. But the key is that you’re winding down your time in the labor force rather than just coming to a hard stop. This route could be easier on you financially because instead of stopping your paycheck completely, you can still earn a little money while you adjust to a different type of schedule.
You may realize, for example, that having more free time means being tempted to spend more money than expected. Knowing that while you’re still getting paid could help reduce your financial strain.
A phased retirement also gives you more options when it comes to Social Security. If you stop working for good, you may need to sign up for those benefits right away. If you’re able to earn a part-time wage, you may be able to delay Social Security for larger monthly checks.
Easing into retirement could also help keep your healthcare costs more manageable. If you work enough hours to stay on your employer’s health plan, it could save you a lot of money on coverage if you’re not yet eligible for Medicare.
From an emotional standpoint, easing into retirement could help you better adjust to having downtime and not necessarily being the point person at work on every big project.
Many people tie their identities to their jobs and struggle once those jobs are no longer a part of their lives. If you reduce your working hours and involvement gradually, you may have a better opportunity to find yourself and adapt to your new persona — someone who prioritizes family and experiences over job-related success.
How to ease into retirement
Some companies support phased retirements and work with employees to make them happen. If yours doesn’t, you may still have options. You could try finding a new part-time job, consulting on a freelance basis, or even starting your own business.
Going from full-time work to no work at all may be a reasonable approach for some retirees. But if that seems too jarring for you, then it pays to see what options you have for a phased retirement that lets you ease in gradually rather than walk away from your career overnight.
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