7 reasons to consider phased retirement

Why dive right into full time retirement cold turkey? For many people, phasing it in makes a lot more sense. Here's why.

By Smart Spending Editor Jun 13, 2013 5:17PM
This post is by Joe Udo from partner site U.S. News & World Report.

MSN Partner PostYou may not be ready to retire completely, but who wouldn’t want a few more hours each day to enjoy the nice summer weather instead of being stuck in the office updating TPS reports? If this sounds like you, you might be interested in phased retirement. This is when you reduce your hours at work or change careers to a less demanding part-time job.

Waterdrops with dollar sign © daitoZen, Flickr, Getty ImagesThe phased retirement concept is a great fit for many of us, and it is not nearly as difficult to achieve as early retirement. If you start saving early in your career, it might be possible to enter semi-retirement at 50, 45 or even 40 years old, especially if you are willing to make some lifestyle adjustments. Here are some great reasons to consider a phased retirement:

1. Retirement can be difficult
Many people find the transition to full-time retirement very difficult. We are used to a structured schedule that a job gives us. When you suddenly have 8 to 10 hours of free time, it can be disorienting, and many people don’t know what to do with themselves. The transition to an unstructured lifestyle is one of the most difficult challenges of early retirement. If you phase into retirement, then you’ll have a chance to get used to a few extra hours per day.

2. Practice living on lower income

Some retirement experts estimate that you need to replace 80% of your income before you can retire. Unfortunately, this is not feasible for many workers. A phased retirement will help this transition in a couple of ways. Most people make less money when they transition to semi-retirement. This will give you a chance to practice living on a lower income. It will also make that 80% replacement income goal easier to reach. Yes, you make less money, but you are also spending less of your savings than you would if you retired full time.

3. Enjoy life while you are young
Taking a phased retirement means you’ll have more time to enjoy life while you are young. This is especially true if you have kids. Many of us spend so much time working that our children are grown ups before we know it. Having more time to spend with your loved ones is one great reason to cut back on work. Also, putting off activities like traveling until you’re fully retired at 65 isn’t a good idea. It’s more fun to travel when you’re young and healthy.

4. Less stress
A full-time job is one of the biggest sources of stress in our daily lives. Reducing your working hours will lessen your stress and help you feel better. Stress is a silent killer, and the impact can become worse as we age.

5. A chance to focus on your health
Many working Americans don’t have time for physical activities. With more free time, we can focus on our health. We can eat better, exercise more and really focus on getting healthier physically and mentally. Don’t let your health deteriorate, because then you won’t be able to enjoy retirement when you get there.

6. More time to find your calling
Many employees are dissatisfied with their jobs. If you are feeling this way, it might be time to take a look at phased retirement. Quitting your well-paying career is hard, but you don’t want to wake up at 65 to regret not going after your dream. We only live once, and being miserable at work isn’t the way to go through life.

7. You don’t know how long you have
You might not make it to 65 for your full retirement. A phased retirement is a good compromise for many of us. We’ll have more time to enjoy life while still working a little bit to help make ends meet. If you’re frugal and find a good part-time gig, then you can enjoy life now instead of waiting until you’re 65.

The great thing about a phased retirement is that it doesn’t have to be permanent. You can try it out for a year or two, and if you don’t like it or couldn’t make ends meet, then you can always go back to work full time. I hope some of you can join me in phased retirement soon.

More from U.S. News & World Report:


Jun 14, 2013 1:21PM
Yeah, we're all going to dictate terms to our employer about how long we're going to work and when we should be scheduled.
Jun 14, 2013 9:13AM
A phased out retirement can be a good idea for many because retirement requires planning and many people just don't plan. A successful retirement depends on planning not just for your financial needs but also for the mental, physical and emotional transition to retirement. On a related note the retirement site retirementandgoodliving  has some interesting information on part time jobs, volunteering, finance, health, retirement locations, etc. Worth checking out.
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
100 character limit
Are you sure you want to delete this comment?


Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.