Semi-retirement

​One of the key things involved with retirement planning is finding out what the clients retirement goals are. Usually, this would involve a time where they would move from full-time work straight to fully retired.

Nowadays, the idea of semi-retirement is occurring more frequently.

The thought of reducing workload and possibly moving to something more enjoyable or less arduous, seems to be the ideal situation for some.

As time has gone on, it seems that job satisfaction and happiness is starting to take priority over money and home owning for a lot more people.

Some of the advantages:

• One of the main advantages of semi-retirement is that your superannuation balance needs to be substantially less to meet your retirement needs.
  • This is because you will be drawing less out of your fund as you'll only need to partially replace your income, allowing it time to generate the return needed.

• When moving into a role you’re more passionate about or one that requires a lot less effort to do, the thought of working longer becomes a lot easier even if your income is reduced.

• You’ll pay less tax.
  • If you’re earning $20,000 each year for 5 years, you’ll pay close to $0 in tax on that income. However, earning $100,000 in one year will have a decent amount of tax come off your income.

• It is much easier to stay relevant in the job market.
  • If something changes and you need to jump back in the workforce full-time, you’ll be much more employable compared to coming from full retirement.

• For a lot of people, it takes time to adjust to retirement, and it becomes a smoother transition by easing off your workload.
  • It gives you time to slowly build some hobbies and interests that can take up some of your time in retirement.

• The big fear of retiring is doing so at a time where there is a period of poor returns.
  • Working during these periods, takes some of that sequencing risk off the table, allowing your retirement savings to recover.

Some of the disadvantages:

• Being an expert in your field, you’ve spent decades building your income and it is unlikely you’ll be able to earn a similar income.
  • In this case, some people would rather put in the hard-work now and finish as early as possible.

• It may not be easy to find a part-time job due to how the job market is at the current time.
  • This is especially true when looking for work that you’ll be happy to do for an extended period.

• Some people will not have the health to be able to work part-time.

• Generally, people are looking at semi-retirement because they don’t want to have to put away such large amounts of their income in their 50's and 60's.
  • This means the money invested will have less time to generate a significant return.

The answer to whether semi-retirement is suited to you is entirely up to your lifestyle and preferences.

​Written by Ali Hogue