Most discussions about retirement treat the concept like a finish line. We’re guilty, too—using terms like “when you hit retirement” and “when you reach retirement” treats the concept of exiting your work life as if it’s an instantaneous moment in time.
Retirement can look like that. That’s a traditional retirement—when a person completely stops working with the intention to never work for money again, with a solid end date. But not everyone wants to retire traditionally.
Some people might be better off easing into retirement. The process goes by several names—phased retirement, flexible retirement, semi-retirement—and the transition process can differ, too, with some people reducing hours, switching to consulting, or even working full-time but at a new job with less mental or physical stress.
If that sounds appealing to you, read on! I’ll explain some of the different methods for slowly transitioning into retirement as well, including the pros and cons of a phased retirement.
Ways to Phase Into Retirement
The path to retirement doesn’t look the same for everyone. While I just got done saying that a moment ago, it’s important to reinforce the idea—because knowing that might prevent you from trying to force your own needs into someone else’s perception of what retirement has to look like.
If a traditional retirement doesn’t sound like it would suit you, it helps to know your options. Here are some of the most straightforward ways to ease yourself into retired life:
1. Reduce Your Hours
One of the most popular ways to ease into retirement is simply to reduce the number of hours you work. According to the 24th Annual Transamerica Retirement Survey, among middle-class workers, nearly half (49%) envision transitioning into retirement by reducing their hours.
For instance, someone previously working a standard 40-hour, five-day work week might step down to a 24-hour, three-day work week. This transition typically is easiest for hourly (rather than salaried) workers.
Alternatively, you might reduce your hours not by cutting down on the number of hours worked per week, but by cutting down the weeks in which you work during the year—an option better suited for seasonal workers. For instance, a retired accountant might just work during tax season helping people prepare returns. Or a retail worker might just work during the busy holiday seasons. A teacher might retire but accept substitution-teaching opportunities as they are offered throughout the school year.
2. Switch Careers
Another way to phase into retirement is by switching to a completely new job, regardless of whether it’s full- or part-time.
You might have a physically demanding job your body can’t do forever, such as firefighting. Rather than fully retiring once you can’t handle the physical requirements, you might transition into a training position, work as a fire safety consultant, or become a building inspector.
Your new career might not even be related to your previous one. Perhaps you currently work as a lawyer but love playing your guitar during your free time. Once you get older and want to get out of a high-stress environment, you might transition to giving guitar lessons a few days a week.
3. Get Involved With a Nonprofit
Some people want to maintain the feeling of purpose that their career provided, but they want to do so in a way that’s more personal to them. Getting involved with a nonprofit that aligns with your values is a great way to do that. You can ease into retirement with a paid (non-volunteer) position with a nonprofit organization, and fully retire (for purposes of benefits) as an eventual volunteer.
In short: There isn’t a “right” way to ease into retirement—just different ways.
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Advantages of Easing Into Retirement
There are several benefits to phasing into retirement, rather than stopping on a dime.
In several ways, semi-retirement can offer a person the best of both worlds: You get some of the benefits of being employed, but you also enjoy some of retirement’s perks.
It also prevents a shock to your system. Some people dream of the day they wake up to a zeroed-out calendar. But for some, no coworkers, no responsibilities, and perhaps a little too much time and energy on your hands (to start with) is a jarring concept—and a phased retirement allows you to slowly adjust to post-work life.
The following are just a few of the upsides to easing into retirement:
A Continued Income Stream
Money is one of the biggest deciding factors in retirement style, so let’s start with that.
In the Mercer 2024 Global Talent Trends report, a survey of employees showed that 36% (across all ages) expect to work past retirement age out of financial necessity.
If you want to exit the workforce but simply have too many financial constraints, a phased retirement where you work less can be an acceptable compromise.
You might have several sources of income in retirement. You’ll likely withdraw money from retirement accounts and collect Social Security. You may also get annuity payments, receive real estate income, or have other money flowing in.
But unless you’re highly confident you have enough money saved and/or entering your bank accounts for when you fully retire, starting with a few transitional years can help you build up extra savings and ensure you’ll make it through retirement.
Plus, the longer you keep money in your tax-advantaged retirement accounts and out of your pockets, the more time those funds have to grow.
Related: How to Invest for (And in) Retirement: Strategies + Investment Options
Potentially Increased Social Security Payments
There are two ways easing into retirement might increase how much Social Security you’ll receive.
First, working increases your number of working years. One’s Social Security benefit is calculated using the average earnings of a person’s top 35 highest-earning years of working. If you worked fewer than 35 years, the Social Security Administration doesn’t just average your working years—for every year fewer than 35 that you worked, they use a zero. (For example, if your working career only lasted 33 years, your average would include two zeros.)
If you no longer can, or want, to continue your current full-time job, you might work part-time for the next two years as you ease into retirement. Even part-time work could improve your average enough to meaningfully bump your benefit higher.
The other way phasing into retirement could boost your Social Security payments is that continuing to work (and therefore receiving that income) may allow you to wait until an older age to start collecting Social Security benefits.
You see, when you take Social Security can strongly affect your monthly benefits. You can start receiving Social Security checks as early as age 62, but you’ll receive a significantly reduced amount for the rest of your life. To receive your full benefit amount, you need to wait until full retirement age (FRA), which for most people is between age 66 and 67. Those who wait to collect Social Security until past FRA receive delayed retirement credits, which can increase their payments even more (until maxing out at age 70).
Related: 10 Common Social Security Mistakes You Should Know
Health Care Coverage
Many Americans’ health insurance is tied to their employment. However, most people don’t become eligible for Medicare until age 65.
So what are the health insurance options for early retirees?
One option is to ease into retirement through a part-time job that offers health benefits. Most employers don’t offer health benefits to their part-time employees, but some do. As of 2024, Costco, Starbucks, and UPS are just a few of the well-known companies that offer health insurance to part-time workers.
If you work one of these jobs, or another one that provides health insurance, it could save you a substantial amount on medical expenses.
Socialization
Many people socialize with their colleagues more than their friends or extended family. So it shouldn’t be a surprise that when they retire, they’re suddenly much lonelier than they expected.
Yes, you can build up your social networks again after you retire, but it might be easier to make new relationships and strengthen existing ones earlier.
A person phasing into retirement can still maintain their professional relationships while enjoying more time to find and foster new ones. With reduced work hours, you might have time to join hobby groups and form connections with other members. Or you might start babysitting grandchildren, deepening those relationships before you fully retire.
People who reduce their work hours by seeking out seasonal employment might enjoy traveling several months a year—and when they return, they might be just as excited to share those adventures with their coworkers.
Thus, a phased retirement can be an excellent way to combat the loneliness that sometimes follows a sudden retirement.
Related: How Long Will My Savings Last in Retirement? 4 Withdrawal Strategies
Time to Pursue Passions
Many people’s dream jobs don’t pay enough to offer them the lifestyle they desire, so they take on other professions. Someone who loves animals might want to work at an animal shelter, but they opt not to because the hourly rate wouldn’t cover all of their expenses during their prime working years. Another person might have dreamed of caring for patients but couldn’t afford the costs of medical school.
Two-thirds of respondents in the Fidelity Investments 2024 State of Retirement Planning study said the pandemic made them more intentional about concentrating on their passions and dreams in retirement. The same amount said they hope for a phased retirement and look forward to working for pleasure in retirement.
People who can retire outright and volunteer for free have more flexibility. But some people who still need income can thread the needle by switching to a job that at least offers more personal satisfaction. The would-have-been doctor might be able to help the American Red Cross, and the pet shelter might now be a feasible part-time gig.
Do you want to get serious about saving and planning for retirement? Sign up for Retire With Riley, Young and the Invested’s free retirement planning newsletter.
Disadvantages of Easing Into Retirement
Everything has its warts, though, and so it is with phasing into retirement.
Let’s discuss some of the reasons why becoming semi-retired might not be a great fit for you … and why you might prefer a traditional transition from work life to retired life.
You Might Have Too Few Employment Options
It’s one thing to want to reduce your own hours—it’s another for your employer to have that option to give you.
Another Transamerica Institute report, Workplace Transformations: Employer Business Practices and Benefit Offerings, states that only 35% of employers offer a formal phased retirement program for workers, with large and medium-sized companies more likely to have one than smaller companies.
It’s possible you might be able to strike a deal with your company even if they don’t offer a formal flexible retirement program, but there is no guarantee they will agree.
Alternatively, you might be willing to take any part-time job but still need health insurance. And as I mentioned earlier, while it’s possible to get medical coverage from a part-time job, it’s not the most common practice. If you live in a small town with few job prospects, you might have to work full time to enroll in a workplace health plan.
Even if you don’t need health care, your options could be scarce, depending on your work wants and needs. So if you have very specific work conditions that must be met, and your current full-time job meets those conditions, you might be better off sticking it out and working until you have enough saved for a full retirement.
Related: Are You Retirement Ready? 10 Questions to Ask Yourself
It Could (Temporarily) Reduce Your Retirement Social Security Benefits
To be clear: The only way phasing into your retirement will significantly be a pull on your Social Security benefits is if you plan to do so before reaching full retirement age and if you earn above a certain threshold. If you want to ease into retirement after FRA, or you won’t make much money, this won’t be an issue.
If you work at the same time you collect Social Security benefits before FRA, your benefits will be temporarily reduced if your earnings exceed yearly earnings limits.
If you work while you take Social Security before your full retirement age, it will reduce your benefits if your earnings exceed the yearly earnings limits.
You can read more about the specifics in our primer on collecting Social Security benefits while working, but in short, the Social Security Administration will deduct money from your benefits if you expect to earn more than a set annual threshold in any given year in which you are younger than or will reach your full retirement age. And it won’t do so evenly across the year—it will deduct up to the entire monthly benefit each month starting in January until the full deduction is made for the year.
Fortunately, you will receive any excess withholdings at the start of the next year. And once you reach your full retirement age, the SSA will recalculate your benefit amount to give you credit for any months you didn’t receive a benefit because of your earnings.
Related: What to Do With Your 401(k) When You Retire
You Can’t Move to Another Location
Many people choose to move at or during retirement. Sometimes it’s to live closer to family, sometimes it’s for more desirable weather, and sometimes it’s to downsize to ease home-maintenance concerns.
Depending on your reason for wanting to move, easing into retirement can delay or complicate that process.
For instance, it might be more difficult to find work depending on the area that you move to. Or it might be more difficult to find part-time jobs that will pay you enough to make a partial retirement financially feasible.
If you’re itching to switch locations, you might want to consider a more traditional retirement timeline. Let’s say you need two more years of full-time work to hit your retirement savings goal. It might make sense to simply work those two years full time, then fully retire and move, rather than trying to spread that work out across four years while transferring positions within your company or trying to find new work.
