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Thursday, April 17, 2014

The Shift

Posted by Tim Stobbs on February 14, 2013

I was recently playing with some numbers the other day around my retirement plans and stumbled onto an interesting concept.  At some time in 2014 or so, I should have enough cash saved up to flip over to semi-retirement if I wanted (on a fairly bare bones spending plan).  While pulling the pin at that point would ensure I would always have to do a fair bit of work each year until full retirement, it did make me realize something important.  Making the shift from full to part work or full retirement is all about degrees of difference.

Full work or full retirement is all about being more black and white for states of being.  You are working full time or you are not.  Semi-retirement is the grey between those two states.  How far you want to go down that path is all about your personal choices.  Some people rather not have to work, while other are like me and fully expect to do some as I go.  It’s all about how much work do you want to add in your plan or how much time off you want sooner than later.

Deciding where you want to be in that grey zone is really mainly about your emotional state.  How much does your current situation drive you nuts and how badly do you want out of it?  Or perhaps you just want a bit more time off now?  Either case the decision is partly a math exercise of you need to either save or make X amount to live, do you want to earn that all at once or spread it out?

So for me there are times when I’m firmly in the idea of getting out as soon as possible, while other days I like the idea of working for a bit more so I don’t have to as much later on.  What I’ve always struggled with is making that choice?  What do I really want on average?  Also how do I deal with my ‘get out now’ days once I can pull the pin?

While I don’t know the answers to these questions, it should be interesting to work through them in the next few years.  So did semi-retirement ever appeal to you? If so, why or why not?

 

Comments

8 Responses to “The Shift”
  1. deegee says:

    I worked part-time for 7 years after 16 years of full-time work. In those 7 years, I was able to recover my personal life while lessening the number of days I had to endure an awful commute. Even at reduced pay, it was still more than enough to cover my expenses.

    But while I lost a lot of my benefits, the main one I was able to keep was my company stock whose value grew a lot in those years. When it hit a certain amount I was able to cash it out at somewhat reduced tax rates and retire.

  2. Semi-retired sounds wonderful but will you still be able to meet your savings goals on the reduced income or do you only need to cover your expenses now and then you will live off what you already have saved when you fully retire or when you are no longer able to work?

    I would love to work 2 days per week. It would keep my brain sharp but it is not in the budget for the next 20 or so years.

  3. Elizabeth says:

    I;m in my early 20′s so haven’t had the chance to be semi-retiered. I would recommend, if you can afford it, to take a 2-6 month sabbatical at some point and live as you want to. See how much you want to work, how much you want to play, and how much it costs. Seems to me the most realistic way to figure things out.

  4. Jon_snow says:

    For me, semi-retirement = part time worker.

    If I have to even “think” about my job, even if it is a few days a week, it’s not retirement. Though the numbers tell me I could stop work tomorrow, I will likely plug away for a few more years to ensure that once I walk away from my job I will be forced to get another one – just putting the final padding on the ER fund these days. Though I wouldn’t rule out working again if I truly enjoyed the work. My current vocation is a living hell…. But I digress…. ;)

  5. Jacq says:

    BTDT (doing that, that is).

    The reason that I went that route is that:
    (a) contract work pays more
    (b) sometimes I get summers off
    (c) I’ve never been in a job where I haven’t got bored after about a year anyway. Once I’ve learned it, made all the improvements I can, it’s time to move on.
    (d) it helps to minimize taxes paid

    Yet after this latest contract (that I still don’t like the work), I kind of agree with Jon too. If I could do 2 days a week and have summers off, I’d be a happy camper for a long time I think.

    Having said that, I think there’s a sort of scary mental shift that comes from not having a paycheck coming in and not being able to save when you’ve been used to doing that for so long. Even if you never touched the excess, the fact remains that you *could*.

  6. Tim Stobbs says:

    @Jane,

    I personally consider semi-retired when you have enough investment income that once OAS and CPP kick in you won’t need to work anymore. Working would only cover some living expenses during the early retirement period.

    Tim

  7. Joe Wasylyk says:

    Greetings! I just want to say that early retirement or retirement for that matter requires some planning on your part. Most people at this stage of their lives are looking at their RRSP’s,TFSA’s, GIC’s, Bonds, Stock’s, etc. I found out that it was more about what meaningful things are you going to work at when you leave the corporate life.

    Personally, I started planning at age 60 by working on a retirement plan from ground zero and up. You can start planning at any age since the retirement age is no longer a fixed number. Some people retire later in their 60′s or 70′s while others retire younger in their 30′s or 40′s. Especially if you don’t like your job then start planning now so you have something to work on later hopefully, something that your passionate about.

    Joe W.
    Seniorpreneur

  8. George says:

    Semiretirement has not appealed to me as my hourly rate would surely drop. Very few part time jobs pay as well as full time and I learned early on that I’m not enough of a salesman to be a consultant.

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