3 Strategies to Help You Plan a Successful Semi-Retirement
If you’re ready to retire but don’t want to leave the workforce entirely, semi-retirement might be a good option for you. Before you take the leap, there are strategies that can help you navigate this lifestyle.


For decades, the goal has been to work hard, earn money and then retire! However, in recent years, the traditional retirement model seems to be changing. So, what’s the alternative?
More retirees are deciding to slowly leave the workforce by reducing their hours or finding more fulfilling jobs, even if they pay less. This trend is known as semi-retirement. In a recent survey by Express Employment Professionals, most retirees said they would choose semi-retirement if their employer offered it.
If you feel this lifestyle suits you, there are some steps you can start taking now to ensure you’re ready to transition to a semi-retired life.

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Prepare Your Finances
Before you consider transitioning to a partially retired life, make sure you have a plan for your finances. Even though you will still be bringing in money each month, make sure to check with your financial adviser to see how much money you have in your retirement accounts and how you can adjust your budget as needed.
If you’ve already started taking Social Security before your full retirement age and are still working, you will get a reduction in your benefits if you make more than the exemption amount laid out by the Social Security Administration. In 2022, that amount is $19,560. Fortunately, you will only see this reduction until you reach your full retirement age.
If you haven’t started taking Social Security benefits but you’re thinking about it, there are some things you’ll want to consider. You can start claiming benefits as early as age 62, but the longer you can afford to wait for those benefits, the larger your payments will be each month. Once you turn 70, those benefits won’t increase anymore, so it doesn’t always make sense to wait longer than that.
You will also want to consider your health care costs. If you are eligible for Medicare but decide to stay employed, you can hold off on taking Medicare Part B and D benefits and take advantage of your company’s health care plan if you work for a company with 20 or more employees. Since Medicare usually covers basic health care needs, using an employer plan could give you some financial support when you are paying for medications, hearing aids, dental care and even long-term care.
If you work for a company with fewer than 20 employees, you will need to apply for Medicare. In most small businesses, after age 65 your health expenses will be covered by Medicare first and any other employer-based plan second. Generally, your employer-based insurance at a small business may not cover all of your expenses.
Assess Your Employment Options
There are a number of employment options to consider when planning for semi-retirement. If you want to stay with your company, see if they offer semi-retirement options. You could reduce your hours and stay in your role, or use your knowledge to become a consultant or mentor for up-and-coming employees who could eventually slide into your current role. Not all employers offer this option, so make sure you do your research and talk to your boss.
With so many work-from-home options, you could also find a new job that is less demanding or is a passion project. You could work with your favorite non-profit in a part-time role or get involved with a local university and share your expertise with a new generation of professionals.
If starting a small business has always been your dream, this approach to retirement might be a good option. After breaking away from the 9-to-5 grind, you will have more time and money to turn your hobby into a business. With any new business, be prepared that you may have to spend more hours than you thought to get the business off the ground. Also, consider how much of your retirement funds you can reasonably spend. A financial professional can help you sort out what you need to live on and what you can put toward your new venture.
Plan for Taxes
If you are working in a part-time position during retirement and you aren’t bringing in enough income to live on, you may need to withdraw money from your retirement accounts, like a 401(k) or IRA. If you do, you will need to pay taxes on that income as well.
If you start withdrawing from your retirement accounts before age 59½, you will also have to factor a 10% early withdrawal penalty into your budget. Make sure you adjust the hours you are working or the amount you are planning to withdraw to make sure you aren’t surprised by your tax situation when it’s time to file.
No matter what you decide to do in your retirement, a financial professional can help you navigate all your options and create a plan that fits your lifestyle. At the end of the day, it’s your retirement, so choose what makes YOU happy!
Get Kiplinger Today newsletter — free
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

Tony Drake is a CERTIFIED FINANCIAL PLANNER™ and the founder and CEO of Drake & Associates in Waukesha, Wis. Tony is an Investment Adviser Representative and has helped clients prepare for retirement for more than a decade. He hosts The Retirement Ready Radio Show on WTMJ Radio each week and is featured regularly on TV stations in Milwaukee. Tony is passionate about building strong relationships with his clients so he can help them build a strong plan for their retirement.
-
Got Assets? Attorney Explains How to Protect Them From Greedy Lawsuits
Potential plaintiffs can sniff out money like bloodhounds, and when they catch the scent, watch out. Fight back with advance asset protection planning.
-
I'm a Financial Adviser: What I Would Tell My 18-Year-Old Self About Money
I've built a business, weathered financial storms and learned that adulting includes understanding my finances. Here's how I wish I had been more financially responsible earlier.
-
Retirement Reality Check: Four Risks You'll Want to Avoid at All Costs
There's no crystal ball for retirement planning, but the closest thing could be to consider the key risks you'll face in retirement and build a plan around them.
-
Eight Ways to Financially Plan Your Way Through Challenging Times
A chief wealth strategist makes some suggestions about how to better position yourself financially while coping with economic uncertainty.
-
Five Reasons Roth Conversions and Pensions Work Well Together
This financial planner unpacks why Roth conversions can save you big-time on taxes if you're a retiree with a pension.
-
The One Surefire Way to Keep Your Car Insurance Premium From Soaring
I'm an insurance expert, so I know from extensive experience: The more claims you file, the higher your car insurance premium. So maybe don't ask your insurer to fix that tiny scratch on your bumper.
-
What You Expect in Retirement vs What You Get: Where Reality Can Surprise You
A financial planner explores how your expectations for retirement can greatly differ from reality — and how you can plan for that.
-
What's Up With the 10-Year Treasury Bond: Four Financial Experts Weigh In
A financial professional and three colleagues explain the fluctuations in the 10-year Treasury bond and what investors should do.