Shorter Full-Retirement vs. Longer Semi-Retirement?

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Which would you rather do:

A) Work 40 hours/week for 15 years, and then not work at all for the next 15 years, or

B) Work 20 hours/week for 30 years?

If you were to ask me a few years ago, I would have picked A. Now, I’d much rather have B. Of course, it’s not as simple as just picking one or the other. Some sample considerations:

  • At most jobs, you can’t simply decide to work less hours and get pro-rated pay. A job change or some clever negotiations with management might be necessary. Self-employment may be better suited to option B.
  • Even if you can work half-time, often you lose your healthcare benefits. This might be reasonable if you are single, but for a family with kids the costs can be pretty high. Might need to investigate alternative ways to get group coverage (professional association, creating your own small business insurance group).
  • For option B, you have less money coming early on, but you have more time for compound interest to occur before taking withdrawals. The opposite is true for option A – more money upfront, but you’ll need to start spending sooner.
  • The (historically) optimal investing asset allocation might be different for both situations.
  • With option B, depending on timing and desire, you would have more ability to spend time with your children when they are young. Is time upfront worth more than time later? Quite possibly.
  • I think it would be hard for me not to work at all. For one, there is the stress of trying to live off a finite amount of money. Second, one would need to find another purpose in life to fill all the hours. Others might find it really easy…
  • Option A gives you a bit of leeway if investment returns don’t pan out as you’d like. Maybe you’ll work a bit longer than 15 years. Trying to make up lost savings when you are older may be more difficult (ageism) and/or tiresome (just age).
  • Lower annual income with option B might leave you with lower overall tax hit.
  • Behaviorally and psychologically, it may be easier to spend less if you force yourself to make less.

I need a better name than “semi-retirement”. Downshifting? Half-retirement? Half-working? Working 9-1?

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  1. For me, I will choose B option as it gives me more time to do other things. I will treat the B option as my money supporter for my side business for it to grow. Working also will increase our contacts to other people which is very important.

  2. That pro-rated observation really hits home with me. I’ve calculated that I could get by (not great, but okay), if I could only make 1/4 of my current salary, which doesn’t seem like very much. But my place of employment would never allow me to work part time, so it’s a moot point. And floating over to another company as a part-timer, as a professional, is highly unlikely. If your current place of employment won’t do you this favor, it seems almost impossible. Then, all that’s left are run-of-the-mill part time jobs (mostly department stores), that wouldn’t bring a 1/4 of my salary if I worked there full-time. What’s a decent paying part time job? I’ve been thinking about going back to school to become a dental hygienist, but it could take 2 years, so I’m not sure … It seems crazy to have to go to school for 2 years, without a salary, just so I can get a good part-time job.

  3. I’m all for B. My issue with B is not the healthcare (we self fund it anyway and I work full-time). But going part-time you often lose ALL benefits.

    For me I would get to keep my great retirement benefits (10% match as it were). But the part I struggle with right now is losing vacation and sick pay, since I am the sole breadwinner for my family. Maybe this wouldn’t matter if we had health care coverage. But it all adds up fast. (We have no other benefits). I imagine making a leap from FULL benefits to NONE would be rather scary.

    Anyway, I could easily see both my spouse and I working part-time. But with just one of us working right now, with kids, it’s pretty far our in the future before I could support the fam on one part-time income.

    I wouldn’t be surprised if I work full-time for 15 years and part-time beyond that (20-30 years?). I’m already 10 years in.

    Anyway, overall, I am not a fan of working to death now so I can retire early. I prefer to work a job I like, forever, though working less hours is my long-term goal.

    P.S. you nail it on the head with taxes. We hardly pay any income taxes on one income. & it doesn’t necessarily seem that appealing to jump to double our income if my spouse returns to work, just to fork over a large chunk to the government. It’s another reason why I think we will both aim to work part-time for the long run.

  4. The key to this scenario is not choosing A or B, but the fact that as employees, the vast majority have no options made available to them. Your employer pays you to make them profits or decrease expenditures in some way. For some lower level positions, a job share may be available (2 workers with 20 hours each) but benefits usually evaporate, saving the employer money. But for any managerial or executive position, the hours are non-negotiable and usually as you don’t punch a clock, most U.S. workers are putting in 45 – 50 hours a week anyway.

    The solution in your prime working years is ojne of two options: 1) move to Europe, become a citizen and enjoy the benefits of generations of socialist policies (think France and riots over a 30 hour work week) or own your own business, where theoretically you could set your own hours. This includes consulting, if you a worth enough to be paid a living wage while only putting in 20 hours a week.

    Regarding retirement years, the key is not to retire. Here working half time is not only smart but will keep you sharp mentally and possible physically as well. Lots of companies are seeing the value of the “partially retired” worker and are hiring them in droves. And no, you are not limited to a Walmart greeter status; semi executive positions are available in the medical, pharmaceutical, and industrial arenas, as well as retail (Home Depot for example.)

  5. MoneyMateKate says

    I would choose (B) for completely non-financial reasons, and one that you touch on: I hate the prospect of being a useless member of society for (hopefully many) years. “Retirement” just sounds too much like waiting around to die. I’m kind of hoping a lot of my generation feels this way, and there will be a wider ranged of options in 30 years than there are now.

  6. Plan B is much closer to my plan. I’ll be working my own business and/or working full-time part of the year and taking the rest of the year off.

  7. Semi-retirement is the term I use too. I always thought I’d go for option A, but when I see how much money I need to amass to do it, I get discouraged. On the other hand I can see working part time as a way to balance my financial needs and my need for a life outside of work.

  8. This post strikes a chord with me. I am a young professional in his mid-twenties and for the last 3 years I have squandered my youth working against the grindstone in a relatively unforgiving industry – but for a high pay relative to my age. It has allowed me to save some money and implement an asset allocation strategy and “plan for the future.” But at what cost? I do not enjoy my job and suffer from constant anxiety knowing that at any moment weekend work may be necessary, not to mention late nights. In the last few years I have come to the conclusion that less pay for more time is ALWAYS the right decision – yet I can’t bring myself to make the leap because it would not allow me to save as much money as I would like to (20 percent of my take home + whatever is left over after mandatory and discretionary expenses)…and it would also mean I would have to lower my standard of living. While materially I am the envy of my friends, psychologically I loathe employment.

    Option B for sure…its simply a more difficult mental decision to make.

  9. WorkHardGetTaxedMore says

    I used to believe in (A), being a person of hard work ethics in nature, but I’m changing my mind too.

    (B) is the way to go now, especially these days with the new Obama administration. With (B), you will wind up paying much less taxes, and maybe even become more eligible for “fiscal stimulus” checks, and more likely “wealth will be spread” towards your way.

    Why work so hard when you’ll just be taxed at the margin at increasingly burdensome rates? Don’t worry about healthcare, since we should all be getting it for “free” as an entitlement.

    I’m being a bit sarcastic, but maybe I’m not too far from the truth.

  10. Financial Fellow says

    My girlfriend (soon to be fiance, then wife) and I like the idea of her working part time. The second income can really help out. Plus, its nice to have someone around with the kids. That said, if you have to put them in day care for the small amount of time you are working it can really dimish the part time salary… I like the phrase “Professional Part Timer”.

  11. The same argument could be made for maxing out retirement savings verses spending the money now to enjoy yourself at the expense of retiring a bit later.

  12. A couple of extra points:
    – Losing healthcare benefits is definitely an American problem. It’s an issue, but people in France or Canada can just knock that off their list.
    – The “optimal asset allocation” will definitely be different.
    I think it would be hard for me not to work at all. The stats seem to indicate that this is universally true. Almost everyone could spend a few months at the beach. (likely b/c most of us have high stress levels) But as the “months at the beach” become “decades” the number of people who actually want to live that lifestyle drops dramatically.
    At most jobs, you can’t simply decide to work less hours and get pro-rated pay. A job change or some clever negotiations with management might be necessary.: OK so this is true. But let’s face it, if you want to “buck the trend” in basically any way, you’re probably going to have to communicate/negotiate with management. It might be scary, but overall that’s a pretty small barrier to entry. I mean really, you’re making the company money. If you can convince them to pay you 50% of your salary with the promise of generating 65% of your previous revenue, then it’s unlikely they’ll be angry. In fact, with many “knowledge-worker” jobs, there’s a case to be made that the current 8 to 6 work schedule provide vastly diminishing productivity returns. See the Four Hour Workweek for practical examples.

    I honestly think there’s a world for working 20-30 hour weeks and I think that world would be filled with happier people. But without people setting trends and pushing for initiatives like ROWE (Best-buy is already signed on), then nothing will change.

  13. Option B by a long shot. A persons best year left (health and quality of life wise) is the next year not the year 20 or 30 years from now. This will become more obvious to you as you grow older.

  14. And what does one do for the rest of their life? Assuming working starts around 20 yrs of age, this only gets us to 50 or so?

  15. Neither? Maybe I’m the only one but I’m looking at working 50-60 hours a week until retirement, unless my investments somehow start making me 200% a year.

    I’m under 30 and, according to Wikipedia, I’m in the top 7% for personal income in the US, yet I don’t see how I can retire any time soon. I wake up early, tend to put in 10 hour work days, but retirement calculators peg me as having ~10-15 years of funds if I retire at 67.

    Of course I’d like to work less, but I don’t think I could make an equivalent amount and still be able to retire some day.

    Maybe the options should be “work 50 hours a week and retire some day” or “work 20 hours a week but never retire.”

  16. If you lose your healthcare, you aren’t making 1/2. If you get healthcare you’re making more than half. A comprehensive company paid family health policy runs about $12,000 per year. I seem to be on option C. Work 40 hours a week for 30 years.

  17. Over the Cubicle Wall says

    Option A is pretty much my goal right now. It will most likely end up being a little more than 15 years, and for the most part has been more than 40 hours a week.

  18. For many of the reasons you’ve already stated, I haven’t felt that working 20 hours a week has been an option. The choices I’ve seen look more like this:

    A) Work 60 hours/week for 15 years, and then not work at all for the next 15 years, or

    B) Work 40 hours/week for 30 years

    I picked B. Some of my friends have picked A. Some of my friends have picked working 60 hours/week indefinitely!

    I mostly picked B by accident (couldn’t get the job I thought I wanted), but decided I preferred it after all.

    Most (all?) part-time (or short-term–you could work 40 hours a week for only 6 months a year) jobs I know about pay extremely little and most have no additional benefits. I don’t know how to make more than $12/hour working part-time or temp jobs (including ones that require a degree and teaching certification), but I’ve finally gotten enough raises in my full-time job to make $20/hour. And my job is full of cushy benefits, my favorite being a gigantic library in walking distance.

    Working a 40-hour job for an employer while building up to a 20-hour job working for yourself would be a way to go from 60 hours to 20 hours.

  19. I am going to do a combo. Work FT for a number of years, 15-18, then drop to PT to keep bene’s and have some income rolling in.

    I figure the FT work will get me through the kids growing up and the house paid off, those will be the biggest expenses.
    When the house is paid and most of the kids are out of the house or on their way, my wife and I can live off 1/2 my salary. I will need to work to keep benefits since I will be below 65 and healthcare will be/is a huge expense.

  20. Interesting ideas…

    I’d rather work full time for x-amount of years than hang it up. There are a lot of other things I’d rather do with my life, and if I’m tied down with a job I won’t get there.

    Work hard; then play hard when you can afford it.

  21. I say work 40hrs for 15 years and buy rental property. Then after the 15 years you should be able to work part time and live off rental income. I’ve been doing it and it’s working for me. I have seven years of full time left. and five rental properties already. Working on purchasing my sixth property. Generating in my pocket around 3k a month after paying mortgage and property taxes.

  22. I used to work crazy hours with great pay thinking that I’d choose option A. But the constant stress of the job and the poisonous environment at work were killing me and I was unhappy going to work.

    So I decided to pull the plug. found a job where I don’t work crazy hours. It is not a part-time job, but I work around 40 hours per week and my after-work hours and weekends are my own. I still get good benefits, still get good pay (not as great as the first job) and I can get by and save for future just fine.

    This job gives me time to pursue my hobbies and such. I realized that life is a journey and not a destination. My current job and option B will give me the opportunity to enjoy life as it happens as opposed to option A where I’d have to wait to enjoy the life and by then I might forget how to enjoy life!

    At this time, option B is not available to me (because I need the benefits of full time employment right now). If it were, I probably would take it. In the mean time, I like my current job that is in between option A and B that gives me time to pursue my hobbies and enjoy life as it happens.

  23. Like you, definitely flip-flopped on this over the past 10 years, largely due to having children and going through multiple M&As, the last of which basically left me in position B, whether intended or not.

    Rather than jumping back into the corporate fray, I co-founded an Internet start-up ( and while my quantity of life (income) is dramatically lower right now, my quality of life is much greater. Plus, the work is much more meaningful.

    Frankly, I see myself “downshifting” (that’s the right expression, you nailed it) right now and then “upshifting” again when my young children are thru college.

  24. NOtice the common thread between all who have written in and lean toward option B: they’d like to go this route, but there are so many obstacles (low pay, no benefits, etc.)
    So how does a professional work PT and make decent $$ to gain a life? Job sharing.

    Job sharing has been proven to profoundly improve workforce productivity and reduce turnover. Each job share employee does better, more productive work in the limited time they are on the job.

    But the only way job sharing will ever work (in my opinion) is if the government sets an example to businesses by mandating it. If each state/fed/local government would provide job sharing for say,10% of all their employees, it’d start a domino effect of productivity. Plus ultimately help the family.
    Time to talk to your local state legislators!

  25. Job Share is already available in many industries. The rub is that the employer is not mandated to provide benefits. I believe many of us would jump at a job share if full benefits were included. Again, for any upper level management positions the concept is moot – never will happen.

    Mandating a set number of job shares with benefits will only cause other layoffs and negative impact – think “minimum wage laws.”

  26. I’m with you Deb. Maybe in place of mandating it — they could provide huge incentives, tax relief, and/or provide free health benefits for employees who job-share. There are probably little inconveniences to companies’ policies regarding sick/vacation/holiday time. It might cost companies something to re-write and re-think all their policies. It could be worked out though — if they had enough incentive. I really believe that the “Green” initiatives lately that have been swooping around everyones’ workplaces’ are a way that the government is trying to persuade companies to allow mass telecommuting (which btw could reduce our total national oil consumption by 25%). But that’s kind of just a feel-good campaign — they should put some real tax incentives in there and see what happens.

  27. stonks @ says

    Yep, definitely option B! I’d see this much more of a work-at-home type of scenario such as maintaining a website, or blogging etc. Hence, it would give you a lot more time to do other things that you enjoyed…

    There’s nothing worse than slaving away 40 hrs a week on something that isn’t fulfilling and you feel you’re wasting your time over.

  28. I decided some years ago that option A is not the one for me. Although I haven’t been able to do just 20 hours per week, I currently work 29 hours per week and I’m not looking to change that anytime soon. I don’t get benefits, and I know that this is something major for most people. I don’t have children, so perhaps one day this will become a priority. Despite the reduced hours, I function just like everyone else. I drive, pay the mortgage/insurance, and pay taxes on my w-2 income.

    Until benefits become an issue, I would not change the 29 hour schedule for the world!

    Good luck to all reaching option b… it’s as good as it seems and more.

  29. frank, do you not get sick? or go to the dentist? Or do you pay for your own personal insurance? What about retirement? I’m curious what you do in those situation as someone who hates 60+ hour work weeks.

  30. Have you read Timothy Ferriss: 4 Hour Work Week? He talks about taking mini-retirements. I couldn’t find anything on his blog about it, but maybe you can ask him directly.

  31. frank @ says

    I get sick every now and then, but not serious enough to warrant going to the doctor. I’m proactive about health, so I eat right and exercise on a regular basis. I do get checkups every now and then, and these expenses are taken into account in my budget. I realize that in emergencies I would not be covered, but like many other Americans, I simply go without. Nobody said there are no risks in life and this risk I’m willing to take for the time being. With children this will probably change one day.

    I don’t believe in 401k’s, or the like. I don’t make enough money to justify locking away money for 40 years. If I was taking a tax beating then this might make sense, but since I’m not I like the control and access of my savings. I do believe in saving for retirement, and do as often as possible.

    Not working less than 40 hours a week is not for everyone. It requires frugality, discipline, and determination… not many people have the will or ability to make it work. I have also been bound by the 60+ hour sentence in the past, so I know how hard it is to let go. Lots of luck letting go…where there is a will there is a way.

  32. I am an attorney, and I currently work part-time–32 hours/week. I get paid 65% of what would be a full-time work salary, and I get health insurance (I negotiated this). I am pretty sure that I would not be allowed to work this schedule if it were not for my children, so it’s not something everyone could pursue. Also, most law firms will not let attorneys start out at the firm on a part-time schedule. I started as a full-time attorney and only changed my schedule once my first child was born. But it works for me (and, so far, for my employer).

  33. From those 2 I would choose B but really I choose C. Work full time 20 years, work part time 20 years, work some (maybe 16 hours a week) 10 years, fully retired – say 50 more years 🙂

  34. life on a limb says

    I’m someone who’s taken the “mini-retirement” option. The plan is to work some, take a break for a few years, work more, then take another break, and probably never retire in the traditional sense. The current mini-retirement started in 2007 and I have been doing international travel and living overseas for the last year. I’m in my 40s.

    It’s not easy to do this from a financial perspective, and there are lots of risks. While I have no debt, I also have no family, no house, no health insurance. But I do have the freedom to do anything I want and go anywhere I want at anytime I feel like it. I get to spend time doing what I want to do, and I have more than enough creative drive to keep me occupied.

    The benefits for me have been clear: my stress levels have decreased to the point of where I feel happy and healthy.

    But I realize this is not the sort of thing to recommend to the masses.

  35. I was an option A guy for a long time, and with some significant lifestyle choices could have pulled the trigger a couple of different times. But having spent time in the Retirement Planning industry and watching friends and family in retirement, has made me an option B guy.

    For years my goal was early retirement, and I was enamored by those who achieved it. But now I’m inspired by those who passionately keep going, keep influencing, keep contributing.

  36. Dusty Rhoades says

    Pam (above) has it right, lead a balanced life giving some time to work, family, friends, relaxation, physical fitness, raising children, saving for retirement, etc. Ben Franklin’s advice of “moderation in all things” is a great yardstick to follow in life. It’s been my experience that when you go overboard in one aspect of your life (e.g., work, exersize, hobbies, watching too much TV) you do so at the expense of another aspect of your life, like spending sufficient time with your significant other and/or your children, you compromise your physical or mental health, lack furthering your education and work skills, encounter lackluster career advancement, etc. Alsway pay serious attention to doing a good job at work (“pay attention to business first”) because it pays for your food and shelter, goods & services that you need, vacations, your children’s educations, your future retirement income,…. I think you get what I mean – work is VERY important.

    There is nothing wrong with working 45 years, all the while enjoying life along the way while saving for retirement, then retiring in your 60s and enjoying a more free, quiet and pleasurable lifestyle in your later years. I am 69 years old and this has been a pretty accurate description of my life and I highly recommend it to you younger people following along behind me.

    Remember: moderation in all things.

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