Is Semi-Retirement Financially Viable? 3 Key Factors to Consider

In this video, Anthony addresses three key factors that will help determine the success of your semi-retirement decision and your next action step to get the answers you need.

Is Semi-Retirement Financially Viable? 3 Key Factors to Consider


Full transcript:


Anthony Saffer 0:00
Three key questions can determine if your semi-retirement will be financially successful.

Number one, will you be withdrawing from or adding to savings?

Two, how many years will you work part-time?

Three, what are your expected ongoing living expenses?

In this video, we’ll address why each question will help determine the success of your semi-retirement decision. And I’ll finish by explaining your next action step to get the answers you need. I will also give you my opinion of a semi-retirement as a viable transition step into retirement.

Okay, for clarity, I’m defining semi-retirement as continued work, but at a reduced level of income.

So question one, will you be withdrawing from savings or adding to savings? Or will it be cashflow neutral, meaning you’ll earn enough to live on but you will not be saving for retirement nor withdrawing.

If you are cashflow neutral, or better, you can give your investments more time to grow without touching them.

Sometimes where people get into trouble is they withdraw from their investments, and work part-time they say, Wow, this is really working great. But once they fully retire, they need to replace that part-time income plus what they’re already withdrawing. And then it adds up to an unsustainable rate of withdrawal.

Now, that’s not to say that withdrawing from your investments in semi-retirement is always bad. It just really depends on how much you’re withdrawing and how much you will need to take out when you do fully retire.

And if we’ve not met yet, I’m Anthony with One Degree Advisors and if you’re not already subscribed to the channel, please do, we post videos weekly to help you gain confidence in your retirement decisions. We hope you’ll follow along and also post your comments. That way you can share that with others as well.

Okay, so question two, how many years will you work part-time. As we established in question, one, the income you’re earning may meet your living expenses, or be close to it. So whether you earn that income for one year, five years, or 10 years is going to make a huge difference.

In this example, let’s just say that part-time income is $75,000 per year, you can go ahead and fill in the number up or down that’s reasonable for you, the total amount can vary wildly by the number of years worked, as you can see, so as you enter semi-retirement, you may not have complete clarity on how long you’ll work. But you should have at least an idea of the minimum number of years,

I was just talking with a client, we determined that if he did consulting work for at least five years, that could really help his retirement plan quite a bit. And then if he settles in and is able to retire later than that, after five years, it would work out even much better.

So if you’re able to defer withdraws from your investment portfolio for multiple years, because you are earning this income, that can really build up a stronger foundation for well into the future. What you don’t want to happen is you quit your full-time career job, move into semi-retirement position for a year or two, and realize you really don’t have enough to sustain a full retirement.

Okay, so question three, what are your ongoing living expenses? Don’t sell yourself short. I asked one couple, and this is actually quite common, how much do you need to live on in retirement? They said, well, we don’t spend that much money, maybe $3,000 per month.

So they’re living in San Diego, where we’re located, the cost of living is pretty high. That may work for some people, but I knew that was not what they were actually spending. So, we have a way of calculating what they’re actually living on today. So, I showed them their number, their estimate versus our calculated number, and I said, Are you prepared to cut spending by this amount of dollars every month?

What you don’t want to happen is to plan based on an unrealistic income need, because then you’re kind of stuck in this dilemma. Do you just live on less? Do you go back to work?

There’s enough uncertainty in life, you want to plan as accurately as possible, so you can have a sustainable successful retirement income well into the future.

So what’s your next step to determine if semi-retirement is viable? Each of these three questions actually works together in combination the magnitude of how much you earn, how long you do it, and how much you spend all affect each other.

At the very least make sure to find an online retirement calculator. Use your own spreadsheet if you really want to nerd out on it. But the main drawback of an online calculator is these tend to be overly simplistic.

True financial planning software, on the other hand, is geared to factor in when income sources may start and stop when a mortgage is paid, the effects of inflation taxes, and even the estimated return on your investments and then create projections well into the future to help you see the big picture.

This can allow you to make more confident decisions today. This is the kind of work we do with families in preparing for them to retire. So you can certainly reach out to us go to Or just make sure to find a quality certified financial planner who actually looks at your finances, your priorities and puts a real plan into place.

Okay, so here’s my opinion of semi-retirement, we see a number of our clients use the semi-retirement transition into retirement. It’s not an option for everyone, but I really do like the concept for those that it applies to. For those who take this transition step, it can help financially. It also helps check several boxes when it comes to retirement readiness.

We previously posted a video called when can you retire: A three-question checklist that would be very helpful to build on the idea of retirement readiness. We’ll go ahead and post that link below.

What tips would you share to make the semi-retirement successful drop a comment down below and like if you enjoyed this video, we created a guide called Five retirement mistakes to Avoid. You can also download that for free. We’ll go ahead and post the link for that in the show notes. Thanks for watching.

Transcribed by


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