Retiring Early with a Semi-Retirement

In this episode of Retire Early Retire Now, host Hunter Kelly, a certified financial planner, explores the growing trend of semi-retirement among older millennials and younger Gen Xers seeking better work-life balance. He highlights the benefits of semi-retirement, such as increased flexibility, financial independence, mental stimulation, and improved health. Hunter shares practical advice on evaluating your financial situation, assessing career options, planning, and considering healthcare. He also celebrates the second anniversary of his firm, Palm Valley Wealth Management, and emphasizes the importance of designing a fulfilling and balanced life.

00:00 Introduction to Semi-Retirement

01:25 Celebrating Milestones: Palm Valley Wealth Management

02:43 Benefits of Semi-Retirement

09:35 Planning for Semi-Retirement

15:57 Healthcare Considerations

17:11 Embracing Flexibility and Conclusion

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Transcript

0:00

And welcome back to another episode of Retire Early Retire. Now I'm your host, hunter Kelly, certified financial planner. In today's episode, we're diving into the concept of semi-retirement, a topic that is becoming more and more popular as people, especially in our generations. Older millennials and younger Gen X generations seek a better work. Life balance. And so the traditional idea of working full-time for decades and decades and stopping completely at 65 is just not, the only option anymore. And so this is what this podcast is year round. How do I retire early? And sometimes that means, Hey, I. I don't wanna fully give up work, but I do want to cut back on my hours or doing, do something more fulfilling, whether that's working for a nonprofit, starting my own business, freelancing, consulting, whatever that may be for you. and doing a semi-retirement or a work optional retirement is much, can be much more rewarding than completely, clocking out, if you will. Again, this is something that, is becoming more and more popular. And so in today's episodes we're gonna talk about the benefits of this approach, the financial independence that it can bring and offer to you. and then show you how can, how can I evaluate this and create a plan, to hopefully one day, see this, plan come to fruition and, maybe achieve this semi-retirement. in my fifties or forties, whatever that may be for you. before we do that, I do want to take a pause and say, yesterday was a big day for Palm Valley Wealth Management, my firm that I, own and run. it was our second year anniversary. So excited. That we are in year two. As most of you know, I was a financial advisor at a larger broker dealer for a number of years and decided to start Palm Valley Wealth Management. So I can do things like this. I can do the podcast and give more education to more people and, and help more people than just the clients that I work with. super excited that we are in year two, has been, one of the best decisions of my life to create this company. So that I can, again, do things like this podcast and, have more flexibility and talk about, things like semi-retirement, that sometimes I, I feel like I am semi-retired because I have so much flexibility in my own company and, and how I run my business and, and just the 100% control over my, my day-to-day work and things of that nature. So I just wanna say thank you and we're gonna continue growing this business. If you're a client that is listening, uh, couldn't thank you enough, my family. Thanks you for continuing to trust me with your financial planning needs and, and goals and aspirations. and if you're a listener of this podcast, again, thank you for listening, and helping this podcast grow so that I can reach more people and hopefully help them retire early as well. let's jump right into the benefits of. A semi-retirement. So let's start looking the primary benefits of re semi-retirement. These are the reasons why so many high income earners, especially, millennials and Gen X generations are choosing to transition to a part-time work schedule. One I just talked about in my own life, and that is flexibility and control over your time. Who wants to, have to go into work nine to five? 40 hours a week. only have two days of, of PTO, or not two days, but two weeks of PTO. and be strapped or constrained by, what the boss is telling you. Now, some people are really good at that. They don't mind it. Maybe they love their job. I'm not saying every nine to five job is that way. but there are a lot of people out there that maybe if they can change something about their life, whether that's more control or flexibility or where they're working or the amount of hours. they would want to change. this is what a semi-retirement can give you, is that more, is more control flexibility over your time. So one of the most, it's probably one of the most obvious benefits of a semi-retirement. when you're semi-retired, you have the ability to create your own schedule. No more nine to five grind. you can decide how many hours a week you want to work. what we'll talk about later is the planning. Obviously the planning has to be in place to allow you to do this. If you're used to making$300,000 a year and you go ahead and cut your income in half. You gotta have a plan for that. whether that's cutting expenses or having investments to, to make up for some of that. But, you do once you get into that spot. having that semi-retirement is going to give you a lot more flexibility, so that you can go travel, be with grandkids, or be with your kids or, do whatever hobbies that you like to do. Right? having flexibility is probably the most, The biggest part about a semi-retirement that I, I would see the biggest perk about it. number two, financial independence and security. So another big benefit of semi-retirement is the financial security it can offer. so instead of completely retiring at 65, where maybe you have some social security and then you have, whatever you saved up and that's what you have, the. Being in the workforce still can allow you to, one, not have to take, Heavy distributions off of your retirement accounts, especially if you're wanting to retire early and you have a prolonged retirement, maybe 40 or potentially 50 years. having this extra source of income, can help lighten the load of your investments, right, or it can allow you. Quote unquote, to retire earlier. So if you've done a good job saving and you're like, Hey, I need$3 million to completely retire, but if I save 2 million and still have a part-time job making enough income to make up what I would need to get to 3 million or what I think that 3 million can generate, then I can go ahead and part-time retire, maybe work much longer, quote unquote work, work much longer. And then. I have a better quality of life. I have more control over my day, like we just talked about. I can spend more time with my family, travel, things of that nature. And I. Having that extra income and security will give you more financial independence. And then maybe you're even one of those lucky ones that create, a small business that then generates, more income than you actually need and you can continue to grow your wealth over time. that's, benefit number two. And so benefit number three, preserving. this is probably one of the most underrated benefits that I see, with people that want to continue working on a part-time basis or have this, semi-retirement. And that would be preserving your mental stimulation and purpose. one of the, negative things, or the dark side of retirement is retiring and having nothing to do. You lose your purpose. Why am I. retired. Why am I here doing what I'm doing? I should be working or I should be doing something. If you don't have purpose in retirement or after you leave your job, this can lead to depression and. worse, health. Health because you're not doing anything. Maybe your diet falls off, you're not exercising what, whatever that may be. Right? and so having a part-time job or creating a business, can give you, a sense of purpose. And, and so you don't have that lack of purpose. You're not bored. you're building potentially a business or you're working for a nonprofit that you have, That means something to you. So I have a client that just retired, probably two or three years ago, and she stayed busy, but, she ended up getting a job at a nonprofit that she's very, close to. And she enjoys it. It, it's, it means a lot to her. It's a big purpose of hers. so now she has more of a, a sense of fulfillment because she is helping people, through tough times and things of that nature, and so it gives her a lot of fulfillment. Is she making anywhere near what she was making before taking that job? No, but, she, is to in a spot where she doesn't necessarily need. The income from that job, but she's able to continue working and do something much more fulfilling than what she was doing previously. staying professionally engaged can add significant benefits. One to mental health give you a sense of purpose. Many people choose semi-retirement. and find, continuing to work even, with, in a reduced capacity, helps them stay sharp. Gives you, or allows you to keep that mental acuity. you don't feel as, isolated from people.'cause maybe you're working in a job where you're, you're surrounded by people and you still, like, you're contributing in a. meaningful way, right? so it's not always about the paycheck, it's about staying connected to something bigger, especially when you're working for something like a nonprofit or a charity or, or just doing something that, means a lot more to you, than, than just sitting at home or playing golf or whatever those other things may be, right? number four, and lastly, Semi-retirement can be a positive impact on your physical and mental health. Again, it can get you outta the house. It can keep you. Keep you moving, keep you active. it's less pressure. So maybe the stress of deadlines and things of that nature aren't, as demanding as your previous career. but you can take more time for self-care and things of that nature. And so what we often see is there's more time for personal growth, hobbies. Again, whether that be golf or travel or underwater basket weaving, whatever that may be, right? creating a semi-retirement can allow you to. Just have more control, more time. keep your health up, from a mental standpoint and a physical standpoint, and still give you that sense of purpose that you're doing good, for, the rest of us. Right? how do we do this? This, this show, this episode, this podcast is all about action. we can talk about the benefits. We can talk about, oh, semi-retirement would be nice, but how do we start to put some of these things in action? Maybe you're in your late thirties, maybe you're in your forties and you've done a good job of saving and investing. I. Well, how do we actually get to a place where we can start thinking about a semi-retirement? Maybe you're a physician that's working 60, 70 hours a week in the clinic and you're like, ah, I'd rather just be teaching, or I'd rather go down to PRN, but what does that look like? I have a pretty lavish lifestyle. How can I get to a point where I can cut my hours down to 20 hours a week or, or something of that nature? You're an attorney in the same deal, right? You attorneys work crazy hours. and so how do I get to a point where I don't have to be in the rat race of billing a bajillion hours a year? I can get to a place where I can, maybe go consult somewhere or, just cut down my hours in general and not have to produce, a ton of, billable hours. Right? Where does it start? And so, one, evaluate your financial situation. Take a look at your current finances. Do you have enough saved to reduce your hours of work to a part-time basis? consider your savings investments. I. And any in passive income sources that you already have, the goal is to find balance where you can still support your lifestyle while cutting back your work, right? And so one of the things key to this is likely you're going to want to start the semi-retirement before you're 59 and a half. And so why is 59 and a half significant? Well, that's when we can start touching our retirement accounts. And one of the things we wanna look at is if, again, we're in our forties and we want to have a chance to do this semi-retirement when we're 50, we need to have assets that we can, use to supplement some of this income, to. help us live and keep our same lifestyle. And one of the ways that we can do that is building a brokerage account. I often call this a large purchase account. I don't know how the regulator feel about this, but also call it a checking account on steroids, because now you can start investing that money and hopefully over a long period of time you'll grow. And then you still have access to it like a checking account. Now it doesn't move. The money doesn't move as quick and you can't pay bills most of the time through it and stuff like that. But, it is fairly liquid, right? And so we can start contributing to this brokerage count and, start growing some assets so that. 5, 10, 15 years down the road, I'm still not 59 and a half. I can pull from this bucket to supplement any income that I may be losing, going to the semi-retirement type job or cutting back. So maybe again, I'm a physician or I'm an attorney and I go, ah, I'd rather go work at that charity or that nonprofit, work 20 hours a week and make$30,000 a year. still have a sense of purpose. But, but I don't wanna be in the, the grind for the rest of my life, right? Having this brokerage account can help you bridge that gap from age 50 or 52 or whatever to 59 and a half. and so we want to consider that. The other thing is make sure that you have that a plan to get some of this debt paid down. So if you have student loans still, maybe credit cards or auto loans or. a large mortgage, whatever that may be. that's the other determiner of success. The people that I work with that are retiring or have successfully retired, or past clients from old firms that I've worked with, all of the ones that have the most successful retirement from a financial standpoint do not have a lot of debt or zero debt. have a plan to have your debt paid off, before you do. Go into a semi-retirement, it's just going to lessen your obligation of things that you need to outlay every single month, right? and so the less you owe, the more probability that you're gonna be able to achieve the semi-retirement or for retirement, for that matter. The next thing is probably the more, the the easiest thing for most people. Sometimes people are just don't like their job and they don't, they don't know what they wanna do. They just want to get, get out of it. Um, but most people have an idea of what they would do if they weren't doing the current career that they're in. and so the number two would be assess your career options. So can you transition part-time? So if you're a physician, can you go PRN or is there another job that you would have to take? if you're in a different profession, can you freelance or consult, or can you start your own business? maybe there's something new you would like to, to explore completely out of your profession. So think about how you can earn income, and then a way that that income can offer you flexibility and fits into your desired lifestyle. Because if you want to travel half of the year, you're gonna need to find something that. Is going to allow you to do that, right? Um, so just keep that in mind and start to create, a. A plan, that would allow you to do that. And the plan of like, okay, what company would I work for? How would I start this company? What is it gonna take to get it up and running and start to produce income? All those things. Start to think about those, types of ideas and, and, and processes to get that going.'cause that may take two or three years, right? and then once you have that idea, create that plan. Plan out how you will scale back. This could mean reducing your hours gradually, so maybe you don't rip the bandaid off and go right down to 20 hours. If you're that physician or attorney, maybe you, start doing that, over a two year period. Right? So shifting to maybe a more project based role, in your business or. Again, starting, some sort of side business or a small business where you can control the hours that you work. So the key is to test the waters and see how it fill to work less while maintaining income and personal satisfaction. so again, all of this needs to have some sort of plan so that you can execute even if the plan is not a perfect plan. Create the plan and start to execute. Get some action going because you can always make adjustments along the way. Obviously the earlier into, this, that you start, the more time you're gonna have to make adjustments. The next thing is what people forget about a lot. number four would be consider healthcare. So this is one of the biggest or one of the most major challenges to a semi-retirement. Especially if you're leaving a job that provides benefits. so consider your healthcare. Look into healthcare options. So Affordable Care Act, spouse's coverage, looking at private insurance. So get with a health insurance agent. tell them everything that they need to know about your health. So what medicines you're taking, what doctors you see, uh, what hospitals you prefer or providers you prefer, so that they can look at a, A good health plan for you. And then they'll also know, what, programs there are based off your income. So maybe you can get a, a stipend, if you will, to reduce your costs for that healthcare as well, depending on what your income will end up being on paper, right? so make sure you have adequate coverage before making the leap. Obviously, you don't want to get into a situation where you have to go to the hospital, you get a surgery, and now you're out a hundred thousand dollars because of the surgery. and you didn't have the proper insurance to cover it, right? So that's the easiest way to kill your wealth and put you right back into a full-time job, if that's even possible, if you have some sort of health scare or event, right? and then lastly, it's kind of a more fun, one is to embrace the flexibility. So one of the most rewarding aspects of. Being able to retire early and have that semi-retirement is the freedom to design your life. So use this time to focus on, your wellbeing, your family, pursue new passions or hobbies, spend time, doing the things that you love, right? experiment. You may, get into the semi-retirement and actually hate the new job that you just started, right? And so you may have to pivot. So just always be ready to make. adjustments as needed. And like I said, the biggest deal is to create a plan, and start to, to do action on that plan and start to execute the plan, right? how am I going to create enough income, to support, the lifestyle that I want? whether that's through a part-time job, whether that's supplementing with investments, and then, taking care of. what do I actually want to do, right? So what, what do I want to do for work? Is it part-time work of doing the same thing I've been doing? Is it something completely different that's gonna be a little bit more fulfilling, but less pay? have all those things in mind. and like I said, this can give you a lot more fulfill fulfillment, through, through your life. So that wraps up today's episode. I hope you have gained a better understanding of the benefits of a semi-retirement. Again, this is what this podcast is about. Retire early. We don't wanna work, for decades and decades and not reap the benefits of it. so start creating that plan to retire early, even if it's a semi-retirement, that can be much more rewarding than, than fully calling it quits, right? it can give you freedom, it can give you flexibility, financial security, and balance in your life. semi-retirement isn't always giving about giving up work entirely. It's about crafting the lifestyle that allows you to enjoy life on your terms, and that's what we're all about here. So, if you like this podcast, go ahead and leave a five star review on your favorite podcasting app. And if you want to hear a specific topic or you have a specific question, you can always click the The button at the top of the show notes, it'll send me a text, of your question. You can send me a text of your question, or a topic that you want to hear. I'm always happy to see those and respond to those as well. so again, thanks for listening. I enjoy it and we will see you in the next one. This podcast is for educational purposes only. It is not meant to be financial. Or investment advice do not make decisions solely based off this podcast ple. Please seek professional help before making decisions about your own situation. Please keep Palm Valley wealth management in mind when making those considerations.