Keep Working or Retire? Don't Decide, Do Both.

There are distinct advantages to continuing to work as long as you can - or at least as long as you can stand to. A dependable income is the most obvious, but the workplace can also offer a sense of self worth and a social aspect that should not be taken for granted. After decades of work, you can't help but to make a lot of personal and professional connections that become important to you. On the other hand, even if you've built a nice working life for yourself (or, especially if it all hasn't worked out just the way you envisioned it would), at some point it's not uncommon to start seriously looking for a way to do things your own way, when and how you would like to do them. That would be a distinct advantage in favor of retirement. It can be difficult to choose between the two. On one hand there is regular income, daily inclusion and socializing, and having a sense of purpose, and on the other hand there is total control over your daily activities but without the paycheck or automatic social aspects a work environment provides. You can certainly substitute different activities and ways of socializing for those found at work, but how well have you thought that through and prepared for it? What exactly is your ultimate goal? Many may find that "being free" is not exactly what they expected, and the euphoria will wear off after a few months. Making it more difficult is that most people just decide to flick the switch between working and retiring, ending their working phase and beginning their retirement at virtually the same time. One day you're going to work, and the next day you're not. That can be a tough, and sharp transition, even if you try to prepare for it. But it doesn't have to be just one or the other. Consider semi-retirement.

Different people will define this in different ways. It may mean cutting back on your current work hours, finding a different part time job, or even starting a small business (possibly from home) on your own. Whatever it means to you, it can be a viable alternative to making the finite decision between work as you know it, or full retirement. Think of it as having your cake, and eating it, too. Just understand that whatever your goal may be, planning for it in well thought out detail will be the key to having it turn into a rewarding experience. Consider the following:

• Do you have sufficient savings (not including a 401k/IRA) to sustain you during a transition?
• How will your budget change from the way it is now? Can you become debt free before the change? Can/should you downsize to help reduce immediate needs? How will your budget change over time (e.g. health care expenses, work related expenses, etc.)?
• How many years will you do this before you fully retire?
• Have you accounted for health insurance until you turn 65? (Remember, even at 65 Medicare is not free and does not automatically cover everything that a more comprehensive health plan does.)
• Will you earn an income while you collect Social Security? Be aware of the potential impact on your benefit!
• If you earn less money while semi-retired, how will that affect your Social Security benefit later on (your top 35 years of income help to determine your benefit)?
• Don't forget to account for taxes on any 401k/IRA withdrawals (after 59 1/2) in your long term budget.
• Honestly consider as many pros and cons as you can of such a decision - you may not be able to reverse it.

These are just some of the factors to consider before you jump at the chance to become semi-retired, but don't let them deter you in any way.  A job worth doing is worth doing well, and the better prepared you are the more control you will have over the outcome. Reach for your goals, just make sure that your eyes are wide open and you are as well informed as possible. Also, remember that having a purpose and the passion to pursue it are often the real drivers behind being content. If you are going to remain working to any degree, make sure that you are engaged and interested in what you will be doing. That will go a long way to ensuring that you will always be happy with your decision.

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