Navigating Partial Retirement: A New Approach to the Traditional Concept
Retirement: A Gradual Transition, Not a Finish Line
In American culture, retirement is often seen as a clear-cut transition from working full-time to not working at all. However, new research from JPMorgan reveals that for many Americans, retirement is a more nuanced and gradual process.
According to the study, 53% of U.S. households drawing retirement income are only partially retired. This means that they are still working some hours, or one spouse has retired while the other continues to work. This trend is becoming increasingly common, with more and more individuals opting for a phased approach to retirement.
Carla Adams, founder of Ametrine Wealth, notes that many clients are choosing to ease into retirement to enjoy more flexibility, freedom, and less stress. This shift in mindset is reflected in the numbers, with millions of Americans “unretiring” after leaving the workforce, particularly in the wake of the COVID-19 pandemic.
While financial reasons are a factor for many retirees who continue to work, a significant portion also cite social and emotional well-being as motivations. Thao Truong, a CFP at Morton Wealth, emphasizes the importance of having both financial security and a sense of purpose in retirement.
This partially retired lifestyle presents unique financial challenges, as retirees may see an increase in spending while earning less income. Jorie Johnson, founder of Financial Futures, highlights the need to adjust retirement projections to account for changes in income and savings contributions.
Navigating Social Security benefits can also be complex for partially retired individuals, as there are income thresholds that can impact benefit payments. Seeking expert advice is crucial to avoid potential pitfalls in managing retirement income.
Additionally, couples where one spouse is retired while the other continues to work are increasingly common. Ben Lex, a financial advisor, notes that this arrangement can have financial benefits, such as one spouse starting to receive Social Security benefits while the other continues to work for insurance or other benefits.
Overall, the trend towards partial retirement is seen as a positive development by many financial advisors. David Demming, founder of Demming Financial Services, sees it as a “hidden gem” that allows for more aggressive investment strategies and a shift towards working for enjoyment rather than solely for financial gain.
In conclusion, retirement is no longer a one-size-fits-all concept but a gradual transition that offers individuals the flexibility to tailor their retirement journey to their unique needs and goals. Whether working part-time, fully retired, or somewhere in between, the key is to plan carefully and seek professional guidance to ensure a secure and fulfilling retirement experience.
