How to Plan for Part-Time Retirement, Ep # 243

If you are looking to ease into retirement by transitioning into a part-time role first, you won’t want to miss this episode of Retirement Starts Today. In the retirement headlines segment, we’ll explore an article by Anne Tergesen at the Wall Street Journal which outlines topics to consider when phasing out your retirement before retiring fully.

Make sure to stick around for the listener questions segment to hear a question from Scott about how to evaluate COLA options on a pension. Press play to start planning your amazing retirement.

Many who are on the cusp of retirement can have their cake and eat it too. Click To Tweet

Outline of This Episode

[1:32] Talk to your employer about how to work fewer hours
[3:12] Plan your income
[6:34] Social Security considerations
[11:51] To take the COLA or non-COLA option on a pension

The work at home revolution has opened the doors for part-time retirement

The past two years have brought about a revolution in the way we work. This cultural shift means that many who are on the cusp of retirement can have their cake and eat it too. You can both work and enjoy retirement at the same time thanks to virtual work and flexible schedules. The combinations and possibilities of work options are endless. If you have been reconsidering your retirement possibilities to include part-time work, you’ll want to make sure that you are asking the right questions of your employer so that you aren’t leaving money on the table.

In the article, How to Plan for Part-Time Retirement, Anne Tergesen explores various questions that are important to establishing expectations for part-time work.

You can work and enjoy retirement at the same time thanks to virtual work and flexible schedules. Click To Tweet

Discuss a potential shift in benefits first

Choosing to work fewer hours for your employer could mean a loss in benefits. Before you decide to cut down to part-time you need to have a strong understanding of what kind of responsibilities and benefits to expect from your employer. First, discuss the arrangement with your employer. Consider these questions:

Will they shift responsibilities to other employees? If so, who?
Will you take on a completely different part-time role in the company?
Will your employer continue to provide health insurance if you are only working part-time?
Can you ask your company to purchase an Affordable Care Act insurance plan for you if they do not provide it for part-time workers?

Before you decide to cut down to part-time you need to have a strong understanding of what kind of responsibilities and benefits to expect from your employer. Click To Tweet

Plan your income

If you choose to cut down to part-time hours you’ll need to plan how you will support yourself if your part-time income doesn’t fully cover your expenses. You’ll want to know if your employer allows employees who are 59½ or older to tap into their 401K plans.

Next, you should learn if you remain eligible to continue contributing to your retirement account as a part-time employee. Will you need to tap into your pension as a way to supplement phased-retirement?

You’ll also need to understand whether your retirement plan considers the years just prior to retirement or the highest three or five years of pay when calculating pension benefits. A part-time salary could possibly lower pension benefits if your employer calculates it by using the years just prior to retirement. Make sure to ask whether you will continue to accrue pension benefits while working part-time. Listen in to hear how part-time work could affect your Social Security benefits if you choose to take them early.