We all want to retire, but have you considered how you would like to transition to retirement?

This week’s retirement headline article shares some interesting statistics on phased retirements: who is thinking about them, who is utilizing them, and what people think about them.

Listen in to learn the findings. Then stick around for our listener question surrounding stock positions, diversification, and taxes.

Outline of This Episode

  • [1:42] Exploring the idea of a phased retirement
  • [7:12] Can a phased retirement allow you to have your cake and eat it too?
  • [11:38] A book update
  • [13:10] Weighing risk vs tax consequences

Would you choose the retirement light switch or a dimmer switch?

The vast majority of retirees treat retirement as if it were a light switch: one day the work switch is turned on and when the time comes to retire, the work switch turns off. However, a growing number of people are exploring the idea of the retirement dimmer switch.

By gradually decreasing hours, working part-time, working from home, or switching careers, these retirees are extending their income-earning years while at the same time increasing their time freedom. Could a phased retirement be a way for you to have your cake and eat it too?

Most Americans would choose to gradually decrease their working hours

Even though 72% of Americans immediately stop working at retirement, studies show that more than half of Americans would prefer to gradually decrease their working hours to transition into retirement.

Along with different opinions on phased retirement, the study also noted variations in retirement timelines among generations. Generation Z anticipates retiring at the age of 55, which is about a decade earlier than baby boomers and Gen Xers and four years sooner than millennials.

Can a phased retirement allow you to have your cake and eat it too?

Having your cake and eating it too is a part of pre-retirement where you start doing the fun retirement stuff you planned for, but you do it while you are still working. A phased retirement is a wonderful opportunity to have your cake and eat it too. If you combine that with a written financial plan that confirms that you are financially in work-optional mode, you can really have some fun.

If you can cut your hours or reduce them over time, you’ll have the free time to do the exciting retirement stuff while maintaining an income. If you can negotiate the healthcare factor with your employer you will further benefit from the arrangement.

If you can effectively arrange a phased retirement you may be able to enjoy the freedom and benefits of retirement a decade earlier without having to pull from your retirement accounts. This extra time will allow your savings to grow while you experience many of the joys that retirement can bring.

Listen in to learn one thing you probably haven’t considered when it comes to phased retirement.

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