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7 Reasons to Consider Phased Retirement

Joe Udo
Photo by: Getty Images
Financial advisors and accountants-
Stress. Stress. Stress. Most people don’t like dealing with their own retirement savings. So can you imagine handling thousands or millions of dollars for other people?

“There is so much responsibility for other people’s finances and no control of the market,” Legge says. “There is guilt involved, and when (clients) are losing money, they probably have people screaming at them with regularity.”

You may not be ready to retire completely, but who wouldn't want a few more hours each day to enjoy the nice summer weather instead of being stuck in the office updating TPS reports? If this sounds like you, you might be interested in phased retirement. This is when you reduce your hours at work or change careers to a less demanding part-time job.

The phased retirement concept is a great fit for many of us, and it is not nearly as difficult to achieve as early retirement. If you start saving early in your career, it might be possible to enter semi-retirement at 50, 45 or even 40 years old, especially if you are willing to make some lifestyle adjustments. Here are some great reasons to consider a phased retirement:

Retirement can be difficult. Many people find the transition to full-time retirement very difficult. We are used to a structured schedule that a job gives us. When you suddenly have 8 to 10 hours of free time, it can be disorienting, and many people don't know what to do with themselves. The transition to an unstructured lifestyle is one of the most difficult challenges of early retirement. If you phase into retirement, then you'll have a chance to get used to a few extra hours per day.

Practice living on lower income. Some retirement experts estimate that you need to replace 80 percent of your income before you can retire. Unfortunately, this is not feasible for many workers. A phased retirement will help this transition in a couple of ways. Most people make less money when they transition to semi-retirement. This will give you a chance to practice living on a lower income. It will also make that 80 percent replacement income goal easier to reach. Yes, you make less money, but you are also spending less of your savings than you would if you retired full time.

Enjoy life while you are young. Taking a phased retirement means you'll have more time to enjoy life while you are young. This is especially true if you have kids. Many of us spend so much time working that our children are grown ups before we know it. Having more time to spend with your loved ones is one great reason to cut back on work. Also, putting off activities like traveling until you're fully retired at 65 isn't a good idea. It's more fun to travel when you're young and healthy.

Less stress. A full-time job is one of the biggest sources of stress in our daily lives. Reducing your working hours will lessen your stress and help you feel better. Stress is a silent killer, and the impact can become worse as we age.

A chance to focus on your health. Many working Americans don't have time for physical activities. With more free time, we can focus on our health. We can eat better, exercise more and really focus on getting healthier physically and mentally. Don't let your health deteriorate, because then you won't be able to enjoy retirement when you get there.

More time to find your calling. Many employees are dissatisfied with their jobs. If you are feeling this way, it might be time to take a look at phased retirement. Quitting your well-paying career is hard, but you don't want to wake up at 65 to regret not going after your dream. We only live once, and being miserable at work isn't the way to go through life.

You don't know how long you have. You might not make it to 65 for your full retirement. A phased retirement is a good compromise for many of us. We'll have more time to enjoy life while still working a little bit to help make ends meet. If you're frugal and find a good part-time gig, then you can enjoy life now instead of waiting until you're 65.

The great thing about a phased retirement is that it doesn't have to be permanent. You can try it out for a year or two, and if you don't like it or couldn't make ends meet, then you can always go back to work full time. I hope some of you can join me in phased retirement soon.

Joe Udo blogs at Retire By 40 where he writes about passive income, frugal living, retirement investing and the challenges of early retirement. He recently left his corporate job to be a stay at home dad and blogger and is having the time of his life.

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