Does a “Soft Retirement” Make Sense for You?

One of the most important things to remember as you reach retirement age is that it looks different for everyone. This doesn’t just mean the age that you leave the workforce or what life looks like after you do, either. It also applies to the path you take on the road to retirement.

For a lot of people, that means a “soft retirement.” Sometimes called a “phased retirement” or a “stepped down” retirement, this is a situation where you gradually ease into retirement, rather than working full-time until a set date and then stopping completely, you slowly start reducing your work hours or responsibilities.

This can be a good option in a lot of cases. 

Why Choose a Soft Retirement?

Gradually slowing down your work instead of stopping “cold turkey” has its benefits. The first is financial. Saving for retirement is tough, especially if you start later in life. If you keep working for longer, even if you slowly start reducing your hours, you’ll give yourself more time to save. 

You can put off withdrawing from your retirement savings or taking retirement benefits, but you’ll also give yourself more time for your investments to grow, which can be a really big deal.

Health insurance is another reason why a lot of workers choose to stay at their jobs for longer, sometimes in reduced roles. This can often allow you to maintain your employee-sponsored health benefits until you’re able to qualify for Medicare.

In addition to financial and practical reasons, another benefit to a soft retirement is that it can be easier emotionally and psychologically. It can be tough to retire, especially when you’ve been with the same company for a long time. You have relationships there and these friendships often change once you officially leave the workforce. Staying with the company, even in a reduced role, will help you maintain your social connections for longer, improving your mental health.

It can also help fill your days with purpose and routine. One problem that many retirees face is the drastic change of lifestyle and how it affects them. It can be hard to go from going to the same place at the same time every day to having much less structure in your life. Leaving a job where you have a lot of responsibility can be difficult as well. It’s common for people to feel like their life has no purpose without work. A soft retirement can help ease this transition.

How to Retire Gradually

There are a few different ways to retire slowly. One of the most common is to gradually reduce your hours. This might mean working half-days or going to work three days a week instead of five. Talk to your company and see if you can work out an arrangement that sees you reduce your hours slowly over time.

In some cases, this can be in conjunction with job sharing or another change in your job. If you will only be working part-time, for example, you might start to share your job with someone else. This could be the person who will eventually fill the role when you officially retire or someone else in the office.

Speaking of adjusting your work responsibilities, this could also be an opportunity to switch roles for one that is less demanding or that requires less time each day. Some people shift into a consultant or specialist role, for example. This can mean only being a part of certain projects or being called in as necessary for certain responsibilities,

What to Watch for in a Phased Retirement

While there are a lot of benefits to a soft retirement, there are also a few things you should look out for. The first is how this will affect your income and your benefits. Of course, you likely expect a lower salary if you are working less, but you should also consider how this will affect your pension contributions, your paid leave options, and your health insurance.

There’s also a good chance that some of your work relationships could still change if you’re working part-time. While you’ll still be able to see your colleagues at work, the dynamics of your personal and professional relationships could be different. You may also feel less connected to the workplace, since you won’t be there as often. This could mean missing out on special occasions and company events, for example, if they happen on days when you’re not at work.

By taking time to fully understand how a soft retirement may look for you and understanding the overall situation from every angle, you’ll have more success and happiness in this transition.