So you’ve worked a long career at your job and put away plenty in your retirement fund…but is it enough? With prices steadily rising over time and your likely hope for a long life, it can be difficult to know when you’ve finally stored away enough nuts to go home for the winter.
If your retirement fund fades away before you do, you could be left with little or no income long after your working years, but after 40 or 50 years, the novelty of waking up early to sell your entire day to a company has worn off. Do you struggle through another 5 or 10 years just to be sure, or do you walk out that door for the final time with your long-term future uncertain? Faced with this decision, many seniors choose a partial retirement as a solution.
At first glance it offers the best of both worlds: less work with the ability to still keep the lights on at home. Nevertheless, there are a few things anyone considering a partial retirement must weigh out to determine whether it’s the right move. A partial retirement does allow you to gradually transition to retirement with shorter hours or less days reporting, but this is a double-edged sword. Check out Suncorp to find out how much super you need to retire.
The reduced number of hours may affect your eligibility for employer-sponsored healthcare offered to full time workers, and if you are left without coverage, you may need to pay out of pocket for medical expenses in your advancing age with less income.
The reduced hours could also affect your pension. Many employers calculate pension benefits using a combination of salary and years of service, and if you spend significant time on a partial retirement with a lower salary, it could drastically affect your final average salary, reducing your benefit. Many union jobs have hourly minimums that constitute a year of service, and if your time is cut in half, the time it will take to accrue tenure will double.
One way some employees avoid this is to quit their jobs entirely on a short term basis. With the approval of the employer, an employee can quit the job and begin collecting a full pension, returning to work in short order as a part-time consultant or contractor.
Partial retirement allows you to gradually slow down instead of slamming the brakes, but it can be more complex than it seems. It is important to know your employer’s policies about partial retirement or if they maintain a dedicated partial retirement program before considering it. After all, the only thing worse than having to delay retirement is having to unretire.
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