Guide to Working Less and Living More: 5 Key Steps to Semi-Retirement Bliss

For many, the traditional path of working full-time until retirement at age 65 is no longer the only option. More people are embracing semi-retirement, a phase where they reduce work hours, shift to flexible careers, or start passion projects while maintaining an income. This lifestyle allows for more time to travel, pursue hobbies, and spend time with loved ones while still ensuring financial stability.

Katie Schwartz, a former school speech pathologist, is one such example. She carefully planned for semi-retirement by securing a job with strong benefits, building savings, and transitioning into a flexible speech coaching business. Today, she enjoys the best of both worlds: meaningful work and the freedom to live life on her terms.

If you’re considering semi-retirement, here are five key steps to help you achieve financial security and personal fulfillment in this next phase of life.

1. Understand Your Long-Term Financial Needs

Semi-retirement can take many forms, such as reducing hours at your current job, starting a freelance career, or launching a side business. While this shift can create a better work-life balance, it’s essential to plan for your long-term financial needs.

When leaving full-time employment, you may lose benefits like employer contributions to retirement accounts, health insurance, and profit-sharing. Aditi Sharma, a vice president in Fidelity’s Financial Solutions, warns that quitting a full-time job could mean forfeiting “free money” in the form of employer-sponsored benefits. Understanding these financial trade-offs will help you make informed decisions about semi-retirement.

2. Prepare for Semi-Retirement While You Are Still Working Full-Time

A successful transition to semi-retirement requires proactive planning. Many semi-retirees take these steps before leaving full-time work:

• Maximize contributions to retirement accounts such as 401(k)s and health savings accounts (HSAs).
• Reduce debt and cut unnecessary expenses to lower financial burdens.
• Explore passive income sources like rental properties, dividend stocks, or online businesses.

Christina Gawlik, for example, downsized her lifestyle at 39, selling her home and investing the proceeds. She now semi-retires while managing her editorial business remotely. By starting these steps early, you can build a financial cushion that allows you to embrace semi-retirement with confidence.

3. Plan Out Your Future Income Sources

A well-planned income strategy is crucial for semi-retirement success. Whether you want to travel the world or simply spend more time gardening, you need a clear financial roadmap.

Ryan Viktorin, a financial consultant at Fidelity Investments, recommends evaluating your current income, savings, and projected expenses. Consider:

• How long you plan to work full-time before transitioning to semi-retirement.
• How much you will need to sustain your lifestyle during semi-retirement.
• When you plan to fully retire and start withdrawing from retirement accounts.

Working with a financial professional can help you stress-test different scenarios and ensure your investment mix aligns with your long-term goals.

4. Understand Your Current Spending and Adjust Accordingly

During semi-retirement, you may not have access to retirement account withdrawals without penalties, making it essential to budget wisely. Fidelity’s financial consultants often model different retirement scenarios to help individuals prepare.

For example, Mike, a hypothetical semi-retiree, planned to reduce work hours at age 55. His financial model showed that while he could sustain semi-retirement, he would need to adjust discretionary spending. Social Security benefits also decrease slightly for those who semi-retire early, further emphasizing the need for careful financial planning.

A good rule of thumb is to aim for a spending plan that accommodates a lower income while allowing your retirement savings to continue growing.

5. Learn About Your Health Care Options

One of the biggest challenges of semi-retirement is maintaining health coverage. Sharma advises exploring all available options before leaving an employer-sponsored plan:

• Spouse’s employer-provided health insurance (if available).
• COBRA continuation coverage, which extends employer health benefits for up to 18 months.
• Affordable Care Act (ACA) marketplace plans for independent coverage.
• Private insurance plans tailored to semi-retirees.

If staying with your employer in a part-time role, check if they offer phased retirement plans that include health benefits. Some semi-retirees also take on light, enjoyable jobs—such as working at a bookstore or garden shop—solely for the health benefits they provide.

6. Define Your “Why” for Semi-Retirement

Beyond finances, it’s important to understand the purpose behind your semi-retirement decision. Christina Gawlik emphasizes the need for self-reflection: “Understand what you are retiring to, not from.”

For many, semi-retirement is about freedom—whether that means traveling, pursuing a passion project, or spending more time with family. Gawlik’s life experiences, including losing loved ones at various ages, reinforced her belief in making the most of life while she can.

By clearly defining your “why,” you can create a semi-retirement plan that aligns with your values and aspirations.

Final Thoughts: Embracing Semi-Retirement Bliss

Semi-retirement isn’t just a financial decision—it’s a lifestyle shift that requires planning, flexibility, and purpose. By taking proactive steps, understanding your financial needs, and exploring various income and health care options, you can create a fulfilling semi-retirement that allows you to work less and live more.

Whether your goal is to travel the world, spend more time on hobbies, or enjoy a slower pace of life, semi-retirement can provide the perfect balance. Start planning today to make your dream lifestyle a reality!