The Rise of Semi-Retirement

Workers are increasingly interested in a gradual transition into retirement.

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Switching directly from a full-time job that consumes most of your waking hours to retirement can be a very abrupt change. More than a third of working Americans say they would like to semi-retire, or cut back their hours, before retiring completely, according to a recent HSBC and Cicero Group survey. Workers have both personal and financial reasons for preferring to gradually transition into their retirement years.

[Read: 10 Reasons to Avoid Retirement.]

The HSBC survey found that 19 percent of respondents between ages 55 and 64 consider themselves to be semi-retired, and another 32 percent hope to move into semi-retirement before retiring full time. The idea of semi-retirement is also popular among younger people, with 43 percent of 25- to 34-year-olds and 41 percent of people between ages 35 and 44 hoping to semi-retire. Workers between ages 45 and 54 are slightly less inclined toward semi-retirement, with only 27 percent planning to do so.

Many people say they want to stay on the job simply because they like working (41 percent). A job often offers mental stimulation and a way to stay active (51 percent) in retirement. And a few people (19 percent) no longer need the income from a job, but stick around for other aspects of the workplace they enjoy. "Most people who have participated in the workplace over the last 30 years have found themselves in a position of importance or relevance, and it's very hard to walk away from being relevant," says Brian Schwartz, a vice president and financial advisor for HSBC Securities.

[See: The 10 Best Places to Launch a Retirement Career.]

A job often becomes a part of your identity that is difficult to give up. "If you have been in the workforce for 25-plus years, it's very likely that what you do is really connected to who you are," says Marci Alboher, vice president of Encore.org and author of "The Encore Career Handbook." "One of the things that's hard for people when they leave work is they often go through a period of identity confusion and loss around this. Making that change gradually might be able to reduce some of that, and you may be able to use some of your free time to do some experimenting to see what you want to do next." Many workers say gradually cutting back their hours will make the transition into retirement easier (39 percent), HSBC found.

Continuing to work at least part time is often a necessity for people who have retirement savings shortfalls. Many workers say they cannot afford to retire full time (29 percent) or need to overcome a lack of retirement income (20 percent). "The extra income, and benefits when applicable, can help alleviate money worries and give people greater financial flexibility during retirement," says Nancy Collamer, a career coach and author of "Second-Act Careers: 50+ Ways to Profit from Your Passions During Semi-Retirement." Working even part time can help you to withdraw less money from your savings, which will give your investments more time to grow.

Many workers say they need additional income to pay off mortgage or other debts (15 percent) that are increasingly being carried into the retirement years. A few people also encountered unexpected retirement costs, such as needing to financially support family members after traditional retirement age. Some employees are forced into semi-retirement due to cutbacks in hours or are forced to cut their own hours due to frail health or the physical demands of the job.

[See: Best Places to Retire for Longevity.]

Of course, just because workers are interested in semi-retirement doesn't mean employers are eager to retain older workers. HSBC found that only 22 percent of retirees were given the option to semi-retire, and only half of those retirees took it. "While some employers recognize the tremendous value, maturity and experience that older workers offer, many others see older workers as being outdated and too expensive," Collamer says. "Moving a valued long-time employee into a part time or consulting basis can be a very smart move. The organization holds onto their expertise while opening up the pipeline for younger employees."