Whether you love your job or hate it, chances are you are looking forward to retirement. Many workers dream of the day they can finally leave the office behind and spend their days on the golf course instead, but an abrupt shift to retirement can be quite a shock. Let’s find out what the benefits are of phased retirement.
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If you are thinking about retirement, you might want to approach it more carefully, easing into your post-work world instead of tackling it all at once. Instead of hitting the brakes and calling it a career, let off the gas slowly and make the transition easier. When you make that choice, here are some big benefits you can receive.
A Smoother Transition for Your Employer
If you’ve been at your job for decades, your boss and company depend on your expertise and professionalism. Your sudden or even planned departure could significantly impact the firm.
Easing into retirement benefits your employer, which is advantageous if you hold company stock or enjoy your job and boss. A phased retirement allows you to mentor successors, train a replacement, and transition gracefully.
Higher Future Social Security Payments
One of the top advantages of working longer and easing into retirement is higher future Social Security payments. Boosting those future monthly checks offers significant benefits, even if you don’t plan to rely solely on Social Security.
For one, Social Security may be your only retirement income that keeps up with inflation. This is crucial, considering your retirement could span many decades.
Also, delaying Social Security benefits increases your payout. This is a compelling reason to consider staying on the job longer. A phased retirement, with this in mind, is worth considering.
The Chance to Test Drive Your Retirement
No matter how well you plan or how much you save, those numbers only reveal so much. You might run multiple retirement simulations and use countless online calculators, but truly knowing if you’re ready only comes from trying it out.
Opting for a phased retirement allows you to test drive your retirement. You can live off your investment income while still earning your regular paycheck. This safety net lets you test your retirement plans in the real world now, before your decisions become irreversible.
Padding Your Retirement Accounts
Every additional day you work lets you boost your retirement savings. A phased retirement is ideal for this. When you stop working, you lose the chance to contribute to an IRA or 401(k), affecting your taxes and future income.
By continuing to work and phasing into retirement, you can keep maximizing contributions to your 401(k), IRA, and other retirement plans. This strengthens your financial position and enhances your future financial stability. Many have successfully used this strategy to extend their savings, much to their future selves’ delight.
Reduce Your Future Withdrawals
Padding your retirement funds now is one big benefit of a phased retirement, but it is not the only one. Continuing to work a few more years, even on a part time basis, also reduces the amount of money you will have to pull from your savings, and that could make a huge difference in how long the money will last and how much income you can receive in the future.
Reducing your future withdrawals is one of the biggest benefits of a phased retirement, giving you a chance to save more and spend less. Whether you transition to retirement over a period of months or many years, you can enjoy the results of a phased retirement for the rest of your life.
It has often been said that retirement is the longest vacation of your life, and there is a lot of truth to that statement. That means that you should pay as much attention to this vacation as you do to that yearly trip to Disney World, and if you have not considered a phased plan before it may be time to think about it. Easing into retirement has a number of powerful benefits, including the ones outlined above.