$Retirement Nerd

Does “Partial” Retirement make more sense?

Does “Partial” Retirement make more sense?

We have been putting our Emergency Fund through a “Stress Test” recently. We have had a number of issues with our house creep up now that we have lived here for almost 20 years. We had been hoping to start doing renovations that we have dreamed about for years, but we have practiced “delayed gratification“. Now that we are almost ready to start, we have to allocate money to mundane things like fixing the roof and the AC system.

If you’re not overprepared, you’re underprepared.

Robin Sharma

To pile on, we also have to pay our taxes before the extended May 17, 2021 deadline. We had taken maximum 2020 Cares Act withdrawals ($100K each or $200k total), but we had $20K withheld and already re-contributed one third ($60K) to our 401Ks to offset any tax hit for 2020. We will still owe some for 2020, and there are other expenses too: summer camps, summer programs, and of course, tuition.

This further emphasizes the importance of erring on the side of “too much” rather than “too little“. When my mother taught me about the power of compound interest and how saving a small amount could become a million dollars, I wondered how large my nest egg could grow if I saved more for as long as possible. The short answer is to save “as much as you can as soon as you can for as long as you can.” Unless you reach a net worth of 10 million or more, I think we will need as much buffer as possible.

I think it would be great to stop working completely in the next few years, but maybe it would be more prudent to enter a “partial retirement“. One option would be to keep working part-time at my current employer. If my wife is still willing to work full-time, we could transfer our health benefits to her and make the transition easier. It would also reduce the need to tap our tax sheltered accounts through the various methods we have considered:

Another option would be to try something new, get an entry level position in a new field. This is intriguing and if I loved it, it could invigorate my professional career. I’m thinking about this one, could provide a lot of benefits, but also potential stress.

My father and I have often talked about starting a business and embarking on a different venture. I definitely day dream about this sometimes, but like buying a rental property, I feel like we don’t have the disposition or “luck” to succeed at it. My Dad is also in his late 70s and still working because he can’t imagine not working, so I want him to lean toward more leisure time instead.

For now, we will continue to try to meet our aggressive saving budget while we manage expenses. We will keep working on the passive income, but also discuss the partial retirement ideas more fully. I know of people that I worked with who went the “partial” retirement route. I think it worked out ok for them. If you tried it, how did it go, would you do it differently?

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~$Retirement Nerd🤓

Disclaimer: I am not a financial planner and content on this site is meant to provide food for thought, not professional advice. I share my experiences to show what worked so far and what didn’t, YMMV. Please consult your financial advisor or tax professional as needed.

By $Retirement Nerd

$Retirement Nerd is in his late 40s and looking to retire in the next few years.

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