Semi-retirement: helping clients balance flexibility with financial security

For individuals who aren’t ready to completely call it quits, semi-retirement may be the way to go. It can allow them to reduce their hours and enjoy greater flexibility until they reach full retirement.

If you have a client contemplating semi-retirement, the key is understanding what that actually means for them and their family.

“For some, it’s consulting a few days a week and for others it’s stepping back from a family business while a son or daughter takes on more of the day-to-day,” said Matt Kimmel, senior vice president and regional manager at Farmers and Merchants Trust Co.

Once you’re clear on a client’s goal, consider whether their savings could carry them if the part-time income ended sooner than expected. Also, determine what they’d give up by leaving a full-time role, such as an employment retirement match or group health coverage.

“Start with the gap, not the dream. What does their household spend, what will part-time work reliably bring in, and how many years do they have until they can claim Social Security?” said Alex Alston, lead advisor at Alston Wealth.

A successful plan should account for both the lifestyle benefits and financial trade-offs semi-retirement typically brings.

How to estimate income needs

In most cases, clients keep their money in several places, including retirement accounts, brokerage accounts, and sometimes trusts.

Part of your responsibility as an advisor is helping them decide which of those to draw on first and when, so they have steady income without spending down the wrong account too early.

“While someone is still earning through a part-time endeavor, it often makes sense to lean on that income and give the other accounts more time to grow,” Kimmel explained.

When it comes to Social Security timing, it deserves a careful look, as claiming before full retirement age while still working can temporarily reduce benefits.

In addition, it’s vital to ensure each account is titled correctly and has the right beneficiaries attached to it. With income coming from several sources, it can be easy for one of them to get overlooked.

Prepare for the costs of leaving full-time work

Healthcare coverage before Medicare is usually the number one risk for semi-retirees and should be priced out early.

“Losing employer coverage before Medicare at 65 can cost $700 to $1,500 a month per individual,” Alston explained.

Other common risks include missing out on the employer retirement match, a bad market in the first few years, and the part-time work ending sooner than planned.

“We often see plans built around the assumption that the client will continue working for a certain number of years, and then something changes,” Kimmel said.

It’s not uncommon for consulting work to slow down, health to decline, or an aging parent to require care. When this happens, the client may draw on their savings sooner than planned. Doing so in a down market could make it difficult for their portfolio to recover.

“Americans are living longer too, so you should plan for a retirement that could last thirty years or more,” added Kimmel.

Tips for a flexible financial plan

A semi-retirement plan is not set in stone. In fact, it should be revisited at least once a year as lifestyle and job changes can and almost always will occur.

“Keeping some cash available to cover a year or so of expenses helps, so a slow stretch of work or a market dip doesn’t force the client to sell investments at the wrong time,” Kimmel explained.

Alston suggests spending guardrails.

“With guardrails, the client spends a little less after a bad year, a little more after a good one,” Alston said.

Additionally, semi-retirement is also a good time to bring the whole family into the conversation.

“Many of our clients set up their trust years ago and haven’t looked at who they named as successor trustee since,” Kimmel said.

Sometimes that individual is no longer the right choice, and sometimes they don’t even know they were named.

“As a fifth-generation, family-owned trust company, we’ve seen how much smoother transitions go when the family understands the plan ahead of time,” Kimmel added.

© Entire contents copyright 2026 by InsuranceNewsNet.com Inc. All rights reserved. No part of this article may be reprinted without the expressed written consent from InsuranceNewsNet.com.