Whether you’ve been forced into a job search due a layoff or a RIF, or whether you’re just feeling the need to make a career change, you may have considered semi-retirement: retiring or withdrawing from employment or an occupation but continuing to work part-time or occasionally.
Unless you’re independently wealthy (if so, congrats!), if you are in your 50s, and too young to start drawing social security, withdrawing from your pension, or applying for Medicare, you’ll need to get creative. The two immediate concerns will be financial security, and a potentially major identity crisis.
In the weeks ahead, I’ll be addressing both of these issues separately and in more detail, but here’s an overview.
To prepare for a potential reduction in income, it is important to reduce monthly living expenses as much as possible.
Rent or Own?
Unless your home is paid-off and proving to be a very good long-term investment, consider moving into a rental situation. Costs of renting are all-inclusive, meaning that you are not responsible for property taxes, maintenance or home repairs. No, you won’t be able to deduct your mortgage interest from your income taxes but it’s likely that renting will still cost less overall with far fewer unexpected expenses to drain your savings.
Pay off EVERYTHING
Get rid of your credit card bills, the car payment and any other debt you possibly can. If you need to take a consolidation loan, do it. At least in a worst-case scenario, you’ll just have the one creditor to negotiate with.
Consider whether you even need to own a vehicle. Remember unexpected auto repairs are costly and can quickly deplete savings. Depending on where you live, you might be able to rely on public transport and ride-sharing services for daily transportation, and just rent a car when you need to travel long distances.
One exception: Student Loans. If you are unable to pay off your (or your children’s) student loans without completely depleting your savings, prepare to work with your lender to negotiate an income-based repayment plan as needed. If your income is very low, your required payment might be $0.00.
Scrutinize EVERY monthly payment
This applies to the utilities, TV and movie services, annual memberships – everything. Look through your bank statement for monthly and annual memberships you may have forgotten about. Make sure you still NEED them. If not, cancel and get rid of that bill.
Once you have your bills as low as possible, look at increasing income.
Have several months worth of bills in savings
Again, unless you’re independently wealthy, this is easier said than done – particularly if the timing of your career transition was unexpected. Potential sources of savings can include tax refunds (which may be higher than usual if income changes mid-year), banked PTO, any saving accounts, or a 401K cash-out (only as a last resort).
Look at income-based subsidies which may available after your income is reduced, such as health insurance subsidies, income-based repayment plans for student loans, and SNAP.
Low-hanging fruit jobs
Whatever your experience is, there are jobs that are readily available to most people simply because they’re not everyone’s cup-o-tea, and they don’t pay a living wage. However, if you’re willing to do them on an as-needed basis, they can be a good way to make ends meet while you’re deciding what you ultimately want to do for more reliable income.
Examples of low-hanging fruit jobs might be work-from-home customer service jobs, janitorial jobs cleaning schools or office buildings, and substitute teaching. You might also check out gig apps, like Fiverr, Clickworker, and MTurk.
Whether this transition into semi-retirement is planned or sudden, it’s still a BIG change, and requires mental prep. Because in our society, so much of “who we are” is connected to “what we do,” you’ll need to decide who you are now and what you do.
Perhaps you’ll want to choose a hobby to identify with (e.g. I’m an “antique trader” or an “artist” or a “mentor”). Maybe you’re just happy to identify as a “retiree,” and if so, that’s awesome. The important thing is to find a new way to describe yourself and what you do that makes you comfortable.
Whatever your new “shtick” is, get used to dealing with friends and family in a new way. Nearly everyone you come in contact with during this transition is going to either have some very well-intentioned advice for you, or a horror-story about something that could go wrong with your new plan. Learn to handle these discussions with a sense of humor and not to take them to heart. Consider telling your very close friends and family members that what you really need right now is encouragement and space to work through this in your own way.
Remember not to confuse “friends” with a “network.” Your friends will (hopefully) be around no matter what. You will need to work a little harder to maintain a professional network, and this is important because even if you want to apply for part-time or volunteer work, you will need these people to provide good references of your character and work ethic. These are also the people you will want to collaborate with regarding various ideas and opportunities for career transition, and maybe even an encore career if you decide you’re not ready for retirement after all.