Moderation and Semi-Retirement

The FIRE Problem

FIRE (Financial Independence, Retire Early) has been a hot topic in the personal finance community for the last decade or so. Blogs and podcasts have thoroughly explored the topic through impressive stories of effort, self-control, and investing savvy.

Super high savings rates and strict monitoring of lifestyle inflation is certainly one path to early retirement. My personal concern, though, is that FIRE at a young age truly isn’t feasible for everyone.

But that doesn’t mean early retirement is off the table. In fact, I believe that most Americans can achieve a comfortable early retirement – even with a moderate income and savings rate and without tax income credit debts.

The Semi-Retirement Process

semi retirement

I’ve walked through several specific scenarios on my home site, Semi-Retire Plan, but here’s everything you need to know about semi-retirement in a nutshell.

Step 1: Work full-time and maintain a moderate retirement savings rate

This initial step looks similar to a traditional career path. And to “move the needle” on early semi-retirement, you don’t need an astronomical savings rate of 50% or more like many FIRE advocates describe.

Even a moderate savings rate of 20-30% can set you up for a comfortable early retirement in the future.

The main ideas here are to control your debt and start investing intentionally in tax-advantaged retirement accounts.

Step 2: Semi-retire from full-time work

Depending on your retirement expenditure plans, portfolio, and investment strategy, you can leave your full-time job much earlier than “traditional” retirees — potentially in your 40s or 50s.

The key to this equation is that you’ll still be working part-time. But now, instead of possibly burning out at a full-time job that you may not enjoy, you can do work you love and still generate some income.

This income can allow you to protect your existing investments, or even continue investing, while you prepare for step 3.

Read Also: FIRE Movement: The Hard Truth About How To Retire Early

Step 3: Full retirement

Eventually, you may not be able to work part-time – or you may decide that you no longer want to.

Step 3 can begin at traditional retirement age (in your 60s or 70s), or even at an earlier age!

The U.S. tax code system does have workarounds for accessing your retirement savings early while avoiding penalties.

Here are the most valuable advantages of a semi-retirement strategy:

  • Feasibility

With some thought and planning, semi-retirement is accessible and do-able for millions of people that have never before considered early retirement as an option.

My major concern with FIRE, and one of my main focuses as a blogger, is that it can be overwhelming or intimidating. Personally, I never expect to earn six divs and I do want to have children. So how could I ever expect to save 50% of my income or more?

I have found an immense amount of peace and motivation in my own life from the semi-retirement approach.

  • Flexibility

Another huge advantage of semi-retirement is that it keeps you in control. As your circumstances change, so can your Step 2 work life.

In a worst-case scenario, you can always increase your work hours.

Plus, you gain flexibility with your time and energy.

While working only part-time hours, you have incredible opportunities to spend more time travelling or with people or interests that you care about.

  • Fulfillment

To be frank, most people I know (myself included!) don’t truly enjoy our full-time jobs. We can give it nicknames (“the old 9 to 5!”) or tell ourselves that we’re “living the dream” — but the truth is that it’s often not something we’re really enjoying.

More financially flexible, part-time work creates a chance to spend time doing something you’re passionate about. Many hobbies or interests can be part-time work opportunities. I’ve outlined nearly 50 such part-time work examples in a previous post, but here are just a few: music teacher, freelance writer, consultant, or non-profit worker.

I want to encourage you that early retirement doesn’t have to be extreme or inaccessible.

Regardless of your current age, a semi-retirement strategy can help unlock a feasible, earlier retirement for you and your family.

Sources Used in Research for the Article:

  1. Types of Retirement, Office of Personnel Management,
  2. Social Security Benefits, Social Security Administration,
  3. Federal Employee Retirement System, U.S. Department of Homeland Security