What Is Semi-Retirement and How Do You Do It?

The traditional idea of retirement as a complete break from work has evolved to include semi-retirement—a phase where individuals scale back their hours rather than stop working entirely. Many choose to stay on with their current employer in a reduced role or take on part-time work elsewhere. This approach can offer extra income, a sense of purpose, and potential benefits for mental and physical well-being. It may also bring challenges, especially when it comes to maintaining health insurance.

Do you have questions about your financial plan for retirement? Speak with a financial advisor today.

What Does Semi-Retired Mean?

Semi-retirement refers to the stage when a person leaves their full-time career and transitions to working fewer hours, often in a role or pursuit they find more enjoyable or fulfilling. It differs from continuing to work a standard full-time schedule past retirement age, as it typically involves a deliberate shift toward reduced hours and greater flexibility.

Semi-retirement was long discouraged by federal policy that reduced Social Security benefits when recipients earned money from working. However, changes to the earnings limit rule meant that after reaching full retirement age recipients could earn any amount of income from working without reducing their benefits. This change has made semi-retirement a more appealing option for many.

Transamerica’s “Retirement in the USA: The Outlook of the Workforce” report published in 2025 found that more than half (53%) of workers say they plan to work part-time in retirement. Meanwhile, nearly a fifth of self-employed workers (17%) expect their business earnings to be their primary source of retirement income, the same report found.

Types of Semi-Retirement

Semi-retirement can come in a variety of forms, including working fewer hours for the same employer, taking a new part-time job or starting a business.

Each semi-retirement option offers benefits and drawbacks. Working fewer hours, remotely or with a more flexible schedule may allow a person to earn a higher hourly wage than they could at a new job. However, few employers offer formal semi-retirement options—just 21%, according to a 2022 Express Employment Professionals survey.

A part-time or seasonal job can give flexibility and the opportunity to learn a new skill or pursue a personal interest in semi-retirement. Part-time work, however, often pays less and may not include benefits.

Starting a business in semi-retirement can be gratifying, but hours may be long and it may be difficult to get a new company off the ground without needing to borrow money or assume financial risk. Consulting can be another way to go, with the opportunity to earn a higher hourly rate without having to invest in a startup.

Benefits of Semi-Retirement

SmartAsset: What Is Semi-Retirement and How Do You Do It?

Earning more income is one of the largest benefits of semi-retirement. People preparing to retire without a pension or sizable personal savings may be uncertain whether Social Security benefits will be adequate to maintain an acceptable lifestyle. Semi-retirement can provide helpful additional income to cover living expenses.

Retirees who have a pension and personal savings can use semi-retirement to delay taking Social Security benefits, which can result in a higher monthly benefit.

Working after retirement also supplies people with social engagement that could be lacking if they stopped working completely. Staying active through work may support better cognitive and physical health than full-time leisure.

Challenges of Semi-Retirement

For people who retire before they qualify for Social Security or pensions, taking semi-retirement can mean having significantly less income. This presents one of the biggest challenges to semi-retirement for many workers.

Health insurance during semi-retirement is also a likely issue. Someone who received health insurance through an employer may lose that benefit by switching to part-time employment, either at the same company or a new one. If the person isn’t old enough to qualify for Medicare at age 65, he or she will likely have to pay for COBRA benefits or coverage purchased through the Affordable Care Act’s Health Insurance Marketplace or on the private market.

Bottom Line

Semi-retirement involves working fewer hours, working remotely or with a more flexible schedule during a period of transition to full retirement. Semi-retirement can provide supplemental income, satisfaction and engagement while also offering more free time than a full-time schedule. Key challenges include securing health coverage and finding employers open to reduced-hour arrangements.

Tips for Retirement Planning

If you’re considering semi-retirement, you may want to talk it over with a financial advisor. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Social Security remains the most important retirement benefit for most people. In 2025, if you wait until age 70 to begin taking Social Security, the maximum benefit amount is $5,108 per month or $61,296 a year, according to the Social Security Administration. You can increase your maximum benefit by earning more while working.