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

Semi-retirement means reducing work hours instead of stopping entirely, typically as a deliberate bridge between full-time employment and full retirement. Most people do this by scaling back at a current job, shifting to part-time work or moving into consulting. The approach can supplement retirement income, maintain social engagement and ease the lifestyle adjustment. The main tradeoffs are reduced pay and, for those under 65, a gap in employer-sponsored health coverage before Medicare begins.

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

What Does Semi-Retirement Mean?

Semi-retirement is a transition period between full-time work and full retirement. Rather than stopping work altogether, a person continues earning income while reducing how much work occupies their time.

The timing varies from person to person. Some ease into semi-retirement before they start collecting Social Security or other retirement benefits, while others keep working after their benefits kick in. he distinction matters because of the retirement earnings test: If you earn income before full retirement age, your Social Security benefits can be reduced, but once you reach that age, your earnings no longer count against them.

Semi-retirement is becoming part of many workers’ retirement expectations. According to Transamerica’s 2026 “Employers, Workers, and the New World of Work” report, more than four in 10 workers ages 50 and older say they “envision transitioning into retirement by reducing their hours with more leisure time to enjoy life or working in a different capacity that is either less demanding and/or brings greater personal satisfaction.”

Types of Semi-Retirement

Semi-retirement can take several forms, from scaling back at a current job to pursuing an entirely new source of income. Each option comes with different tradeoffs for income, flexibility and financial risk.

Cutting back hours at your current job may sound appealing, but formal arrangements aren’t the norm. Only 39% of employers offer a phased retirement program, according to the same Transamerica Institute survey. Among those that don’t, the reasons cited most often are the company’s size (64%), a preference for handling requests case by case (24%) and limited employee interest (23%). ¹

For those drawn to self-employment, consulting can strike a middle ground. It offers some of the flexibility and earning potential of running a business without requiring the same upfront investment in a startup.

Pros and Cons of Semi-Retirement

Semi-retirement can provide extra income and flexibility, but it may also create financial and healthcare challenges.

Potential benefits include:

• Added income: Semi-retirement can help cover living expenses if Social Security, a pension or savings aren’t enough.
• More Social Security flexibility: Retirees with other income sources may be able to delay Social Security and qualify for a larger monthly benefit later.
• Social engagement: Working can provide regular interaction and a sense of connection.
• Continued activity: Staying mentally and physically active may support overall well-being.

Potential drawbacks include:

• Lower income: Leaving full-time work before Social Security or pension benefits begin can significantly reduce household income.
• Health insurance costs: Moving to part-time work may mean losing employer-sponsored coverage.
• Coverage gaps before Medicare: Those younger than 65 may need to use COBRA, an Affordable Care Act Marketplace plan or private insurance until they become eligible for Medicare.

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 2026, if you wait until age 70 to begin taking Social Security, the maximum benefit amount is $5,181 per month or $62,172 a year, according to the Social Security Administration. You can increase your maximum benefit by earning more while working.

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