New Retirement Trend? The Traditional Approach May Not Be For You

The Traditional Retirement Approach May Not Fit Everyone. Essentially, retirement doesn't have to be "all-or-nothing"

When most people think about retirement, they picture a hard stop. One day you're working full-time, the next you're not. However, if this all-or-nothing approach feels abrupt or unnatural to you, you're not alone. Many are now exploring a "phased retirement" instead.

Phased retirement involves gradually transitioning from full-time work into the next phase of life. We see this especially often with our aerospace and defense clients, particularly those doing consulting work. For busy executives and engineers, going from a fast-paced lifestyle to having significantly more free time can be mentally challenging. There's only so much travel, golf, and TV watching one can do before feeling restless!

Of course, some retirees are perfectly content with having minimal obligations and priorities. But many of our clients want to stay mentally stimulated and prefer having work be "optional" - they can take on consulting projects with more flexible hours. At the same time, our health tends to decline as we age, so taking advantage of our physical prime in retirement during our 60s and 70s to stay active and travel is often advisable. Phased retirement allows for the right balance.

Beyond the mental and physical benefits, there are also significant financial perks to phased retirement. Continuing to work part-time means delaying portfolio withdrawals, potentially boosting Social Security benefits, and allowing more time for investments to grow. However, the advantages go beyond just money. Work provides a sense of purpose, social engagement, and daily structure - elements that are crucial for healthy aging. Phased retirement is about blending work and the rest of your life in a way that aligns with your evolving values and priorities.

To create your own phased retirement, consider these strategies:

1.??? Make a "stop doing" list. Identify the work tasks and commitments that drain your energy or take time away from what you enjoy most. Focus on paring down activities that don't align with your strengths and passions.

2.??? Balance work and life on your terms. With remote work more accessible, you may be able to reduce commutes and have more flexibility to focus on family, hobbies, and self-care.

3.??? Stop waiting to live your dreams. Incorporate travel, new experiences, and hobbies into your life now, rather than saving them all for full retirement.

Phased retirement is about designing a life that balances purpose, financial security, and joy. Whether you want to enter this next phase gradually or all at once, a solid financial plan is key to ensuring it will work for you. We typically recommend starting the retirement planning process 3-5 years before an expected retirement date.

Would you like some help creating one? Our team of seasoned Certified Financial Planners and Fiduciary Advisors are here to help. You can schedule a time using the link below:

https://www.clarkgroupam.com/schedule-a-call

For important disclosures, please visit: clarkgroupam.com/disclosure

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