My Dream of Semi-Retirement

Everyone knows that it takes a lot of money to retire and consequently people invest in various retirement accounts, hoping to have a large monetary value in their accounts. However, I don’t think many people think about how exactly those big retirement accounts are going to provide the income they are going to need.

Is retirement savings pretty much like having a big enough pile of gold that will slowly dwindle away, hopefully after you die. I don’t want to root for a short life so my money will last. To avoid this, I have to have enough passive income to replace my active income without selling the underlying assets. In this way, the income is perpetual; you can’t outlive it. When you pass, your assets become a legacy and can be passed to the next generation or given to a well worthy cause. 

I’m not even joking when I tell you I was planning for my retirement in high school. Consequently, at 26 years old, I have given a lot of thought to retirement. Retirement accounts with tax advantages have strings attached about the age you can start withdrawing without penalties and actually accumulating enough savings to quit working completely is devastatingly far away. Consequently, in addition to maxing out employer 401(k) matches and ROTH IRA accounts for my husband and me, I’ve been working on a plan to reach what I term “semi-retirement.” Semi-retirement is where someone requires very little active income because so much money is coming in from income-producing assets and therefore is free to follow more satisfying, but less lucrative pursuits without compromising their financial goals. Right now my dream of being a Zumba instructor, dance teacher, writer, blogger, inspirational speaker, adjunct professor, personal trainer and nutritionist would dash my dream of supporting three kids with a similar standard of living to what I experienced as a child. That relaxed life style is not worth the financial strain it would cause my husband and me. This doesn’t mean I’m giving up. Every day I am closer to semi-retirement!

Most retirement accounts involve buying stocks or mutual funds and until recently even me, Mrs. Retirement Obsessed, hadn’t really considered how those funds churn out income to actually pay bills. To me, it seems that people have to either sell shares as expenses come in (which seems risky because you never know where the market will be at) or redo their portfolio so that their funds are all invested in assets that create income.

With this new awareness I’m setting out to do three things:

1) Increase my passive income

2) Reduce expenses

The most obvious application is paying off debt. Additionally, forming habits that are conducive to a low-cost lifestyle habit is helpful as well. Something that I’ve never heard anyone else talk about it considering retirement saving an expensive because, well, it’s expensive! While semi-retirement is a major goal, it cannot replace actual retirement (or at least the ability to fully retire) because your health may not last and eventually you won’t have the energy for even enjoyable active income. So will I continue saving for retirement up until the day I do retire? Heck no! At a certain point, I’ll have planted enough seeds that I’ll reap a full harvest without any more planting. Many people don’t start saving until their 30’s. Well, I’ve invested in my 20’s, so even if I don’t save for retirement in my 50’s, I’ll come out ahead because of the time value of money. 

3) Increase my qualifications and experience to make a transition to my dream job(s) more plausible.

I used to focus only on the first and second steps, but it is so hopeful to start doing what I feel I am called to do, even though I can’t do it full time for now.

Has anyone else thought about this semi-retirement concept? Do you have a goal to be done with saving for your retirement before you actually retire? Leave a comment! Thanks for reading.