Advice matters
The benefits of a phased retirement

Retirement – it doesn’t have to be an all-or-nothing sort of thing. In fact, in certain circumstances, a staged transition (where you retire in steps) can be really beneficial.

Here are a few things to think about.

Money matters

Easing into retirement allows you to earn an income for longer, which might be your quality-of-living superpower…

If you are earning an income from working as well as receiving the pension for a while, you have the opportunity to invest and save more, and for longer. You can supercharge your retirement nest egg with more income, while at the same time reducing the number of years that you’re expecting it to fund – a win-win situation.

It might also be appropriate to use the additional income to reduce any debt you have hanging around, eliminating a potential stress point in your next phase of life.

While your KiwiSaver funds will become available to you at 65, there is no obligation to tap into them until you’re ready. Leaving the money invested to grow a bit more could be a great idea. It’s up to you whether you continue to contribute.

An easier adjustment

You might be counting down the days until you clock off for the last time. But the reality of no longer working can be a bigger adjustment than many people expect.

Opting to gradually dial down your hours at work instead – perhaps going part-time, contracting or consulting for a period – can be a smoother process for everyone involved.

Your employer benefits because they do not lose your skills overnight, plus you could help upskill whoever will eventually take over your role. And if you own your own business, it can be very helpful as part of a staged succession plan.

You also get time to build your ideal retirement. Instead of suddenly needing to fill whole weeks’ worth of hours, which some people can find daunting, you can start slowly enjoying your spare time.

In a nutshell, a phased process might give you the benefit of a better work-life balance, without the commitment of full retirement straight away.

Make tweaks as you go

A slower retirement process also allows you to adjust your plan as you work through it. You may find that how you spend your time is different from what you expected, and requires a different approach.

It can help you make the adjustment socially, too, and give you time to make new connections or reconnect with people you want to spend time with, in your post-work life.

More and more people are working past 65, and there’s no reason to rush into a retirement decision if you don’t want to. It may be useful to take some time and seek personalised financial advice about your situation and the options available to you.

Like to talk?

Getting ready to retire can be an exciting time. If you’re starting to think about how you’ll make the transition, and what you need to do to make the process as smooth as possible, get in touch with us. We can help you to work out how to set yourself up for a great post-work financial life.

Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current developments or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.