Retirement was once seen as a one-size-fits-all concept. You simply reached the end of your working life, either by choice or necessity, and spent the rest of your life in the retirement phase.
That meant that the planning involved always tended to follow a fairly similar structure. It was about accumulating as large a nest egg during your working years as possible to enable you to live in comfort for the remainder of your time.
Changes in the way we live – from longer lifespans to less physically arduous work – have changed the nature of retirement as well. A person’s life is often not cleanly divided into the working stage and the retirement stage anymore.
There are now considered to be three different kinds of retirement, each of which necessitates a different plan. That is what we will look at in more
detail in this piece.
What are the three types of retirement?
- Full retirement
- Semi-retirement
- Temporary retirement
Now let us look at what each of these involves and how to plan for each of them.
Full retirement
This is what most people still think of when they hear the word ‘retirement’. Under the terms of a full retirement, your working life comes to a complete halt and there is an expectation that you will not be returning to work at any point in the future.
Because it keeps the lines between working life and retirement life completely separate, it is probably the easiest type to prepare for. The first step will be to find suitable retirement planning specialists in Chester or wherever you live, as it is best to start planning as soon as possible.
After all, a full retirement will require more extensive savings than the other types, because you will not have a regular income from any kind of work. Furthermore, people often have ambitious plans for a permanent retirement, such as moving to live abroad.
Planning for a life after work will involve discussing what you want from it with your retirement planner and working out a way of earning enough money to make it possible.
That usually means a mix of putting aside money – both through pensions and other forms of savings – but also making investments that can increase your retirement pot and continue to bring you an income once you retire. Any retirement planner that you hire should have extensive knowledge of different sorts of investments.
Semi-Retirement
The second type of retirement that is common in the modern era is a semi-retirement. This usually involves the individual giving up his or her full-time career or job but seeking out low-stress part-time employment to replace it.
As the name suggests, it is a mix of part-retirement and part-time working. The plan for a semi-retirement will thus be different from that of a permanent one.
In most cases, people will not need to build up savings to the same degree for a semi-retirement. That is because they will still have an income from their new work to help support them.
Among the strategies that a financial planner may suggest for semi-retirement is to minimise the money from any retirement savings account that you use during this semi-retired period. Instead, your part-time employment income can be used for the majority of day-to-day living expenses.
That will allow the savings to build so that you have a sizeable amount of money for when you do decide to fully retire. Intelligent investments, such as in property, can also provide an income to support you both during the semi-retirement period and when you become unable to work.
Temporary retirement
A temporary retirement generally involves someone taking a period of time away from work, often because they are thinking of changing their careers. A temporary retirement can last for anything from six months to a much longer period like five years and the planning is more complicated than for the other types.
Again, saving well in advance will almost certainly be necessary, especially if you intend to take a more extended break. Temporary retirement can also set back plans for the full retirement in the future, because you will have to use savings you have built up to help finance it.
That is why balancing savings with good investments will be a crucial part of planning for a temporary retirement. The more you can fall back on another source of income during your time away from work, the better it will be for you when you wish to stop working for good.
This and other issues will be ironed out once your retirement planner knows how long your temporary retirement will last and what you want to do during it.
These are the three forms of retirement that are available. Speak to a professional retirement planner for more detailed information.
