Only 21% of pre-retirees picture retirement as the day they stop working for good, according to an F&G Annuities & Life survey of 2,001 adults 50 and older with at least $100,000 to invest. Far more, 51%, plan to semi-retire.
A smaller paycheck can keep savings growing for years longer. It also runs into rules built for people who are either working or retired, with little room in between.
Social Security, Medicare, and the IRS each treat part-time workers differently than full-time workers, and the gaps show up in the first year of cutting back.
1. Line up health coverage before cutting hours
Most part-time jobs do not come with a health plan. In March 2026, just 23% of part-time workers in private industry had access to employer medical care, compared with 87% of full-time workers.
Before 65, that usually means pricing a marketplace plan or a spouse’s employer coverage before giving notice, not after.
At 65, the stakes rise. Medicare lets people delay Part B without penalty if they have group health coverage through their own or a spouse’s current job. A part-time job with no health plan does not count.
Miss the window, and Medicare adds a 10% penalty to the Part B premium for each full 12-month period you could have signed up but did not, and that surcharge generally lasts as long as you have Part B.
It’s worth putting the Medicare enrollment windows on a calendar the year before you turn 65.
2. Run the Social Security math on the new paycheck
Claiming benefits before full retirement age while still earning triggers the earnings test. For 2027, Social Security will withhold $1 for every $2 earned above $25,560. In the calendar year you reach full retirement age, the limit rises to $67,920 and the withholding drops to $1 for every $3, counting only earnings before that birthday month.
A part-time job paying $35,600 in 2027 would put someone $10,040 over the lower limit, enough to hold back about $5,020 in benefits.
That money is not lost. Social Security recalculates the benefit at full retirement age to credit the months it withheld, but the cash flow hit lands now, and it can stop checks for months at a time.
The flip side is more useful. Part-time income can pay the bills while you wait to claim. After full retirement age, each year of delay adds 8% to the benefit, up to age 70, and the earnings test no longer applies.
3. Let the paycheck cover expenses so savings can sit
Every month a part-time job pays the grocery and utility bills is a month you do not have to sell investments. That matters most early in retirement, when selling shares during a market drop locks in losses on money that will never get the chance to recover.
A paycheck also keeps the door open to new contributions. The IRS has no age limit on IRA contributions, as long as you have taxable compensation. For 2026, the cap is $7,500, or $8,600 for those 50 and older, or your earned income if that is lower. A modest job can fund a full year’s contribution.
4. Expect the tax bill to change shape
To determine how much of your benefit is taxable, the IRS adds half of your benefits to your other income, including wages. For a single filer, above $25,000; for a married couple filing jointly, above $32,000, part of the benefit becomes taxable. Above $34,000 or $44,000, up to 85% can be taxed.
A part-time job can push benefits that used to be tax-free into the taxable column, and no federal tax comes out of benefits unless you ask for it. Social Security will withhold federal tax from benefits if you file Form W-4V, which can head off a surprise bill in April.
5. Map the order before you cut back
Semi-retirement stacks decisions on top of each other: when to claim, which accounts to draw from first, whether lower-income years are a good time for Roth conversions and how long the part-time years will last.
The F&G survey found 52% of those considering or delaying retirement worry they will not have enough money, and 75% of all respondents would rather have predictable income even if it limits growth.
A fiduciary advisor can run those scenarios side by side. If you have $100,000 or more invested, SmartAsset can match you with up to three fiduciary advisors at no cost and with no obligation, and nearly all of them offer a free first appointment.
SmartAsset handles the matching and does not give advice itself. The questionnaire takes about 10 minutes, asks for a phone number near the end, and lets you control whether and when you respond to anyone.
Find a fiduciary advisor through SmartAsset.
Half retired, fully planned
The survey found 60% of pre-retirees see retirement as a gradual transition. A gradual transition still has hard dates in it: the month you turn 65, the year you reach full retirement age and the April tax deadline after your first part-time year. Put those three on the calendar before you tell your boss you want Fridays off.
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