Retire Gradually: Work at a Million Dollar Part-time Job

While the rules of retirement spending may be shifting (, the notion of withdrawing approximately 4% of your portfolio annually is a good rule of thumb. It allows you to withdraw a portion of your savings to augment Social Security and any other pensions or income sources without depleting your nest egg too soon.

If you follow this approach your portfolio should live as long as you do.

So, for example, on a $1 million dollar portfolio you’d withdraw 4% or $40,000 annually to help cover your living expenses. [Note: This is, of course, just an example and each person’s situation is unique.]

But if you adopt a retire-by-degrees approach you may not need to tap your retirement savings at all for a period of time!

By earning $40,000 annually (to continue with our example) in retirement through consulting, part-time work or other sources, you’d be deriving the same income as if you were drawing from that $1 million.

And while you’d be continuing to earn financially and learn new skills, to socialize and have a purpose…you’re leaving your actual nest egg untouched for another year to grow! And as a bonus you’d be letting your Social Security payments grow by about 8% a year by not claiming them.

Like many other positive facets of retiring gradually, there are significant benefits from a financial perspective as well.

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