semi-retirement: going part time

[mrfeh]

Hi folks.

Instead of jumping head first into retirement, I'm gonna cut back to 2 days per week in a couple months. When that happens, I'll lose most of the benefits I receive now from my employer.

Regarding unused vacation - is there any advantage to using it for the last X days of full time employment vs having the company hand me a check for unused time?

For anybody else that cut back to part time - any advice for the transition?

Thanks!

 

[fh2000]

Regarding unused vacation - is there any advantage to using it for the last X days of full time employment vs having the company hand me a check for unused time?

Your situation might be different. To me, and DW, we plan to use up all of our vacation time before we quit. That means we will putt off our planned ER dates by just few weeks or a couple of months. The reason is, we earn 7-8 hours of vacation time for each pay period. So, while we take a 2 week vacation, for example, we still earn a little extra vacation time.

 

[pb4uski]

If your part time works like mine did I would not use it before going on part-time as you can get more days off after you are part time. For example, let's say when I was changing from full-time to part-time that I had 20 days (160 hours) of vacation time available. After I was 50% time, I could take up to 40 days of vacation since each day I took would only use 4 hours.

In my case, I stopped working just before Christmas and took vacation from then and resigned effective March 1st. I reset my 401k contributions to 100% so I had no earnings from work for that year but I got a minor benefit in that I had employer subsidized health insurance for January-March, the Christmas and New Year holidays, vacation accruals for January and February, etc.

However, where I worked there were no benefits below 50% (essentially hourly wage) so I'm not sure how it would work in your 2 day (40%) situation.

 

[Sunset]

Your income for 2016 will drop a lot by being PT, so the tax on the vacation days will also drop, meaning you get to keep more of it.
So its worth more as cash than before.

Since you will have 5 days per week off, perhaps the draw of having a vacation will seem smaller.

 

[Sunset]

If you lose most benefits, are you getting a pay per hour bump up ?
Or are you simply now going to be working for less (money + benefits) than when you were FT ?

Did you run fireCalc to be sure you have enough $$ , as I'm wondering why the dipping in the toe type of action ?

 

[Throwdownmyaceinthehole]

I'm 3 years into part time, I thought it would be 3 months. I've now got replacement fully trained and this is the first week with no work for me. It's been great as I've been able to work from home as needed. Only downsides have been that I still spent huge amounts of brain time thinking about work. Still kept me up at night and I still had some office politics to deal with. And the travel which I have come to despise. But it's been a great glide path out the door. I've cancelled healthcare and turned in my phone. I've still got my computer and company credit card, and I've got about 30 hours of vacation. They have been laying off some folks, I don't see any reason to keep on keeping on. I may just use the vacation and see if they contact me, they've been pretty hands off, my retirement may just be to stop turning in time sheets.

 

[DrRoy]

I would think that if you use the vacation it would extend your full benefits for a bit. Otherwise I think it is a wash.

 

[scrabbler1]

After working full-time for 16 years, I worked part-time for 7 years (2001-2008). Most of those years I worked 20 hours per week (~3 days or equivalent) before reducing that to 12 hours per week in 2007.


I gave up some of my benefits when I worked 20 hours per week then gave up nearly all the rest that remained when I went to 12 hours per week in 2007. PTO (paid time off) time was reduced in 2001 but because that was earned at the start of the year (the company didn't switch to accrued time until a few years later) I had a lot of it in 2001. I used it on an hourly basis and earned it in 2002 and beyond also on an hourly basis (part-time hours), mainly because I became an hourly employee instead of a straight-salaried one.


When I switched to 12 hours per week, I no longer accrued any PTO time and had actually overused my accrued time by one day (which they waived). But, strangely, I turned out to be wrong when I received a nice check for unused PTO time when I left the company in 2008.


One major thing which happened when I switched from 20 hours a week to 12 hours a week was that I became ineligible for the group health plan. I was able to go on COBRA for 18 months but had to make sure to get the paperwork done. I happened to make that switch at the start of a month so I retained group health coverage for the entire month, a pleasant surprise. Many others in this forum have mentioned this little perk.

 

[MasterBlaster]

Regarding unused vacation - is there any advantage to using it for the last X days of full time employment vs having the company hand me a check for unused time?

If you quit after your vacation is used up you'll get whatever benefits you have coming (paid medical etc). If you just get the check no benefits.

 

[Ready]

I have been working part time for three years now. I go into the office one day per week and do the rest of my work from home via phone and computer. It averages a couple hours a day, but I get to do most of it when it's convenient for me. I like having the income stream, and I like having something to keep my mind from turning to mush.

Hopefully it will continue on for years and I will continue to enjoy it, but I know I can always quit if it is no longer enjoyable.

 

[pacergal]

From Jan. until Nov, I am using my saved up time off to essentially be working 1/2 time, but receive full time benefits until I retire in November. (plus time off still keeps accruing !)) It made no sense to get a pay out my last day that would be taxed and I could not roll it over into any tax advantaged account as they are maxed already.
I think it would make a difference if you are planning on retiring soon, or if this is a way to handle the next several years.

 

[Ronstar]

I cut back gradually - a yr at 4 days a week, a year at 3, a yr at 2 before I pulled the plug 2 years ago. I lost all benefits except 401k. It was a great transition into retirement.

I can't answer your question re: unused vacation.

My only advice is to make sure that you and your company have a plan in place for someone else to cover 60% of your full time work duties. You don't want the workload and pressure of full time work crammed into 2 days. My last 2 years were mostly spent training a few people to do my job. My last year was probably 50-50, 1 day of work and 1 day of trading per week.