Part-time - Potential Pitfalls?

[GalaxyBoy]

(Not sure where to post this, so here it goes into "other topics".)

Just had my interim performance review (which always makes me re-read this essay and these Dilbert comics), which gave me an opportunity to bring up the possibility of going part-time. I discussed this six months ago with the boss who is actually very receptive to the idea.

Megacorp's policy is quite generous, granting full benefits including healthcare for only 20 hours of work per week. Only PTO and holidays are pro-rated. In other words, I'd only get half the PTO hours I currently earn and would only be able to charge 4 hours per holiday regardless of whether it falls on a workday or not. Not a bad deal, in my opinion.

My BS bucket is overflowing, and I believe I've pretty much reached FI. However, I still feel I could use some "cushion" in my financial plan. FireCalc says I can go (assuming social security benefits will be available as under current law); my gut says waiting at least a year or two would be prudent. I'm 53 and DW is 58 and already FIRE'd.

My question is: Are there potential pitfalls with going part-time that I may be missing? I've already got a list started:

1. I'll have to put my foot down on hours per week worked as I expect our project managers wouldn't think twice about scheduling meetings on my days off.
2. I need to check on whether I'd get paid for hours over xx/week as a professional part-time employee.
3. I need to decide if I should just go for 24 hours/week vs. 20 since half a day at work pretty much kills the whole day anyway.
4. I need to decide if I want to keep contributing the full amount to the 401(k), which would amount to transferring funds from taxable accounts to tax-deferred accounts. (I'm leaning toward full contributions.) [Edit: I mean to say that I'd have to spend more money from the taxable savings accounts to make up for the portion of the paycheck going to the 401(k).]

Have I missed anything? I'd especially like to hear from those who've actually made this move. Sounds like a good transition to RE.

Thanks!!

 

[Meadbh]

Congratulations on getting a good reception to your idea. It may be exactly what the doctor ordered. In my experience, #1 is the biggest hazard. If you are too flexible about scheduling, your part time job will rapidly turn into a full time one, for less pay. It's OK to accommodate once in a while, but make sure you take a different day off to compensate. I have seen some part timers be very strict about this ("I'm sorry, my work days are Tuesday and Wednesday. I can only schedule meetings on those days") and people can adapt if they really want their expertise.

 

[someguy]

I agree with Meahbh. Could you go to a 1099 contractor instead? This provides more protection against #1. Worst case, you get paid for those extra hours. In my case, it gives me flexibility. If it's something I want to do, I don't say anything and just bill for the extra time. If it's something I don't want to do, I make a big point out of saying this is going to push into extra hours and therefore extra billing. This strategy has worked well for me. You could even write your consulting agreement such that you bill extra for "overtime" hours.

Of course I figured out what FICA/benefits/etc were worth and added those in to my hourly rate when converting from salary. It seems 20-40% is typical, depending on your overall pay rates. And you would need to determine HI.

By going 1099, you can also do an individual 401(k). This allows putting the standard $17.5k plus up to 20% of net income.

 

[Katsmeow]

I have been working part-time for 3 years. I have remained an employee the entire 3 years. However, I negotiated to be paid on a hourly rate during the 3 years.

In my case, I am not eligible for certain benefits (health insurance) due to the number of hours I am working but I am OK with that since I get my health insurance through DH's retiree insurance.

In my case, I work fewer hours than you plan to and I do some work from home. Some pitfalls are probably specific to my type of situation in my profession.

1. Initially the office manager planned to cut off my access to certain things such as the firm paying for my phone and so on. We quickly worked this out (I was able to keep all this stuff). In any event, I would suggest you get clarity on what things if any will not be available to you if you are working part-time.

2. I have found that things like raises and bonuses tend me to be fewer and more skimpy since I went part-time. I expected this in advance so I set my initial hourly rate to basically cover this (that is my initial hourly rate gave me a large enough raise that I didn't care that much what happened after that).

3. There has been some creep in the number of hours worked. I started out planning to work about 8 to 10 hours a week and within 2 years that was up to 15 hours. I'm now back down to about 12. Because I am paid hourly, this hasn't been a big issue but if I was paid a straight salary it would be a big issue. For exempt employees who would not get paid overtime, I think it is far, far, far preferable to be paid on an hourly rate. That way if you do have to work extra hours some week then at least you get paid for it. Note I am not suggesting being an independent contractor. I am suggesting that you be paid an hourly rate rather than a flat salary.

4. This next one may not apply to you. When I went part-time I went to more of a consultant/special project type role rather than what I was doing before. It was hard at times to get the timing to work. I started out coming to work each week on a specific day. Sometimes this was great. I would come in and would be asked what I thought about X or would be asked to talk to someone about Y and I would work all day doing these things and then would come home and be done with whatever I had worked on as I didn't have ongoing work on the projects. On the other hand, sometimes I would come in and the person who was supposed to be consulting with me/giving me work wouldn't be there or would be busy so I would twiddle my thumbs all day. Since I only got paid for work that I billed I wouldn't get paid for that. After a while, we alleviated that some by putting me on some ongoing projects where I would be working with others but wouldn't be the sole person in charge of something (which I did not want to do). That has worked reasonably well, in terms of me not having to worry about going to work with nothing to do. However, with ongoing projects I may get called at any time for my input or may get asked to do something. Last week for example I ended up working about 10 hours and went into the office one day but still did at least some work on almost every day. It isn't so much that I end up doing more hours of work than I want to do, but that I feel like I never get away from work since I end up doing something at least every day even though a lot of it is from home.

5. Because of the above, while I do have more free time I don't have as much free time as you might expect. Since I end up doing at least some work probably most days of the week and I never know when I will be called upon, it can be hard to really get my head out of work and to plan to do other things. I'll be out and about with my DH (he is retired) and then get a call and asked to review something. It doesn't take long but it is an interruption.

6. True vacation time doesn't come often. That is, I find myself more taking off Monday thru Wednesday and then doing work Thursday and Friday rather than taking off an entire week or two like I used to. For this year, while I've averaged about 50 hours of work each month I've actually done at least some work every week of the year so far.

7. Because I still go to the office and have to be there at a reasonable time I still have to keep myself in a typical work type schedule of sleep/waking. DH who is retired may occasionally take an afternoon nap and doesn't have to worry about if it will make it hard for him to get to sleep since he can sleep later the next morning. If I was tired in the afternoon I probably wouldn't do it since I know I can't sleep late the next morning if I'm going to the office.

I don't mean to make it sound like working part-time is bad. It has been very advantageous to me for the last 3 years and definitely helped smoothed some financial rough edges that occurred in connection with our sale of one house and purchase of another. And, many of my negatives probably won't be negatives for someone with a different type of job and a more regular part-time schedule.

 

[Chuckanut]

The biggest pitfall I see is working full-time or nearly full-time for a part time salary. Example: A meeting about project X is scheduled for 2:00 PM on the day you normally don't work or go home at noon. But, you seem to be able to control this.

I would much rather work 3days by 8hours than 5days by 4hours. After going through the process of getting up early, getting in to work clothes, commuting to an from the job, and then getting home and unwinding, it seems to make a lot more sense to pay these fixed daily costs in three days rather than five. My 2 cents.

 

[Live And Learn]

I worked Part Time for a couple of years before going back to Full Time in the same position. I worked 3 days a week (theoretically 24 hours), but it was really closer to 30 or 32 since I ended up working extra hours. While this sounds like "nearly full time" you have to compare to teh 50 - 60 hours I was working when I was full time.

Working 3 full days, rather than part days, gives you better control over the start and end time for the day.

The other downside is that your bonus will most like be pro-rated down and if you ever go back to full-time it won't be prorated back up (I know that one from experience !!).

ETA: The only reason I went back to full time was because I knew a severance opportunity was coming up and I wanted a years pay at my FT salary, rather than my PT salary !

 

[pb4uski]

I worked PT for many years before I ERd. Like the OP, virtually everything (salaries, bonuses, vacation, expected chargeable hours, 401k match, non-contributory DC plan contributions, etc.) was x% of FT as long as you were 50% or more. HI and HSA contributions by the employer was same as FT as long as you were 50% or more. I was 80% for a few years and 50% for another few years. I telecommuted and traveled some so commuting was not an issue in my case.

In my case, we billed for our time and did bi-monthly timesheets so it was easy to keep tabs on what I was working and how it compared to the % I was being paid for. I worked as needed by the practice and if I was a too far ahead they would just increase my pay % for a little while until it caught up or vice versa if I was running behind but we only really needed to adjust where I agreed to increase my hours for a short time to help out on a special project for a client who was insistent that I be involved.

While it worked out well, it was because I was pretty flexible. The problem became that I would too readily agree to firm/client demands so while I was working 50% I felt like I was on-call 100%. The nature of the work we did was demanding and time sensitive so I knew it wouldn't work to try to carve-out Mondays and Fridays as off days and work only Tu-Th so I could get more contiguous time off. A client with a pressing problem that needed my input wouldn't be willing to wait until Tuesday if the issue emerged on Thursday night - and I wouldn't blame them given what they were paying for our services. Since we couldn't figure out a way around the 100% on-call issue I decided to ER.

So far, best decision I ever made.

 

[RunningBum]

I did 20 hours for a couple of years before ER. I worried about #1, but I was able to keep that from happening for the most part. Considering that for a number of years I worked more like 50-60 hours, I wasn't too worried about a little bit of a creep. I tried to be reasonable about flexibility with meetings on my off time, but fortunately I didn't have many. If it didn't seem critical, I'd just say I was unavailable and give alternate times when I was available. Related to this, I probably worked harder and had less down time in my 20 hours than I did while full time, at least at first.

#2, I doubt you'd get paid for hours over 20 or 24.

Katsmeow #2 definitely applied to me. I was basically being evaluated on my productivity directly against full timers. I knew I was on my way out anyway so I didn't push it, but it definitely snowballed into one of those things where I began to perform at the level they evaluated me at, which was not very high, and it eventually led to me taking an exit package.

#3, I worked 4 hours a day, which just was better for me so I could ski in the mornings during winter, or golf afternoons in summer. If you have any kind of commute, I'd probably go for fewer days/week.

#4, I also chose to keep maxing out the 401K. I had plenty in taxable accounts to supplement what was left of my paycheck, and it could also leave you some room to do a Roth conversion if you have a separate tIRA.

The only other thing you may want to consider is jealousy from other co-workers. I never heard about it directly but indirectly I know some people were asking why they couldn't telecommute. I don't think anyone else really wanted 1/2 pay.

 

[Katsmeow]

The problem became that I would too readily agree to firm/client demands so while I was working 50% I felt like I was on-call 100%. The nature of the work we did was demanding and time sensitive so I knew it wouldn't work to try to carve-out Mondays and Fridays as off days and work only Tu-Th so I could get more contiguous time off.

I wanted to highlight this since it so clearly and succinctly expresses better part of what I was saying in my post. Obviously, whether this is an issue depends on the type of work. When DH worked the nature of his job was that almost all the time if he wasn't at the office he wasn't on-call. There were extremely rare exceptions.

On the other hand the nature of my work is just as stated above. I've been work 1/4 to 1/3 time for the last 3 years but I really am on call all the time - and not just during regular work hours either. While I have specific days that I go to the office, my actual work is by no means limited to those days. There has been no way to really resolve this for me either which is one reason I plan to retire fully.

 

[daylatedollarshort]

Going hourly is a great idea. I turned down a part time job offer from mega corp to come back after I quit because full time had been 60 hours, so I think to them part time meant only working 30 - 40 hours a week, not 20 hours which would really have been part time. I figured it would end up being 30 - 40 hours at half pay and without benefits or bonuses, so I turned it down and did something else.

 

[ER Eddie]

I appreciate you asking the question. I'm planning on going PT in about a year, rather than fully retire. There are a lot of advantages -- less work, 4 day weekends, additional income, decreased financial worry, no need to beat the pavement for PT work elsewhere, the intellectual and social stimulation, less stress, and a transitional phase into full retirement. The only disadvantage I see is financial. In my case, my pension builds slightly for each year I work FT, but it won't accumulate if I work PT. Also, I have to pay for most of my health insurance if I go PT. But I think the pluses still outweigh the minuses.

 

[GalaxyBoy]

Thanks for all the great replies. I don't think I want to deal with the hassles of going 1099 and I'm not sure they would go for it. Part of the deal is that I'm supposed to transition more into the role of mentor and quality control checker, which should take much of the pressures of running large projects off of me. My job involves some travel that I really would like to keep doing (in the last few years I've gone to Hawaii, Italy, Japan and the middle east) and the boss thinks I'd be a better choice for much of that until the young 'uns come up some more. That will have to be worked out in advance as these trips last a week or more at a time.

As far as raises and bonuses go - what's that? Raises haven't been very big for a while now, and it seems bonuses have all but disappeared except for senior vp's and above anyway. Besides, I don't plan on doing this for more than a few years anyway so it really wouldn't make much difference.

The jealously factor is something that crossed my mind but I didn't pay much attention to it. I expect it will rear its head when coworkers realize I can actually afford to do this at my age. I'm surrounded by those who appear to be the stereotypical I-can't-save-any-money types we read about in all those news articles. Frankly, my dear, I don't give a damn about most of my coworkers so that won't bother me - I just need to be aware of it and make sure it doesn't interfere with getting my j*b done.

Now, I need to figure out the schedule for this thing. Soon, I hope.

 

[youbet]

I appreciate you asking the question. I'm planning on going PT in about a year, rather than fully retire. There are a lot of advantages -- less work, 4 day weekends, additional income, decreased financial worry, no need to beat the pavement for PT work elsewhere, the intellectual and social stimulation, less stress, and a transitional phase into full retirement.

While those benefits sound good, you're leaving out one HUGE negative. You're still working! That would suck.

 

[48Fire]

I worked part time for several weeks as a trial. It was ok, but I still had a lot of work hanging over my head. It was hard to shut off completely. And in my case I can get 1/3 from pension, so getting to the 1/2 is very minor improvement financially.

I do have a coworker who part times, and he solves the 4 hour work day by taking PTO, especially summer. So he works two, 8 hour days and PTO for 4.

 

[Jackson D]

I cut down to 75% FTE for the last 2 years I worked and found that it accomplished several things.
1. I was able to get rid of some of the more stressful aspects of my job so I didn't mind coming to work as much. My B.S. bucket seemed to magically go down for awhile. Eventually it started overflowing again and I knew it was time to go.
2. I was able to test drive having additional time off to ease the transition to retirement after many years of working.
3. My income matched my retirement budget so I was confident that I could live on that amount.

Downside was that my 75% was really more like 90% timewise, not only in meetings scheduled during my time off but also in the fact that I still spent a lot of time thinking about work. My friend at work teased me that I was working 25% more for 25% less money because he still saw me there all the time it seemed. Financially it was not truly a great deal considering the amount of time I was still working. It really did help me get through the last couple of years because of the diminished stress and I don't regret it.

A couple of the things you mention do sound good in that you can travel nice places and perhaps you could extend the trips and turn them into some vacations. Also, the mentoring aspect of your job has the potential to be quite enjoyable. Passing along your years of experience and knowledge to the younger people could be one of the most rewarding parts of your career when all is said and done.

 

[ER Eddie]

While those benefits sound good, you're leaving out one HUGE negative. You're still working! That would suck.

Oh, I was thinking of advantages/disadvantages of part time vs. full time, not part time vs. no time.

I'd always planned on continuing to work part-time doing something, at least after a period of decompression. I've never really liked the idea of retirement without any work at all. I guess I should ask for a name change to "Semi-ER Eddie"

 

[rodi]

I've been a part-timer since the birth of my oldest, almost 13 years ago. Initially I was 24 hrs/week (3 days), then when I transfered west, I had to bump it up to 4 days a week.

The pitfalls of being pushed to work more hours are real - especially if you're doing partial days. For me - they know I do NOT come in on Fridays. If they schedule a meeting, they know I won't be showing up or calling in. It took a while for that to sink in.

There is still push to do things outside of the work hours. Specifically, in my case, conference calls with our team in Bangalore at 5am and 8:30pm... Oye. I did those for a few years but have recently negotiated off of them. I was ready to quit over these calls...

I am paid an 80% salary, earn PTO at an 80% rate, get paid for holidays that fall on my work schedule, etc.

Part time helped me balance work & income against home & family.

And because I'm part time - they don't send me on travel as much. Yay!

 

[jollystomper]

About a year ago one of my work colleagues took an offer to work 60% of the time for 70% of her pay, and retire by the end of the year. From my discussions with her she really has had to push to keep it to three days or 24 hours in a week. Her management chain and some of co-workers essentially ignore her schedule and make requests from her, she has to be proactive and push back on the requests. It seems doable but you from my observation if you tend to be a helpful person (as she is) one really needs to build a "heart of stone" (as she has learned) to keep others from taking advantage.