What Is Semi Retirement? (Escape In Your 40s And 50s)

To be honest, I don’t like the term “escape the 9-to-5”. But it perfectly describes how learning about semi-retirement lets you work less in your 40s or 50s, enjoy family life more, and achieve financial freedom faster (all while raising small kids).

Imagine you stop working a traditional job in your 40s or 50s and start working on your terms while still enjoying a steady income. That’s the essence of semi-retirement. I promise, it’s worth considering, even if you like your job now, like I do (in the corporate world).

A semi-retired life is a flexible lifestyle. It allows you to reduce work hours, maintain a source of income, and transition into a more balanced life as a family without waiting until your 60s (when your kids are about to move out or have already moved out).

In this post, we’ll explore what exactly semi-retirement is and why it’s becoming a popular choice for those seeking early financial freedom.

What Exactly Is Semi Retirement?

Semi retirement means you retire from the work life you live now and transition to a more self-directed work life where you work on your terms. That can look like choosing part-time work and working fewer hours per week instead of a full-time job, switching to remote work, or working in a less stressful job and position.

Originally, the concept of semi-retirement comes from traditional retirement. There, you don’t go from working full-time to stopping work entirely from one day to another, but you transition smoothly by working a couple of years part-time before you fully retire and enter traditional retirement.

What Is Semi Financial Independence (Semi FI)?

Semi FI (Semi Financial Independence) or Semi FIRE (Financial Independence, Retire Early) combines the concept of semi-retirement with the concept of FIRE. I featured the differences in the blog post How Early Retirement Works vs Semi Retirement: Your Options. But for now, what does that combination mean?

With Semi FI, you accumulate a small nest egg in retirement savings early on in your life, like in your 20s, 30s, or 40s. That can be by having saved up €200.000–400.000+ in your stock market portfolio. So, during that time, you focus on saving and investing for passive income.

Then, you stop saving and investing for retirement because you‘ve already funded it. You let your portfolio compound in the background during the next decade, more or less, until you become financially independent. That means your portfolio generates enough passive income for you (e.g. through dividends) to pay for your living expenses. This allows you to fully retire earlier than the average, after that decade (of compound growth), like in your 50s or 60s.

Meanwhile, until you fully retire, you can enjoy the semi retired lifestyle. Let’s see what that looks like.

The Hack Of Semi FI / Semi Retirement

Most people pursuing Semi FI or semi-retirement have a high savings rate and investment rate of at least 30–40%. Some even get to a 50% savings rate or more, like we do. So, if we stop saving and investing for financial independence, we can afford to earn at least 30–50% less.

That gives us choices. The choice to pursue another career. The choice to work less and pursue further education in the “free” hours we have now. Or simply the choice to maximize family time, but without feeling that financial loss. If you have small kids at home, then Semi FI will allow you to do that.

The 3 Stages Of Semi FI / Semi Retirement

1. Full time work for 5-10 years
2. Part-time work for 5-10+ years: Semi FI
3. Stop working entirely: FI

Stage 1: Full time work for 5-10 years

(Both of) you need to work (close to) full-time for around 5–10 years so you can save and invest a big portion of your family’s income—for example, in the stock market. You do this with the goal of earning passive income from your investments one day, like through dividend payments. Your savings rate needs to be at least 30–40%, but typically, it’s 50–60+%. You do this until your portfolio reaches a certain point. More on that in the blog post Semi Retirement: How To Semi Retire In 5-10 Years.

Stage 2: Part-time work for 5-10+ years: Semi FI

Now, you start living a semi-retired lifestyle for 5–10+ years. You can switch to part-time work or a less stressful job position. You can afford to earn less because you don’t need to save and invest for retirement anymore. How long you stay in semi-retirement depends on how quickly your investment portfolio grows in the background to the point where the passive income it generates is enough to cover your living expenses, as mentioned above.

Stage 3: Stop working entirely: FI

Now you can stop working altogether because you have achieved FI—Financial Independence. You have self-funded your retirement savings account. So, you have the choice to take (early) retirement if you want to live off your passive income entirely. You can do so following the 4% rule and withdrawal strategy presented in the post How To Retire Early With Kids: Your Guide To The Fastest Way.

Semi FI / Semi Retirement: The No. 1 Goal, Benefit & Downside

People in the FIRE community who choose semi retirement over early retirement (like we do) have one main goal: taking the stress out of work life as soon as possible and striving to achieve a true work-life balance. They want more control over when they work and what they work on, rather than waiting until later. Most pursue their passion or just want to do something they find meaningful and fulfilling while still earning a decent income.

The biggest benefit of semi retirement or Semi FI is that it gives you the time freedom that financial independence offers—before you actually achieve it. So, even if you are not financially independent yet, you enjoy having more freedom of choice over your time without feeling restricted by job demands. Also, your job income helps cover your family’s medical needs and health insurance.

The biggest downside of semi retirement or Semi FI is that you won‘t be able to retire as early. If that doesn‘t feel like a sacrifice, but rather like pursuing something else, then Semi FI is for you.

Semi Retirement And Debt

Should I Become Debt-Free BEFORE I Semi Retire?

There are two most common approaches to that, coming from traditional retirement. One approach is that you first want to become debt-free as soon as possible before investing your money anywhere else. That makes the most sense if you have high interest-rate debt like 8–10+% in negative interest to pay. The other approach is to invest your money while making minimum payments, or as much as you need to, to become debt-free before entering traditional retirement. That makes sense if you have average interest rates for mortgages and student loans ranging between 2–7%.

But, there is an approach in between that we are big fans of: paying off debt aggressively while investing aggressively at the same time. We have run our numbers back and forth. This approach makes the most financial sense (as we are much wealthier in the end), BECAUSE we only have to pay low-interest debts like 0–3% negative interest rates.

Our Plan For Debt In Semi Retirement

We want to be debt-free before we semi retire. This is because, in semi retirement or Semi FI, we want to have as few bills to pay as possible. And debt shouldn’t be one of them. Therefore, we have €400.000 of debt to pay off before entering semi retirement, which is our mortgage (not including interest).

We already pay around €1.800 a month towards our mortgage. But that’s not enough to become debt free in the next 5-6 years more or less. We need to make additional payments. We plan to increase our debt payback in 2026 to €2.600, and in mid 2027 to approximately €5.000. Doing this we are getting close to being debt-free in 2031.

Resources To Calculate Your Semi Retirement

• MoneyFlamingo is an Australian blog providing free Semi FI calculators to run your numbers
• On our blog we offer a free Barista FIRE Calculator and a free Coast FIRE Calculator. Both are completely free so you can run your numbers directly online.
• If you want to further explore Barista FIRE, Coast FIRE or other Semi FI / FIRE strategies, you can read the blog post I’ve written about The 8 Types Of Financial Independence And Semi Retirement

Is Semi Retirement Right For You?

If you say YES to the following three questions, Semi Retirement or Semi FI might be just perfect for you:

• Do you want to stop working like crazy while raising (small) kids as soon as possible?
• Do you want to enjoy the time freedom and work-life balance that FI offers before achieving FI?
• Can you find part-time work you truly enjoy doing that also generates a modest income?

Semi FI depends on finding meaningful work you truly enjoy doing in semi-retirement that pays at least 10.000 per year (833 per month), more or less (eventually also covering healthcare). If you bring in 20.000 per year in earned income as a couple, that translates into earning 1.666 every month. But why specifically 20.000?

An earned income of 20.000 per year means you need to have 500.000 less in your investment portfolio!

That’s because you need 1.666 less in passive income every month (because that’s what you earn). In case you have no idea what I’m talking about, this is just the mathematical result of using the 4 % rule as a withdrawal strategy (i.e., you withdraw 4% per year from your portfolio) so you don’t run out of money in retirement.

If you need 500.000 less in retirement savings, you won’t have to put in as much effort on your FI journey to earn, save, and invest more money. Remember: It’s about YOUR retirement planning and YOUR lifestyle choices, now and in the future. So, you decide exactly what that should look like.

Why Semi FI Is Perfect For Europeans (And Everyone Else)

I believe Semi FI is perfect for Europeans like us – and everyone else – who struggle with the standard path to FIRE. This boils down to three main problems with European culture and traditional FIRE that you don’t have with Semi FI and semi retirement, where:

• You don’t need to hustle: Most Europeans have only one job, and for some, that is part-time work. This makes it difficult to save and invest thousands every month, which is usually required to achieve FIRE. With Semi FI, there is simply no need to make such an effort.
• You can rely on a strong social security system: Many receive state benefits for kids (around €255 per child in Germany until finishing education), among others. That can be additional income in semi retirement too.
• You can diversify your income streams: Living solely from your investments, like passive income from a stock market portfolio, is not something most can imagine. When you semi retire, you still earn an income compared to when you fully retire early.

When you walk away today with at least one new idea to improve your financial journey, I’d love to show you some more in the next post. Subscribe to our newsletter in the green footer below so you don’t miss any new release, freebie, or limited special deal we offer to all members who are part of the community.

Now, I’d love to hear from you: Could semi retirement be just perfect for your family and why? Let me know in the comments below!