Working part-time is en-vogue in financial independence circles.
As more and more people opt for alternative and more flexible approaches to financial independence, part-time work has become a prominent feature in many (if not most) FI plans.
Maybe working part-time is part of your semi-retirement plan. Maybe you see going part-time for a while as a stepping stone along the path to early (or standard) retirement. Or maybe you’ve decided that you want more time freedom now and would rather switch to part-time work early on in your FI journey, even if it means you’ll take longer to reach your financial goals.
No matter why you are considering working part-time, there are many things to think about. This article was written with those who are considering going part-time in their professional careers in mind. We’ll delve into the pros and cons of working part-time (vs. full-time) and discuss some unique considerations for those on the path to (or at) Financial Independence.
Advantages of Working Part-time
Let’s dive into the benefits of working part-time.
1. More Time and Balance
This is arguably the biggest benefit of working part-time – more time (and energy!) for the important things and a better work-life balance.
Whether you want to see more of your kids, other family members or friends, go hiking on a random Wednesday, learn a new language, volunteer, start a side project or simply feel less rushed – working part-time will give you more time and space to focus on the things that matter most to you.
Many people pursue financial independence to enjoy a more balanced lifestyle. Switching to part-time work along the path to FI is a strategy you can use to tap into this benefit of post-FI life early (more on this below).
2. Reduced Stress and Burnout
This one goes hand in hand with #1 above. Having more personal time in the week can do wonders for your mental health and stress levels.
Working part-time can help reduce the overwhelm most of us feel in our daily lives.
When you work part-time, work takes up less of your time and consequently plays a smaller role in your life overall (in most cases, anyway). This alone can be a game-changer.
But by working less, you can also manage your daily chores and to-do list more efficiently. Going to the gym or shopping during the day – when most people are at work – is much more enjoyable. Also, getting your household chores done during the week means you can properly relax and spend quality time with your family or friends on the weekend.
3. Improved Overall Health
If you use the hours and bandwidth working part-time free to focus on a healthy and active lifestyle, you will likely be able to improve your overall health. Less stress, more time to move, get outside (vitamin D!), prepare healthy meals, and get quality sleep, is a winning combination.
In order to fully enjoy retirement (whether that’s early, semi or traditional retirement), you need to maintain your health and fitness. If you feel working part-time could help you improve your health, this is certainly something to consider.
4. More Family Time
This one is a no-brainer for anyone with kids. By working part-time, you will get to spend more time with them.
If you have young kids, you can take them to activities or the playground during the week (when it’s much less busy than on the weekend). Plus, you’ll save on childcare fees (see #5 below). Working part-time might mean you can be there for pickups and don’t have to rely too much on after and before-school care if you have school-aged kids.
More quality time together is probably the number one benefit of part-time work for anyone with a family. Of course, the same principle applies if you want to spend more time with other relatives or friends instead.
5. Lower Spending
The so-called “cost of working” is real. And it includes more than just the obvious items like transport costs, work clothes and lunches with colleagues.
There is also the convenience spending many full-time workers know all too well: easy meals/take away and outsourcing of tasks you could otherwise do yourself (if you had the time…).
As a full-time worker, you will likely go away for long weekends or try to leverage public holidays to minimise the number of days you have to take off. This means you’ll usually travel when it’s most expensive and when everyone else also travels.
For those with young kids, childcare fees can quickly add up to a huge chunk of your full-time paycheck. Plus, in countries like Australia, you also pay more for childcare the more you earn, so earning more is not always the answer. In fact, you might be better off financially by working fewer hours (crazy but true). You can probably tell I speak from experience. 🙂
Lastly, our old friend lifestyle inflation deserves an honourable mention here. I don’t have any data to back this up, but from my observations over the years, lifestyle inflation is much more common in full-time working couples and families who are stressed and over-committed and who feel they deserve an upgrade (home, cars, holidays…).
Working part-time can help avoid some of the pitfalls listed above – simply because you’ll likely have more time and experience less overwhelm on a part-time schedule.
6. Paying Less Tax By Working Part-time
How much of a pay cut do you take by going from, say, 5 days per week to 3 days? Instinctively, most of us would answer 40%. And while that’s true in pre-tax terms, the after-tax story often looks much more favourable.
For instance, in Australia, someone going from earning $120k pre-tax to $80k pre-tax (a 40% reduction in pre-ax pay) will only take a 30% pay cut after tax. Combine this lower tax rate with a higher child-care subsidy (which is based on family income), and it becomes obvious why part-time work can be such a good choice for young families.
7. The Chance to Build a Portfolio Career
If you have many different interests and career fields you want to explore, going part-time is a great way to kick off a portfolio career. Your part-time job can then serve as your portfolio career base, to which you can add other part-time jobs, self-employment or volunteer and freelance roles over time. This way, working part-time can help you enhance your skills and explore new ventures.
If you are interested in this concept, I recommend reading my portfolio career article. It’s a working style that aligns well with many of the core tenants of the FIRE community, like freedom and flexibility.
A part-time job that forms part of a portfolio career is just one of several active income streams. That’s why I personally feel this can be a safer approach to working, especially in uncertain economic times.
Disadvantages of Working Part-time
I know the pros listed above can make switching to part-time seem like a no-brainer. However, depending on where you are in your career and along your Financial Independence journey, there are some serious downsides to consider. Let’s dive into the cons of working part-time.
1. Negative Perception and a Lack of Respect for Part-time Workers
This possible con does not apply to all part-time roles, especially in industries where part-time work is very common or even the norm.
However, part-time roles are the exception in many corporate environments, and most employees work full-time. This can lead to real challenges for part-time workers.
Part-time employees often experience a perceived or real lack of respect from full-time colleagues and superiors. Things like being unavailable some days of the week and/or leaving early can cause raised eyebrows and be perceived as a lack of commitment and dedication. A lot of this is probably rooted in jealousy and possibly unintentional ignorance on the coworkers’ part, but it can still sting and put a damper on the joys of working part-time.
In my experience, full-time colleagues also tend to forget that others work part-time, scheduling meetings on days off, setting unrealistic deadlines, etc. This then makes the part-time worker feel like they have to justify why they are unavailable or unable to deliver a result by a certain date. This, in turn, can cause stress/anxiety and makes setting clear boundaries difficult. It is easy to see how this would erode many of the benefits of part-time work.
I have a client who got so overwhelmed by the pressure he felt at work after going part-time that he spent most of his time (before and after hours!) to try and combat his colleagues’ negative perceptions and to showcase that he is available and dedicated to the company.
2. Societal Expectations and Identity
Most of the pressure and expectations someone who works part-time may feel typically come from their work environment (bosses, coworkers, customers, etc.). However, family, friends and spouses sometimes also contribute. Unless you are, say, working part-time after having a baby, it can be hard for people to understand why you are not working more hours.
A lot of clients I work with as part of my transition coaching program have had long and successful careers. Often, a large part of their identity is wrapped up in their careers. When they consider going part-time, they sometimes experience feelings of guilt, loss of identity and a lack of contribution. Overcoming these thoughts and feelings requires a significant mindset shift.
I am not saying at all that you should give up on your plan of working part-time because of these internal and external expectations. However, be aware that you may have to manage this carefully if your job is a big part of your identity.
3. Slower Career and Income Progression
If you work part-time, you very likely won’t have the same career (and income) progression as someone who works full-time. This may not be an issue for you if you go part-time in semi-retirement or as part of your transition out of the 9-5 grind. But it might be a major challenge if you are still trying to grow your career and income. There are several aspects to consider here, so let’s explore them one by one.
Missing Out On New Projects and Responsibilities
As a part-time worker, you are much less likely to be considered for big (and high-value) projects that require full-time coverage. Overall, you’ll likely be given less responsibility than full-time coworkers.
Missing Out on Promotions
Having less responsibility doesn’t just make your work potentially less exciting and interesting but also means you might miss out on future promotions and/or leadership opportunities.
Missing Out on Bonuses or Merit Awards
Bonuses and merit awards are usually given to those who exceed expectations. It is much harder to “go above and beyond” and stand out in a crowd of full-time colleagues when you are only there a few days per week. Hence, your bonus potential is probably limited after you switch to part-time.
4. Slower Financial Progress
There is no way around it – working part-time usually means a slower progression towards FI. This is obviously a non-factor for those who are ready to semi-retire or who simply want to continue working a little after FI. For everyone else, it means a lower savings/investment rate and a longer journey towards financial independence.
That’s not necessarily a bad thing, but if your goal is to reach FI by a certain date, it might be something to consider. You can use our free Semi FI Calculator to get a general idea of the impact of a drop in your savings rate. Alternatively, use the DWZ Drawdown Calculator for a more detailed analysis based on your assumptions.
Financial Independence Considerations
Before discussing how part-time work could form part of your FIRE plan, I wanted to re-iterate one important message (in case it wasn’t clear to everyone): There is no rule that says you can’t switch to part-time work before you reach your FI goals. You absolutely can, and it makes a lot of sense to consider it in many cases.
With that out of the way, let’s look at some different stages of your FI journey and how part-time work could fit into the picture:
Working Part-time During the Accumulation Phase
I like to call this the “part-time path to FI” or the slow path. With this strategy, you opt for part-time work early on in your journey while you are still actively saving and investing. You accept that your path to FI will likely be slow and long. In return, you get a better work-life balance and more free time now. This is the complete opposite of the full-throttle grind to the finish line.
Working Part-time in Semi-Retirement
Working part-time and semi-retirement is a perfect match. Working part-time is part of the plan for most people who opt for a 3-stage FI strategy like Coast FI or Flamingo FI. This is the approach we’ve chosen, and it’s a bit of a sweet spot, in my opinion. With the accumulation phase behind you, you can easily go part-time and simply earn enough to cover your expenses while your investments compound in the background.
If you opt for a Barista FI strategy (aka perpetual semi-retirement), you can work part-time to cover your investment income shortfall.
Working Part-time After Financial Independence
If done for the right reasons, working part-time can be a great way to transition out of the workforce gradually. By “right reasons”, I mean that it’s not done out of fear of touching your investments, One-More-Year-Syndrome or a scarcity mindset. If done correctly, working part-time can give you a sense of purpose and connection after reaching FI and helps avoid what I call the “retirement abyss”. At this stage in the FIRE journey, part-time work in a lower-pay, stress-free non-career job might also be a good alternative (think barista, shelf stacking, dog walking, etc.).
Conclusion – Is Working Part-time as Good as It Sounds?
Working part-time comes with many benefits, but there are also several potential downsides to consider. Whether working part-time along the path to FI is right for you really depends on your individual circumstances, priorities and goals.
If you are still actively growing your income and career opportunities, going part-time might not be the right move, especially in industries where full-time work is the norm. It pays to think about the potential cons and consequences in detail before making a decision.
On the other hand, a better work-life balance, more flexibility and less stress are considerable pros of working part-time. In many ways, you can replicate the benefits of a semi-retired lifestyle long before you hit the related financial milestones by going part-time. Just be aware that your overall progression towards financial independence will be slower.
Once you are ready to semi-retire or are at or close to FI, many of the potential downsides of working part-time don’t apply to your situation anymore, and you can use part-time work as a stepping stone towards full (early) retirement.
Keep in mind that working part-time is just one of many strategies you can use to create more balance along the journey to FI. Check out this article for some alternatives to explore.
If you feel inspired and are looking for some real-life examples of people who work part-time as part of their FI strategy, check out these interviews:
- The High-Income Part-Time Path to FI
- Starting a Part-Time Business and Job Sharing for the Ideal Work-Life Balance
Is working part-time part of your financial independence plan? For those who are already working part-time – what has your experience been like so far?