Transitioning to part-time contract work?

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Topic Author
WarpSpeed
Posts: 58
Joined: Fri Mar 21, 2014 9:48 am

Transitioning to part-time contract work?

Post by WarpSpeed »

I'm looking to learn from the experiences of those who have made the transition from full time work to part-time contracting. Here's the situation:
  1. I work in the tech industry for a Megacorp.
  2. I'm in my mid-forties. So is my wife.
  3. I'm at the point in my life where I want more control over how I spend my time.
  4. My kids are in high school and college. All college savings are complete.
  5. I'm not ready to retire--I still enjoy most aspects of my work, but I would just like to work less (and be paid less, of course).
  6. I'm financially stable, no debt, though not quite what I would consider financially independent yet if I want to maintain lifestyle through retirement.
This is not really a financial decision (of course it plays a part), but more of a lifestyle decision. I would like to understand from those who have already gone this route what a transition into contract work might look like.

Ideally, I would like to work full-time for several months at a time. But then I could take 1-2 months before I started my next contract.

What are the practical aspects that I need to be thinking about? Would I start my own LLC? I assume medical insurance would be whatever I can find on healthcare.gov? Will I be constantly "looking for work"? I don't think there will be trouble finding work--my skills are in demand. But I realize there would be some uncertainty as to when the next paycheck would come in. I'm OK with this.

I'm just barely starting to explore this option, so don't necessarily even know what questions to ask yet. If anyone has experience they're willing to share, I would appreciate it.
namajones
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Re: Transitioning to part-time contract work?

Post by namajones »

As a former contractor, I suspect this is tough to pull off in real life. I hope I'm wrong and others will say it's possible.

In my experience, though, contract work is very much like full-time work while it lasts--and it often lasts longer than the original contract term (extensions).

I really don't see much half-time work out there. Maybe it's because I'm not looking. The danger with half-time work is that it really is (or becomes) full-time work with half-time pay. I guess you'd have to put in hard stops on your time. But then what one person can do in 4 hours takes another person 8 hours. So you see how this could get tricky really easily.

If you pull this off down the road, please drop in and let us know how it went.
rk6
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Re: Transitioning to part-time contract work?

Post by rk6 »

ThankYouJack
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Re: Transitioning to part-time contract work?

Post by ThankYouJack »

I like this idea and I've done part-time and freelance work before. Since your skills are in high demand, you may have some leverage with your current employer. Maybe they'd let you transition to 30 hours a week and/or take a work hiatus. I know it's a megacorp and there may be some red tape to cut but if they really want to keep you, they may make an exception (my employer did).

WarpSpeed wrote: Fri Jul 30, 2021 2:26 pm
What are the practical aspects that I need to be thinking about? Would I start my own LLC? I assume medical insurance would be whatever I can find on healthcare.gov? Will I be constantly "looking for work"? I don't think there will be trouble finding work--my skills are in demand. But I realize there would be some uncertainty as to when the next paycheck would come in. I'm OK with this.
You'll want to be making significantly more per hour (some recommend at least 2x more) if you switch to a 1099 contract role because you'll be losing out on so many benefits (including PTO) and have to pay more for taxes. I've never bothered forming an LLC (just had a sole proprietorship) but I was never concerned about getting sued.

Along with looking how much health insurance is going to cost (probably going to be significant), you may want to research setting up a solo 401k.

The thing I wouldn't like about your ideal set up is having to find new work and interview or find a new client every time you want to come back from a break. That's part of the reason why I think staying with a single employer but having a lot of flexibility would be better.
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Bogle7
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Re: Transitioning to part-time contract work?

Post by Bogle7 »

I started my own sole proprietorship in 1996 (at age 48) doing web work.
Last month, I billed 15 hours, which is a lot for me now.
During that time, the most important lesson I learned is: more customers are better than fewer.
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Topic Author
WarpSpeed
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Re: Transitioning to part-time contract work?

Post by WarpSpeed »

namajones, thanks for your thoughts!
namajones wrote: Fri Jul 30, 2021 2:32 pm In my experience, though, contract work is very much like full-time work while it lasts--and it often lasts longer than the original contract term (extensions).

I really don't see much half-time work out there. Maybe it's because I'm not looking. The danger with half-time work is that it really is (or becomes) full-time work with half-time pay. I guess you'd have to put in hard stops on your time. But then what one person can do in 4 hours takes another person 8 hours. So you see how this could get tricky really easily.
When I say "part-time", I'm probably not using the right terminology. I fully expect that I would need to work full time during the contract. But then my hope is that I would be able to take a couple months away from work before beginning the next contract. The challenge will be in finding the "right" jobs. I wouldn't want to get involved in any multi-year projects. I'd hope to find projects that can be finished up in 3-4 months (or if not finished, at least at a point where I could walk away from them). So if I did 4 months of work and then two months before beginning the next project, I'd be looking at about 8 months of work per year. Even without vacation time, this would still be significantly less time that I'm working today.

But I absolutely hear you about the contracts getting extended (if I agree to those terms). And about the work being full-time work while under contract.

Again, not sure if I can make this work or not. Just starting to explore the idea.

Thanks!
Topic Author
WarpSpeed
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Re: Transitioning to part-time contract work?

Post by WarpSpeed »

ThankYouJack wrote: Fri Jul 30, 2021 3:01 pm Since your skills are in high demand, you may have some leverage with your current employer. Maybe they'd let you transition to 30 hours a week and/or take a work hiatus. I know it's a megacorp and there may be some red tape to cut but if they really want to keep you, they may make an exception (my employer did).
Great ideas, ThankYouJack! I think there's a small possibility I could swing something like this with my current employer as well. I may just look into this. It's not something I see happening around me though, so I'm not overly-optimistic.
You'll want to be making significantly more per hour (some recommend at least 2x more) if you switch to a 1099 contract role because you'll be losing out on so many benefits (including PTO) and have to pay more for taxes. I've never bothered forming an LLC (just had a sole proprietorship) but I was never concerned about getting sued.

Along with looking how much health insurance is going to cost (probably going to be significant), you may want to research setting up a solo 401k.
Thanks for these very practical considerations. Exactly what I'm looking for.
The thing I wouldn't like about your ideal set up is having to find new work and interview or find a new client every time you want to come back from a break. That's part of the reason why I think staying with a single employer but having a lot of flexibility would be better.
Yeah, that would definitely be a downside. Single employer may be the way to go if I can negotiate the proper terms/flexibility. But I think that might be kind of tough.
Wannaretireearly
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Re: Transitioning to part-time contract work?

Post by Wannaretireearly »

Could be interesting to explore OP's option.

Has anyone had any luck just telling their org that they'd like 6-8 weeks off continuously once a year (unpaid). Everything else stays the same.

I'm hoping these kind of flexible options open up to keep people from leaving. Usually the big companies are more adventurous with 'employee happiness'. E.g. if FAANG started benefits like this, other companies would follow suit (forced to).
“At some point you are trading time you will never get back for money you will never spend.“ | “How do you want to spend the best remaining year of your life?“
namajones
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Re: Transitioning to part-time contract work?

Post by namajones »

WarpSpeed wrote: Fri Jul 30, 2021 6:44 pm
But I absolutely hear you about the contracts getting extended (if I agree to those terms). And about the work being full-time work while under contract.

Again, not sure if I can make this work or not. Just starting to explore the idea.

Thanks!
Well, if you ever make this work, please come back and update the thread. I personally have not known anyone who has done this (voluntarily), but the idea is appealing.
namajones
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Re: Transitioning to part-time contract work?

Post by namajones »

Wannaretireearly wrote: Fri Jul 30, 2021 7:10 pm Has anyone had any luck just telling their org that they'd like 6-8 weeks off continuously once a year (unpaid). Everything else stays the same.
That would certainly be fantastic. Never been in a company where it was possible, though.
Sam_957
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Re: Transitioning to part-time contract work?

Post by Sam_957 »

Teachers get that 2-3 months off arrangement. Seems many have side gigs though.

Doing short term contracting is definitely an option, but many contracts are 6+ months. I’d talk to some reputable head hunters to see what they know.

Someone I work with is going to half time as a test arrangement. Key employee who could probably retire now and likely wants either time off or to do consulting. Happy to see this development!
My other vehicle is an index fund.
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