There is a lot of financial advice out there on how to save for retirement. You know the drill: work hard, save and invest consistently, and if all goes according to plan, you’ll be able to stop working and enjoy some freedom around age 65.
But what if your retirement dreams can’t wait that long? What if you’re not sure you can ever Can I stop working? Enter: mini-retirements.
Mini-retirements are exactly what they sound like: small career breaks taken throughout your working years. Although they require some strategy and planning, mini-retirements may be more affordable than you think.
Read on to learn more about what constitutes a mini-retirement, its pros and cons, and how to financially plan for one.
Mini-retirement, micro-retirement, career break, gap year – these all refer to extended time away from work.
There’s no official definition of mini-retirement, but typically these breaks involve stepping away from your main job for at least a couple of months and are self-funded.
It is important to note that the “how” of a mini-retirement can vary. Some people take a mini-retirement after being laid off. Others may leave a job they are dissatisfied with and take a break before getting another one. Some people can even negotiate time away from a role they want to return to.
Jillian Johnsrud, author of “Retire Often,” has retired a dozen times and coaches her clients to do the same. For her, a key aspect of a mini-retirement is that it means spending time on something that matters to you: whether it’s travel, your health, or even planting a garden.
“People can accomplish a lot of different things during a mini-retirement, whether it’s longer adventures, personal goals, or even professional goals,” Johnsrud said.
If a mini-retirement seems far-fetched, consider the following benefits. They may be enough to convince you that it is worth doing the necessary planning:
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Opportunity to reevaluate career goals: When you step away from your job for an extended period of time, you may find that you’re ready for something new. It could be a similar position at a new company, a position in a new industry, or even starting your own business. A mini-retirement can also give you the opportunity to negotiate a higher salary when you return to the workforce.
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Opportunity to do things while you are physically able: If your retirement dream is to hike the Appalachian Trail, you may want to do it when you’re in your physical prime. Illnesses and health complications cannot be predicted, so experiencing these adventures when you are younger may be the safest bet.
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More time with friends and family: Mini-retirements can give you invaluable time with the people you love, time that may not be available decades from now. “I took a 10-week trip to 10 national parks with my five kids in a pop-up camper,” Johnsrud recalled of one of his mini-retirements. “(It was) an absolutely memorable and incredible experience.”
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Recovery from exhaustion: An Aflac study found that 72% of employees experience at least moderate stress in the workplace. A mini-retirement allows you to step away from those stressors for a while and reset. “Being able to return to work refreshed, excited and motivated is also a huge career boost,” Johnsrud said.
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It’s time to focus on physical and mental health: For many, work takes priority over exercise, eating well and getting enough sleep. A mini-retirement can give you time to prioritize your health and establish new habits that can benefit you for decades to come.
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A “practice” at the time of retirement: Everyone has heard the story of the retiree who stops working, panics about having nothing to do, and goes back to work. And it’s no wonder: if you’ve never taken a career break before, why should it be easy to retire? A mini-retirement allows you to practice retirement by giving you the opportunity to explore your interests outside of work.
Read more: Retirement Planning: A Step-by-Step Guide
No matter how good a break from work may seem, you may have questions. Here are some potential drawbacks to weigh and plan for if you’re interested in a mini-retirement:
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Intensive planning: Planning a mini-retirement can be a huge logistical burden. Negotiating a leave of absence from your job (or quitting altogether), budgeting for your free time, and saving enough money are just some of the hurdles you’ll have to face before taking a mini-retirement.
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Difficulty getting rehired: If your mini-retirement involves leaving a job, you’ll have to navigate the hiring process after your break. Depending on the state of the economy and your industry, it may take longer than planned to get a new job, which can cause financial stress.
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Pause retirement contributions: One of the biggest benefits of employer-sponsored retirement plans is the match your employer can earn when you contribute to your 401(k). But if you stop working, you’ll lose those extra contributions, whether you continue saving for retirement or not.
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Losing employee benefits: In addition to retirement contributions, your employer may offer you a variety of benefits that you will give up if you take a career break. For example, if you currently receive health insurance through your employer, you may need to find it elsewhere during your mini-retirement.
Read more: 9 ways your employer can help you save money
If you’re excited about the idea of a mini-retirement but don’t know where to start, take it step by step. According to Johnsrud, anyone can afford a mini-retirement with the right planning. Here are three crucial steps to financially plan for a career break:
“The first step is to come up with a list of possibilities of what you might want to do,” Johnsrud said. “That will give you an idea of how much time you’ll need off and what the budget would be, but it will also give you the motivation to take action once you can imagine this cool thing you’re going to do.”
Whether you plan to hire a nutrition coach, travel to South America, or enroll in an art class, give some thought to how you’ll spend your mini-retirement and let yourself get excited.
Once you know how you will spend your time, you can begin to outline a budget for your time off from work.
When making your budget, you’ll need to decide which of your current expenses you’ll keep up with during your break. For example, will you continue making contributions to your savings and investment accounts, or will you feel comfortable pausing them? Will you continue to pay rent or arrange a lease buyout? Answering these questions can help you determine how much you need to save to fund your “normal” life while not working.
Next, consider how much additional activities will cost, like hiring a coach, traveling, or taking that art class. Add these costs to your initial budget to know how much you’ll need to fund your mini-retirement.
3. Formulate your exit plan (and consider your reentry plan)
Once you have an idea of how you will use your free time and how much it will cost you, it’s time to make an exit plan.
Your motivations for a mini-retirement will determine how you approach this step. Do you want to quit your job completely? If so, there’s not much to plan. But whether you want to negotiate paid or unpaid leave, you should approach your boss for a solution-oriented conversation about how to take an extended break.
If you’re eager to re-enter the workforce after your mini-retirement, create a flexible plan before taking leave. Decide how you will approach the job search, when you will start looking for a new position, and how you can stay involved with your network during your time away.