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Retirement at 65 is no longer the norm. For many, retirement is not an endpoint but rather a pause in their lifelong journey. People seeking a break from the daily grind are now considering a mini-retirement. A mini-retirement goes beyond a sabbatical or long vacation by providing time for reflection and reassessment of one's career path, while also rejuvenating passion and opening up new possibilities to reshape work at any stage of life.
If you're not sure what it is or how to take a mini retirement, or have budgeting questions about it, here's some information.
What Is a Mini Retirement?
A mini retirement is when you take a long break from work with the intention of eventually returning to the workforce — even in a different job or industry. While a traditional retirement typically involves permanently walking away from work after a 30- or 40-year career to enjoy the rest of your life, a mini retirement isn't so permanent.
Introduced by Tim Ferriss in his book, "The 4-Hour Workweek," mini retirements can last several months or years, and often include several periodic breaks throughout your career. A mini retirement may be a good fit for some in today's working environment. The average full-time employee works 8.09 hours each weekday, and only 46% of Americans use less than half of the paid time off that is offered.1,2
Why Consider Taking a Mini Retirement?
A mini retirement can be a valuable opportunity to reassess what you want to do with your career — and your life — and to make time and space for personal and professional growth.
For example, you may choose to take a year off to start the business you always dreamed of, travel all over the world and volunteer, learn a new skill, or do apprenticeships in different industries to see what ignites your passions. The point is, a mini retirement can take many forms, so it can help to thoroughly plan for such a major life decision to make the best use of your time away.
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How to Prepare for a Mini Retirement
If you're wondering how to take a mini retirement, money is likely the biggest consideration. You'll probably need to give yourself time to prepare and save. This could include reviewing your current income, expenses, debt and savings to decide where, or whether, you can make adjustments to cover an extended break from work. Here is some more information to consider.
Savings & Expenses
If you plan to cover your living expenses with your savings, you may want to adjust your monthly budget to put more money away leading up to your time off. You might want to save even more if you plan to travel or change your lifestyle.
You may even find it helpful to increase your income for a period of time before taking a mini retirement. You could get a second job or take on some freelance work to help hit your savings goal.
Health care could also become a significant expense without your employer's insurance. Consider researching how much insurance will cost you and your family while you're away from work and adding this number to your overall savings goal.
Debt
If you have high-interest debt, you might consider prioritizing paying this off before your mini retirement. It will likely be harder to bring down when you no longer have a steady income, and you might not find it favorable to let it grow during your time off.
Full Retirement Plans
You may not want your mini retirement to disrupt saving for your retirement. It might be tempting to dip into an existing retirement account to fund your mini retirement, but that could lead to an early withdrawal penalty if you're under age 59 1/2. You could also miss out on the opportunity for potential growth on any savings you withdraw early.
Could a Mini Retirement Be Right for You?
Mini retirement can be beneficial for some people, but you'll want to consider whether you're all right with leaving your current company and potentially not being rehired; whether you can cover your living expenses and additional costs like health care; whether you still can afford to make long-term retirement contributions; and whether a job switch, a new role or career change might be a better option than extended time off. You should also consider how not working for a period of time will affect your Social Security retirement benefits.3
The Bottom Line
The point of a mini retirement is to take a break (or several breaks) throughout your career rather than waiting until your 60s or 70s to rest and enjoy yourself. With a mini retirement, you may be able to take a break from the 40-hour workweek to reset and eventually return to the workforce.
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Sources
- Average hours employed people spent working on days worked by day of week. https://www.bls.gov/charts/american-time-use/emp-by-ftpt-job-edu-h.htm.
- More than 4 in 10 U.S. workers don’t take all their paid time off. https://www.pewresearch.org/short-reads/2023/08/10/more-than-4-in-10-u-s-workers-dont-take-all-their-paid-time-off/.
- Your Retirement Benefit: How It’s Figured. https://www.ssa.gov/pubs/EN-05-10070.pdf.
