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Retirement used to mean one thing. Workers would plug away at the same job for 40 years and work towards the day they would retire and ride off into the sunset, pension in tow, to live a life of leisure.
The retirement landscape is rapidly changing. Movements like FIRE (Financial Independence, Retire Early) have brought an awakening to younger generations who now recognize that retirement no longer has one meaning. There's early retirement, gap years, sabbaticals, and mini-retirement, to name a few.
What is a mini-retirement?
The concept of a mini-retirement has intrigued me for some time. Essentially a mini-retirement is a period, often six months to one year, where you “fake” a retirement to see what it's like. People take this time to explore new endeavors, spend time with family, or simply take a break from employment to gather new life experiences. Most who embark on a mini-retirement have definitive plans to return to work.
I was first introduced to the concept of mini-retirement on a podcast. I remember the guest saying how people should “retire early and often.” It was the first time I ever considered that retirement didn't need to wait until I was in my sixties, and I could take a mini-retirement anytime. I feel drawn to the idea of mini-retirement for a few reasons:
- You shouldn't have to wait until you're older to try new things – Some of the most common reasons people refrain from trying new things are time constraints and family responsibilities. Freeing up time when you're young to branch out can lead to unanticipated lifestyle changes and greater overall happiness. If you wait to figure out your life's purpose at 65, you'll have so many fewer years to reap the benefits.
- Mental breaks can spark huge creative gains – Have you ever gone on vacation and came back with the solution to a work problem? Sometimes letting the subconscious mind take over can lead to incredible creativity, both in work and personal life.
- The financial preparation will only better your long-term financial picture – It takes a lot of planning to be able to stop working for six months or a year. Only good things can come from taking the reins on your finances and socking away savings and investments to make a mini-retirement happen.
As you can see, I'm captivated by the idea of a mini-retirement and am considering taking one in the next five years. But what does it take to set yourself up for success? I decided to pull together a list of things I'll need to do, and anyone else would be wise to do as well, before diving into mini-retirement.
Clearly define your “why”
One of the most important things I've ever heard someone say about retirement is that you're not retiring from something, you're retiring to something. The same could be said of a mini-retirement. If you don't have a purpose, and you want to stop working for the sole purpose of not working, you might end up pretty miserable.
Sure, traveling and hanging out on the beach is incredible, but people need a reason to get up every day. Most people who embark on a mini-retirement are using it to work on a passion project, write a book, or learn a new craft. It's critical to decide your why behind mini-retirement to make sure you get real value from it. The last thing you want after spending years saving and a year doing it is to say, “eh, it was fine, but I'm happy to be back to work.”
Focus on financials
To take a mini-retirement, you'll need to be financially secure. Without a steady income, you'll need to have enough set aside to cover your expenses for the year. If you're planning to travel or live abroad, you'll need funds to support that adventure, too. While many people who take a mini-retirement end up working in some form during their break, it's often nothing close to their corporate salaries.
As a rough estimate, I anticipate setting aside two years worth of living expenses in cash. This would not only support making no income during the mini-retirement but also cover extra if work is not immediate upon returning.
Bring your support system onboard
For a life change of this magnitude, you'll want the support of close friends and family before deciding to go on a mini-retirement. This is especially true if your mini-retirement's primary purpose is to spend more time with loved ones, or if your spouse will continue to work regularly.
You'll need the support of those closest to you to handle the emotional rollercoaster that comes from leaving your job and jumping headfirst into the unknown. When I quit my job to start a career in freelance, it was one of the scariest and most uncertain times of my life. I can't imagine committing to that big of a life change again without my loving inner circle.
Squash your fears and actually take the leap
Entering into a mini-retirement with or without the promise of a job upon return is a considerable risk. Many people are uncomfortable with the instability, especially during the years when earning potential is at its highest. Humans have a natural aversion to change and a fear of the unknown.
George Bernard Shaw once said, “Progress is impossible without change, and those who cannot change their minds cannot change anything.” Opening up to the idea of a non-traditional retirement can result in genuinely amazing progress and growth. It will be scary, as change always is, but don't let fear of the unknown hold you back.
I see many incredible benefits that are possible from taking a mini-retirement. And many people have had great success from taking one. I challenge you to get curious about what you might uncover and what you can achieve by saving up to take an extended vacation from work. You might be surprised at what drives you to consider taking one yourself.
Contributor’s opinions are their own. Always do your own due diligence before investing.
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