With pensions dying out and the responsibility to save enough in your working years to pay for decades of life without a paycheck squarely on workers’ shoulders, the traditional idea of retirement may no longer be realistic for most. That might not be a bad thing, though. Working full-time until 65 or 70 years old, then retiring to do absolutely no work at all, comes with a number of downsides.
For one, it’s expensive. People now live longer than ever, and to completely retire at 70 might mean relying on your savings to see you through the next 30 years – and that, in turn, could require you to have millions in the bank. Additionally, we’re increasingly seeing how detrimental this traditional retirement can be for retirees. Those who retire may find themselves more isolated and less active, which can lead to a host of mental and physical health problems.
On the other hand, working up until the day you die probably doesn’t sound appealing either. So what should you consider doing if neither a full traditional retirement nor continuing to work forever sound like good solutions?
Consider Taking Mini-Retirements Instead
The idea of “retirement” doesn’t have to be all or nothing – nor do you have to wait until some official retirement age to enjoy some time off or away from your career.
You could consider taking a series of “mini-retirements” throughout your working years instead. You can work for a number of years before taking a period of time away to be with your family more, explore other hobbies or business ideas, or pursue something you always wanted to do like travel.
These mini-retirements could last 12 months or they could last years. But once you’re ready to refocus on your career, you can come back and do just that, picking up a full-time job (or business) and continuing to work until you want to enjoy the next in the series of breaks.
What to Think About Before Mini-Retirements
This might sound a little bit like a sabbatical or an extended vacation, but it’s far more than that. Yes, this can be a time to rest and recharge – but it should also be a period of time you can use to reflect, to experience new things, and to be engaged in aspects of your life that your normal work might keep you from doing fully.
Again, this could be spending more time with family or traveling the world. It could be a chance to enroll in some sort of continuing education program or to learn a new skill or craft.
To prepare, do a little research. Mini-retirements or a series of second-, and even third-act careers are growing trends, and plenty of people are sharing stories not only about how they created retirements in the middle of careers, but also about how their breaks actually helped them improve their work when they returned.
Before you simply quit your job and plan to kick back for a year, you have to consider the logistics. That includes how you’ll finance your mini-retirement, and how you’ll get back into your career when it’s time to do so.
Remember, you don’t necessarily have to go back to the same career. If you’ve developed new skills or taken in great experiences that set you up for a different path, don’t be afraid to explore it!
Whatever you choose to do, thinking about your game plan is an important first step. Consider both how you’ll get the most value from your time away, and how you’ll transition back into a job with the income you need to continue saving and investing.
How to Fund Mini-Retirements
There are several ways you could consider making a mini-retirement financially feasible. The most straightforward way is to simply save up for it.
Decide how long you want to be free of the obligation of earning a paycheck to pay your living expenses, and then figure out how much money you’re likely to spend during that period. For example, if you want to take a mini-retirement for 12 months, estimate how much it will cost you to live for those 12 months.
If you say $50,000, you know you need to save that amount before you leave a current job (and paycheck) behind and begin your time away. While saving this sum might sound daunting, you can make it a little easier on yourself by investing that money as you work to reach your goal.
A strategic investment plan can help put your money to work for you by allowing it to earn a return in the market.
You can also fund your mini-retirement with other income sources. Your paycheck might not be the only way for you to earn money. You could consider real estate investing, where you can buy and use rental properties to generate income.
Or you could explore business ideas and models that allow you to generate a small income for a small amount of work that you could sustain with little effort during your mini-retirement. There are a lot of options; you just need to explore and test the one that works best for you (and of course, do this before you leave that steady paycheck behind).
Retirement Doesn’t Have to Be a One-Time Occasion
However you define it or whatever you want to do in your mini-retirements, it’s all up to you. The bottom line?
“Retirement” is no longer a fixed point in time. It doesn’t come with a set definition, either – and both of these things mean you don’t have to work your life away until you reach a certain amount of money in the bank, only to quit and never work a day in your life again.
Most people find a complete lack of work dissatisfying and unfulfilling. What mini-retirements, or a strong sense of financial freedom, allow you to do is pursue work and activities that you love, without needing to rely so much on a particular kind of paycheck.
You can now access that freedom and flexibility throughout your working career, and not just at the very end of it. Of course, you’ll probably need a plan to make sure you strategically use your money now, during your periods away from work, and for later on in life when you’re truly ready to fully retire.
A financial planner who understands the value of making the most of your resources for both today and tomorrow can help you figure out the logistics involved so you can do more of what you love – in work, and in life.
Here’s how to find a financial planner to help you, so you can get started with planning the mini-retirements you can’t wait to take.