What to Consider When Planning for a Mini-Retirement

In Tim Ferriss’ book, The 4-Hour Workweek, he shares the idea that we shouldn’t focus so much on the major end of life retirement.

Instead:

He suggests taking mini-retirements throughout your career. 

But what is a mini-retirement and how can you make it work for you?

Here’s what you need to know.

What is a Mini-Retirement?

So is a mini-retirement the same thing as deciding to retire early?

Definitely not.

If you retire early, your goal is generally to never have to go back to a job again.

On the other hand, a mini-retirement is a break from work during your career. These breaks may be relatively short, such as a few weeks or months, or longer, such as a couple of years.

No job (temporarily)

During a mini-retirement, you don’t really hold a job.

Instead, you act much like a retired person would and don’t work.

With that said:

Once your mini-retirement is over, you re-enter the workforce. You may take a job with the same company you worked with before.

You could decide to work for a competitor.

Alternatively, you could shift to a different career path altogether.

Room for a career change

Of course, the definition of a mini-retirement can be flexible and isn’t strictly defined anywhere.

You could work part-time if you wanted or have a side hustle to bring in a little bit of income.

That’s up to you.

The key of a mini-retirement is to take a break from your career.

During that break, you can explore what you want to be doing without the constraints of a full-time job.

Why You Should Consider Mini-Retirements

Taking mini-retirements has many advantages. Unfortunately, not everyone lives until traditional retirement age.

Wouldn’t it be awful to spend your whole life working and saving to retire and then never get to retire?

Doing what you want to do

By taking mini-retirements, you can guarantee yourself that you’ll have times in your life that aren’t focused around your job, even if you don’t make it to traditional retirement age.

Instead, you can focus on what you want to focus on.

Mini-retirements can give you more time to reflect on what you actually want out of life. 

When we’re busy hustling at our jobs and keeping up with our home lives, we often don’t get the time to think about what we really want.

A mini-retirement can help you re-evaluate your life and decide where you want to go next.

Travel

Mini-retirements can help you explore the world, too. There’s no rule saying you must stay in your current home for your mini-retirement. 

Instead, you could travel the world slowly to absorb different cultures.

You could spend weeks or months in different countries, some of which have much lower costs than living in the United States.

Take care of your health

A mini-retirement may be a good idea if you have health concerns that need to be addressed, assuming you can maintain health insurance.

They can be a great way to combat burnout from a job you hate, too.

Improve relationships with family and friends

You don’t have to leave your house for a mini-retirement.

You could spend your time in your hometown with friends and family. You could take a mini-retirement to spend time at home with your kids when they’re young.

The different ways that you take mini-retirement are endless. You can use them for whatever you want to do.

Top Concerns Before Mini-Retirement

While taking a mini-retirement seems great, there are many valid concerns that must be addressed. 

Mini-retirements require you to pay your bills without an income, can disrupt your career and even your mental health.

Here are some concerns you’ll want to consider before you take a mini-retirement.

1) Impact on finances

Taking a mini-retirement means no income from a job in most cases. That also means you’ll need to save for a mini-retirement in advance.

Otherwise:

You won’t be able to financially survive during your mini-retirement.

Saving for a mini-retirement can be daunting, especially for longer mini-retirements.

Since you may not have decades to allow your money to grow, investing in stocks may not be the best option.

If the market drops right before a mini-retirement, it may be jeopardized.

So:

Before you take a mini-retirement, you’ll need to plan your finances carefully. Come up with a budget that shows your projected cash flow during your mini-retirement. 

Consider any income you may have and estimate how much the various expenses you may incur will cost.

Don’t forget to set aside money for any unexpected emergencies that may pop up.

It is still possible to have income during a mini-retirement. This is especially true if you have managed to build passive income sources.

Passive income sources like website advertising revenue and rent from rental properties you own could help defray the costs of a mini-retirement.

If your mini-retirement is in a low-cost area, such as Thailand, it may cover all of your costs.

2) How will it affect your final retirement?

Taking mini-retirements can have a long term effect on your future finances, too.

Any money you save toward mini-retirements will likely get spent during your mini-retirement. That means you won’t be able to use that money when you eventually fully retire. 

Because of this, you’ll need to be saving for both the mini-retirement and your real retirement at the same time. 

Now:

Unless you have a high income, finding enough money to save toward both goals may not be possible.

If you opt to save for mini-retirement instead of your final retirement, you may find yourself regretting the decision when you don’t have as much money on which to fully retire.

Make sure you fully consider the immediate and long term financial impacts of a mini-retirement before you make a decision.

3) Effects on employment and career

When you’re working a full-time job, taking a mini-retirement can seriously mess up your career path in certain industries.

Many industries are rapidly evolving.

When you stay employed, you keep up with the changes. However, when you’re on a mini-retirement, it’s easy to lose skills that change quickly. 

Unless you stay up to date on the latest changes in your industry, you may not have the skills you need to land a job when you return.

The bigger concern:

Leaving a job for a few months or years can cause a loss of career momentum.

If you’re seen as an up and coming superstar but decide to leave for a year, your employer may question your commitment if you return.

A gap on your resume may make it hard to get a new job.

To make matters worse, you may have to take a smaller salary when you do find a job. This could permanently reduce your income potential over the rest of your career.

Relationships you’ve worked hard to build may fade away. The people you planned to rely on to rehire you may leave the company.

It’s hard to tell what will happen while you’re on a mini-retirement, but these are real issues that may pop up while you’re gone.

4) What will you do in mini-retirement?

One of the biggest questions you’ll need to answer is what are you going to do when you don’t have to go to work.

Typical full-time jobs require 40 hours of working at a minimum. They also include hours of getting ready, commuting and other work related tasks.

Initially, it might seem easy to find ways to spend all of that time. That said, you might find yourself wondering what to do after the first few weeks.

To have a successful mini-retirement, you should come up with a plan.

Know what you want to accomplish during your mini-retirement. Pre-plan what your average day will look like. Make sure it’s something you want to take months or years off of work to do.

This is easier if you plan to travel or work toward a particular task. Even so, slow travel can result in big periods with nothing to do if you don’t make plans. 

5) What will it do to your mindset?

One aspect most people don’t realize will impact them is their mindset during a mini-retirement.

It’s easy to tie your work in with your identity. If this is you and you leave your job, who are you without your job? 

Struggling with a loss of identity during a mini-retirement can cause serious mental health issues. It can even make a mini-retirement seem unenjoyable.

Before you take a mini-retirement, focus on finding ways to identify yourself that don’t involve your job.

Make sure you have a group of friends outside of your coworkers. Find activities to take part in that don’t rely on your job or employer.

Look:

As long as you’re aware this can be an issue, you can work to minimize the risk of it happening before you start your mini-retirement.

Is A Mini-Retirement Right For You?

Ultimately, you have to decide if a mini-retirement, a term coined by Tim Ferriss, is a good move for your situation. 

For some people, it might be.

For others, chasing financial independence, retiring early or simply retiring at traditional retirement age might be best.

Consider the factors mentioned above.

Then, take a careful look at your life, career and finances. You might even want to consult a financial advisor to make sure you can make everything work. 

Only after you’ve carefully examined all aspects can you decide if a mini-retirement is right for you.