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Today we will be talking about mini retirements! Traditional retirement sounds really far away doesn’t it, like 30, 40 years away… and in my opinion, that seems TOO far away.
Well what if you could take a semi-retirement, mini-retirement if you will, and get a break sooner rather than later?
Before we dive into this exciting topic, don’t forget you can access my free resource library and get a bunch of budget templates for google sheets by signing up for my email list! Or if you don’t want to give me your email you can shop everything at The Budget Empire!
Table of Contents
Life is Hard.
I think everyone experiences a sort of sadness about 1 or 2 into their career, after graduating college. This sadness, or existential crisis as I like to call it, relates to the realization we have to work for another 40 years and we’re already kind of tired after just 1 or 2….
(No? Just me?)
It’s this feeling that leads people to explore the F.I.R.E movement (financial independence, retire early) and want to retire asap. Chasing this million dollar finish line isn’t about having a million in the bank.
It’s about being able to control your own time and decide what you want to be doing all day. However, achieving FIRE is difficult and still takes years.
The slogan of this blog seems to be “enjoy life now AND at 65” so a mini-retirement might be able to do just that.
What is Mini-Retirement?
Tim Ferris coined the term mini-retirement in his book “The 4-Hour Workweek.” Mini-retirement refers to taking several breaks (or “retirements”) from traditional work intentionally, instead of waiting until 65 for one final retirement.
Mini-retirements are a bit different from leaves, sabbaticals or the F.I.R.E Movement because they typically entail leaving your employer completely and then reentering the workforce later on.
These breaks from the traditional 9-5 are designed to let you focus on you. Meaning you get to take some time and focus on your passions and hobbies! This can range from staying home to be with your family, traveling the world, focusing on your side hustles or passion projects, whatever you want!
Mini-retirement is what you make of it! The common characteristic is that you’re not holding a full time job in the meantime.
Is Mini – Retirement Worth Considering?
This is just my opinion and a little bit of a rant, but so much of our life is dedicated to our jobs.
If you’re lucky like me you enjoy your job but only 45% of Americans say they are satisfied with their workplace.
People often ask “what would you do if you won the lottery?” however I think a better question is: if you were going to have a $100,000 salary, no matter what you did, what would you do? Now would you still stay at your current job?
I bet the answer is no.
However we need to have a job because we need food and shelter. So why not take the extra effort to save additional money for a bit and be able to take a break?
Give yourself a year or six months to do whatever you want!
Then you can come back refreshed and rejuvenated! Maybe you’ll learn more about yourself and what you’re passionate about.
If you think you’d get bored taking a year off maybe ask yourself why that is.
What do you do for fun? What are your hobbies? Who are you, outside of your job? Maybe you haven’t had time to figure those things out (because you’re busy working all the time?)?
Maybe a mini-retirement can help you get to know yourself, your passions and (honestly it sounds cheesy, but) what you want out of life.
Logistics: The Finances Behind Mini-Retirement
Ok yes a year off sounds great, blah blah blah, but how does one actually pay for that?
Unless you have some sort of passive income, a mini-retirement means NO INCOME. So you’re going to have to save up enough money to cover all your expenses for a year, or whatever duration you choose.
This means 1. figuring out what you would want to do during your mini-retirement and 2. figuring out how much whatever you want to do costs.
If the idea is to stay at home, you need to track your expenses and create a budget. You won’t know how much money you need to save unless you actually calculate that number, which means writing everything down. Don’t forget to include expenses that might change when you don’t have an employer, for example, health insurance.
Alternatively, if you’re planning to travel, then some major research is in order. Ask yourself where you want to go, how long, what your travel style is and come up with a realistic number.
So yes, to make this mini-retirement happen you have to work your butt off to save money for it.
Additionally, in both cases, the amount you’re saving should be APART FROM your emergency fund.
Mini-Retirement Fund IS NOT YOUR Emergency Fund
Emergency Funds are usually defined as money help in cash that could support you for anywhere between 3 to 6 months. This means you would be able to sustain your same lifestyle without having an income for 3 to 6 months.
That sounds an awful lot like saving for a mini-retirement doesn’t it? NO!
An emergency fund is for EMERGENCIES. It is not to fund a year off. Start saving money separately for your mini-retirement.
How Will Mini-Retirement Affect Actual Retirement
Taking a mini-retirement requires a lot of thought and number crouching. If not planned correctly, a mini-retirement can cause serious financial impacts to your future retirement.
This means you should ideally be saving for your mini-retirement alongside your actual retirement. Not to sugarcoat it, it takes time, discipline and a nice salary doesn’t hurt.
I would not recommend anyone take a mini-retirement without first hitting Coast FIRE. This is just my opinion.
Wtf is Coast-FIRE?
WalletBurst has an amazing Coast-FIRE calculator and explanation. Long story short, Coast FIRE is when you have enough money saved currently, that if you did not contribute another single dollar, because of compound interest and market growth your money would grow enough to support you in retirement.
This “magical” number depends on your current age, your current investments, when you want to retire, and how much you want to spend in retirement. This is a lot of math so you can use WalletBurst’s calculator which takes inflation into account for you and represents all the numbers in today’s value.
Theoretically, if you’ve already hit Coast FIRE, your retirement shouldn’t be affected by this mini-retirement. You probably would have been able to retire sooner if the money was invested, but you’ll retire nonetheless.
When done correctly of course.
Final Thoughts
So what does everyone think about mini-retirement? Is it worth doing?
I think if you’re feeling burnt out or want to take some time for yourself it can be a great option!
What would you want to do during a mini-retirement?
Don’t forget to snag some free budget templates for google sheets and printables from my resource library!
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