People are increasingly challenging the traditional concept of retirement. As work-life balance becomes more important, some don’t want to wait until the end of their careers to enjoy time off.
As a result, the modern concept of a mini retirement—a preretirement career break—has been rising in popularity. It’s not just an extended vacation or sabbatical; it’s a deliberate pause from work that allows you to step back, reassess, and even choose a new adventure for the next stage of your life.
Here’s what to know about this trend to help you decide whether it’s right for you.
Mini Retirement vs. Traditional Retirement
Unlike a traditional retirement, which is a permanent departure from the workforce, a mini retirement is temporary. Those who choose a mini retirement intend to return to work at some point, either with their previous employer or a potential new career.
For many, traditional retirement is focused on enjoying time away from work—exploring hobbies, spending time with loved ones, or just relaxing after decades of hard work. That’s why retirement planning often involves aligning your finances and long-term goals to cover your lifestyle needs and interests for the long term.
A retirement mini-break focuses more on personal growth and exploring what you want to do, including career transitions. It allows you to test-drive retirement, providing insights into your financial needs, lifestyle preferences, and future goals.
Key Considerations to Weigh
As with traditional retirement, this career break requires careful planning. Assess your financial situation and develop a strategy that supports your time away from work, especially if you won’t have additional sources of income.
Here are the key areas to evaluate and questions to ask yourself as you plan.
Financial Implications
Review your finances to ensure you can comfortably budget to enjoy time away from work without impacting your long-term financial security.
Savings Cushion
How much do you realistically need to cover your living expenses during this break?
Debt Management
If you have high-interest debt, do you have a plan to cover the expense or pay it down beforehand?
Emergency Fund
Do you have enough in your emergency fund for unexpected needs?
Health Insurance
If you won’t maintain your employer-provided insurance during the break, do you have a plan for coverage and the costs?
Career Aspirations
This time off can be a much-needed break but could impact your career path. Accordingly, give thought to your future.
Employer Communication
Have you discussed your plans with your employer, and does it offer options to take extended time off?
Career Trajectory
Consider how this break could affect your career path, professional development, and future job prospects.
New Opportunities
Will you take time to learn new skills, expand your network, or explore new career options?
Personal Preferences
A mini retirement also impacts your personal life. Ensure your plans are aligned with your preferences.
Goals and Intentions
Do you have specific goals you want to achieve during this time, or are you looking to rest and recharge?
Time Management
How will you manage your time to make the most of this break or avoid falling into a rut?
Support System
Do you have a network of loved ones you can rely on for support and encouragement during the break?
Benefits and Drawbacks to Consider
A temporary retirement can have many advantages, but you should also consider the possible drawbacks as you plan.
Potential Benefits
- Stepping away from your job could reduce stress and improve your sleep and overall mental health.
- With more time and flexibility, you could reflect on your career and explore hobbies, passions, and interests.
- You can dedicate more time to your loved ones.
- You can get insights into your spending habits and financial needs, which can help with long-term plans.
Possible Drawbacks
- You could put a significant dent in your savings without careful planning.
- You might find it challenging to reenter the workforce after this break.
- You might have difficulty adjusting to this free time, leading to boredom.
Tips for a Successful Mini Retirement
If you’re considering taking a temporary retirement, a proactive approach can help create a smooth transition and maximize your time off. Assess your savings and budget for expenses, explore alternative sources of income, and consider the potential impact on your long-term retirement savings. Also, consider what you want during this time away from work. With a thoughtful approach, you can create a financially responsible and personally fulfilling plan.
We’re here for you!
Interested in getting personalized insights for your retirement and beyond? Contact a Bankers Life representative for financial guidance and support.
