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Mini-retirement – where do I sign?

21 February 2018

Woman standing on beach contemplating retirement

Money & Life team

Money & Life contributors draw on their diverse range of experience to present you with insights and guidance that will help you manage your financial wellbeing, achieve your lifestyle goals and plan for your financial future.

Think a mini-retirement sounds like a pipe-dream? If you daydream about having the time and energy to get through your bucket list while you’re still young, it could be time for the blue-sky thinking and practical planning that can make it happen.

A retirement shake-up?

According to leading research agency McCrindle, adults from Generations Z and Alpha can expect to have 17 jobs, 15 homes and five careers in their lifetime[1]. All that chopping and changing adds up to a much more flexible lifestyle than their Gen X and Y parents have been used to. McCrindle’s namesake and founder Mark McCrindle reckons this more dynamic, unpredictable path through life could lead to a new approach to the whole concept of retirement. “They’ll probably take those retirement years and sprinkle them throughout their earlier life,” suggests Mark. “They might work for a few years and then take six months off, then work for a few more years and take an educational sabbatical[2].”

Is it for me?

So why should future generations of workers get to have all the fun with their career breaks and sabbaticals? Isn’t a mini-retirement something we could all do with at some stage in our working lives? It certainly makes sense to get a head start on that bucket list at a time when your age won’t hold you back. Taking some time off can also be a great opportunity to get your priorities in order and reorganise your life, work and daily habits to match your real values and most important personal goals.

But before you start plotting to perfect your paddle-boarding in the Philippines or build wells in Burkina Faso, it’s worth thinking about your particular circumstances and what a career break now will mean for your overall retirement plan. When you’re staring down the barrel of 50 with super savings that look a little meagre, a retirement appetiser now could mean waiting a long time to get to the main course and retire for real.

Stage 1: Anything is possible

Having said that, it’s important to put aside your doubts and reservations about taking a break so you can get to the heart of what it is you really want to do with your time off. This is the visionary stage, the part that can get you excited enough about your plans that you’ll be motivated to push through and find a way to make it happen.

Start by asking yourself what you would be doing if you could spend a year off work with no financial concerns or constraints. Let’s also assume you can pick up where you left off at the end of the year, with the same home, friends and job. So you won’t be losing anything in the way of security and comfort when your adventure is over.

Once you’ve come up with your idea – who knows maybe you’ll have hundreds – start thinking about where and with who you’d want to live out your vision. How long you might need – perhaps a year is too long or maybe it’s not long enough. And can your activity or plan be carried out at any time or is it seasonal? Answering these questions take your vision from something vague and abstract and turn it into something that’s more defined, with a time limit, a location and the people you’d like to have involved – if this isn’t a solo mission you’re embarking on.

Step 2: Make it achievable

Now you’ve got your vision and you’re excited to make it happen, it’s time to discover what it’s going to take to see it through and come out the other side smiling. And that means more questions, such as:

  • How long do you really need for this adventure?
  • What arrangements do I need to make for those who depend on me – children will have to be with you obviously, but what about elderly parents and pets?
  • Will you be able to carry on living in your home? If not, can you rent it out and still pay your mortgage or does it make more sense to sell?
  • What will I do with my stuff? This can be a good time to pare back your possessions for a more minimal return to the mainstream.
  • Will your living expenses be lower or higher during this time?
  • Will there be big costs to get your project or adventure started?
  • Do you need to save money to support yourself (and others) or will you continue to have money coming in with a side hustle or two?
  • Can you expect to start earning again when life returns to “normal”? Or would you benefit even more from your break if there’s less pressure to return to work?

While many of these questions are purely practical, getting your head around not working is usually tricky to sort out from a financial perspective. And that’s why getting a financial planner involved with your scheme could make it a lot more achievable. They can work with you on a budget and ways of managing your income and expenses while you’re saving for, and living, your mini-retirement vision.

So what are you waiting for? Get ready for a new approach to retirement on your terms.

Thinking a mini-retirement might be just what you need? Find out more about how to succeed in reaching your goals.

[1] The McCrindle Blog, GenZ and Gen Alpha Infographic Update, http://mccrindle.com.au/the-mccrindle-blog/gen-z-and-gen-alpha-infographic-update

[2] Big Sky, Five predictions for Generation Alpha, Megan Blandford, http://www.bigsky.net.au/articles/2015/october/five-predictions-for-generation-alpha