Mini-retirements - Episode 52

Financial Autonomy

Episode 52 – Mini-retirements

In several previous posts we’ve looked at strategies to help you achieve early retirement. I’ve often spoken about the fact that early retirement in our Financial Autonomy context doesn’t mean spending all day sitting on the couch watching the Simpsons. Our objective is gaining the flexibility and choice to pursue the things that we’re interested in, and not have our life dictated by the need to earn money.

An alternate way to gain flexibility and choice is through the concept of mini-retirements. Rather than work, work, work until a particular age, and then give things away totally, the idea of mini-retirements is that during your working life you step away and take meaningful breaks, to refresh, recharge, and explore life and the world. A mini-retirement might be 3 months long or it might be 3 years, but the idea is that you will take this time, and then return back to the income generating world. Often people planning around this approach will target several mini-retirements in their working life. For instance I know of a person whose goal is to take 6 months off every 5 years.

I think the concept of mini-retirements aligns really well with Financial Autonomy and the idea of gaining choice. So let’s jump into today’s episode and explore how you might make mini-retirements a part of your life plan.

When researching for this post one of the first pieces that I read was by Ric Kelly – How a mini-retirement brought meaning to my life. Ric certainly didn’t mess around. He quit his job and spent the next 5 years, living across 10 different cities studying, researching, writing, and having the time of his life.

One particularly interesting observations that Ric made was to not think doors will close because you’ve had an employment gap. When he was ready to return to work, the first person to offer him a job was his old boss. With that in mind a great suggestion he had was to have some fun, but also set some goals. What will you do during your mini-retirement? What new skills will you learn? If travel is part of your plan, perhaps learning a new language is a piece of the puzzle. Maybe you have a go at an entrepreneurial idea that’s been rolling around in your head. Or perhaps you’ll master the piano.

One of my clients took time out to do a Masters in a topic totally unrelated to the work he had been doing, but in an area he had a passion for. He’s got 6 months to go, and the future certainly looks interesting for him. He’ll probably go back into project management, which is where he worked before the studies, but will use the cash flow from this work to develop an environmental project that he’s formulated as part of his Masters thesis.

Tim Ferriss in The 4 Hour Work Week also wrote about the concept of mini-retirements. Tim’s definition of a mini-retirement is closer to an unpaid vacation than Ric Kelly’s 5 year break, but the objective is the same – refresh, recharge, and grow as a person. One interesting way that Tim and others have brought this to life is through volunteering in a developing country.

When I was in Cambodia a few years back I came across several people doing exactly that. I met an Australian who worked in IT, who was volunteering at a school for orphans teaching them all sorts of computer skills, from basic typing and data entry, to graphic design and web site development. It’s these sort of skills that will enable Cambodians to participate in the global economy and raise living standards.

I also met an American couple who were volunteering with a program to build houses for people. The organisation provided labour and I believe contributed to the cost of materials. What a fantastic leg-up this must provide to the people they help.

I’ve met people who have worked in animal rescue shelters in the Amazon rain forests of Peru, and others who have volunteered at school camps in Ecuador. There are plenty of opportunities that you could explore, and the personal development that you could gain would be just immeasurable.

In many of the articles on mini-retirements it appears to be something of a single person’s game. Yet mini-retirements for families makes a huge amount of sense. Your kids grow up so fast, and your opportunity to participate in their growth is a specific window in your life.

So how would a mini-retirement look for someone with children?

Well I guess the first observation is that people, most often women, taking time out of the paid work force to raise children is not something new. But that’s a long way from “retirement”, so that certainly doesn’t count.

Increasingly common though is both parents working, and simultaneously parenting and doing all the exciting normal household stuff like cleaning and laundry. With this sort of load, mini-retirements for families are possibly an even greater need than for the kid-free set.

A popular mini-retirement for Australian families is the big road trip either around or through this huge country of ours. Whether it’s with caravan or tent, there’s plenty to be explored, you’ll capture memories that will never be forgotten, and the whole family will learn an enormous amount about our environment, history, and one another.

But why stop at Australia for this type of adventure? I know of Australians who have done much the same thing in the United States (though there it’s an “RV” rather than a caravan), and I’m sure it would be equally possible in Canada, Europe and Britain.

A popular way for families and individuals to make a mini-retirement possible is to rent out their home. Rent your Brisbane home out for 3 months while you live in Thailand, and the rental income will cover the bulk of your expenses in Thailand provided you don’t stay in a hotel or resort. The likes of Airbnb make this so viable now.

Mini-retirements in a family context, in comparison to an early retirement goal, also have the distinct advantage that you can better time the mini-retirement to the life stage that makes the most sense for your family. Often, when we do the maths on when people can achieve early retirement, it arrives too late – once the kids have flown the nest.

Before we wrap this one up, I think it’s also worth reflecting on a likely key difference between early retirement and mini-retirements. If you chose the mini-retirement path, it’s likely that you will be in the paid work force for longer than had you stuck with the traditional life path of retirement at somewhere between age 60 and 65. This is of course the opposite of the outcome sought by those with an early retirement goal.

So if you are going to adopt a mini-retirement plan, just give some thought to that. Will you still be able to work perhaps through until 70 or beyond? Now if you’re a desk worker like me, then the answer is hopefully yes. But if you work in a more physically demanding job, then perhaps this isn’t so realistic.

I guess the key here is just to really think things through and plan thoroughly. Get some financial modelling done to ensure you fully understand the long term impact of taking the next year off.

So could a mini-retirement form part of your future plans?