Why a Mini-Retirement Could Be Just the Thing to Get You Unstuck

What is a mini-retirement? It’s a purposeful break from work to pursue personal or professional endeavors. It’s a sabbatical. Mini-retirements can be particularly helpful if you’re feeling stuck personally and/or professionally. That feeling of “I know there’s more out there for me, but I’m not sure what”. It’s a great opportunity to reprogram your default daily life and let your curiosity lead rather than obligations. 

I think I first heard the term used by Jillian Johnsrud who’s done a good bit of writing, podcasts, and even created a course on mini-retirements.  She’s taken many over the course of her life, which I think is amazing. 

There are two parts to mini-retirements, each of which you are welcome to define for yourself. 

• First: Time off or ending of work. This may be permanent or just temporarily vacating a position. It may be leaving a job, a line of work, an industry, or just changing how you’ve looked at a job. Or maybe it’s a leave of absence from your business.   
• Second: The duration of time-off. It can be months or years.     

I am currently four months into a mini-retirement and am emphasizing the more traditional definition of retirement, as I want to mark leaving a chapter of my life behind. I left a job, a business, and the accountancy profession. I plan to spend somewhere around 1-2 years in my mini-retirement and during the mini-retirement I plan to start a new business.

Freeing Yourself Up for a mini-retirement

Freeing yourself up is necessary in both the figurative and literal sense.

Figuratively, you may need to give yourself permission for a mini-retirement. Many excuses have likely come to mind since you’ve been reading thus far (my employer wouldn’t let me, I can’t afford it, I’d lose my position, I’d fall too far behind). Take a good look at those excuses and determine which are legitimate and which are just obstacles that require a different perspective to work around them. Giving yourself permission requires not allowing excuses to be barriers that stop you. Excuses that surface based on unexamined fears are just resistance. Resistance is so important to recognize in all arenas of life because it’s really just a self-imposed limit.

Literally freeing yourself will become much easier after you’ve worked through resistance and have given yourself permission. It will be much easier to go to your workplace, co-workers, family etc. and let them know your plan for your mini-retirement. If you haven’t convinced yourself first, you’ll find it difficult to get around the obstacles that others place in front of you when you tell them your decision. Right now is an ideal time for a mini-retirement with the labor shortage the US economy is experiencing and economy in good shape for skilled workers. Employers are willing to be more flexible than ever for good talent. Leave of absences, additional paid vacation, part-time schedules and tele-working are all negotiable.

Personally, giving myself permission for my mini-retirement was and still is difficult. Being self-employed and moving from one business into another I had a lot of fears of whether my absence would make me lose out on business opportunities and hinder my ability to start my new business after. This step requires a lot of optimism and trust in myself that my plan and this investment in myself will work out. And of course I have days where I think this was a great plan and others where I feel like this may have been a terrible one. Mostly, the good days outweigh the bad.

Reasons for your mini-retirement

There isn’t a good or bad reason for a mini-retirement, but, if the only thing driving you to consider one is negative then you may want to do some additional thinking before pulling the trigger. I like the saying I’ve heard used numerous times in the FIRE (Financial Independence Retire Early) community regarding retirement of: “running toward something rather than away from something” as your motivation to pursue a mini-retirement.  What makes a mini-retirement different from a vacation is the exploration of something.  Maybe its relationships, a hobby, a new professional pursuit, culture, travel, childcare, etc.  The key is to figure out a positive driver for the time-off.  This will help to ensure that your mini-retirement is worthwhile.  

Here are my reasons: 

1. At the end of my mini-retirement I will be moving into a career and business that requires the development of additional skills. I want time and space to study, recalibrate and practice. I have also recognized specific skills and beliefs that made me successful in my career thus far, but will limit me in my next endeavor.
2. I have a unique opportunity where I have time available, lack of competing commitments, and I can afford the time off and it will not compromise any of my financial goals.  
3. Finally, the action of spending money on my personal development and wellbeing (rather than professional or business development) is a behavior that I want to cultivate.  I want to reverse a pattern of self-sacrifice for money. This will help develop intentionality around money and question habits that may not be helpful to me.

Defining goals for your mini retirement

Defining goals for your mini-retirement can be helpful to bring clarity and to serve as a source of accountability. Goals will help motivate you in planning for your mini-retirement, they will also help you solidify what you hope to get out of the time. Once you’ve got a written record of your goals they will also be available for review periodically during your mini-retirement to make sure you’re on the right track. In my experience, its taken the first four months just to break down the habit of the typical 9-5 workday and weekday/weekend routine. I have to keep reminding myself: all of the time is mine. I’m responsible for how I choose to spend each moment. Reviewing my goals each month is helping this sink in. 

I have a number of goals that span both personal and professional.

1. Experimenting and starting a business that provides me with purpose and meaning first and allowing the money to follow second: While I have the idea that Financial planning and coaching will be a part of the new business (or are my current direction). I’m being vague because I want this business to truly suit my core skills and the audience I choose to serve. That means being flexible. In the past I’ve been very focused on a specific outcome and then allowed financial momentum to move me and that made sense based on my financial and career goals at the time. This time is different. I want meaning to lead.
2. Focus on community: During the years I spent building my business, I neglected forming community outside of work. As a result, I miss having deeper friendships and connecting with people around life and love of culture that I’d had in other periods of my life. I want that back. 
3. Experiment with different living arrangements and travel: Thinking back to my college days, those were some of my happiest times and it’s not just because of friendships and all of the other great things about college life. It’s because of my college’s location.  It’s in a rural quiet area close to the beautiful St. Mary’s River. I’ve recognized that I’d like to spend more time in nature, but at the same time, I also enjoy city life and proximity to family and friends as well. I don’t know what this will look like, but I want to explore what’s the most ideal place (or places) for me to live.
4. Actively pursuing hobbies and interests: One is writing, which I’m happily checking off this very moment. Another is psychology and human development which I’d say is a personal and professional interest.  Other potential hobbies are music, language and culture (maybe learning french) and of course a long-time favorite yoga. 

Financial Planning for your mini retirement

Depending on how you approach money, this could be the part you start to plan first or last. If you’re fairly diligent with money, then this part will be easy for you, but actually pulling the trigger and taking your mini-retirement will be hard.  If you tend to avoid money, then you probably will be inclined to execute the mini-retirement and then make the money fall into place. I honestly think a little of both of these mindsets have a place in making your mini-retirement a reality. You can plan for a mini-retirement, but its also important to recognize when analysis paralysis is taking hold if you’re a diligent money personality. If you avoid money, a mini-retirement is not something you want to just jump into. Have a plan! 

I’m a money diligent type so I had to basically repurpose existing money and convince myself I’d be fine to take a mini-retirement. Since I sold my business this involved setting aside a portion of the proceeds in a savings account rather than investing that money.  If I hadn’t had that sale, however, I would have saved for my mini-retirement the same way I’ve invested or saved every working year of my life thus far which is: 

1. Figure out the amount needed (I’ll go into more depth on this below)
2. Determine my time horizon to meet the goal and then figure out what that equals per month or pay period in savings
3. Determine the best savings vehicle for it (a savings account for goals of 3 years away or less)
4. Create an auto-deposit or transfer each payperiod or month into the savings vehicle in 3 above.

Of course sometimes you might not have a specific date in mind or there may be other unknowns, if that’s the case don’t over analyze it, just start saving something.  You can always increase contributions or change savings vehicles, but the most important thing is to start saving by setting up automatic savings. 

Figuring out the total amount needed to fund your mini-retirement

1. Know your monthly spending

You have to have a rough idea of your monthly expenses by category for this. You can use YNAB (You Need a Budget), Mint, or create your own spreadsheet. Don’t go crazy with categories, but make sure you’ve got your essentials: housing, car, food, health care, childcare, education/student loans, utilities and then your discretionary items: dining, subscriptions, travel, etc. This is important because you need to be able to set aside an accurate amount to cover your expenses during your mini-retirement.  I recommend tracking for 6 months to 1 year so you’re comfortable that you’ve got an accurate representation to go off of.

2. Try to estimate larger expenses that might change depending on what you plan to do during your retirement and adjust your budget accordingly:
   1. Plus/Less Childcare
   2. Plus Travel
   3. Less Commute
   4. Plus Education

I built up 2 years of living expenses and have them in a savings account in order to provide for my mini-retirement.  I have specifically earmarked this amount separate from any other savings amounts I may need during this period (like travel, future home purchase, renovations, etc). In order to get to this number I started tracking my spending for 6 months before my mini-retirement. This was a change for me. I’m an “anti-budget” proponent. That’s right, even though I am a financial professional I don’t think everyone needs a budget. I opted for expense tracking now, however, because it was important that I had an accurate understanding of my spending habits in order to make sure I set aside the right amounts for my mini-retirement.

Can you turbocharge your plan?

Hopefully these last two steps didn’t discourage you. If you feel like the amount you need is huge and you’ll never be able to save for it, there are ways to cut expenses down. You also may be able to find more room by thinking harder about expenses that might change from #2 above.  This may require some mental flexibility and mindset shifts on your or your family’s part. Some ideas are:

1. Renting out your home – short term rentals of a room, renting your whole home while traveling, temporarily moving are all options.
2. Side hustling before or during your mini-retirement – this is especially helpful if an interest you want to explore can pay you while you’re working and learning. 
3. Repurposing other savings – once we designate money for a purpose it’s hard to repurpose it. If you’re already a diligent saver or are saving for early retirement, there’s likely some wiggle room in your money, but a mindset shift or flexibility will be required!

When a goal feels hard, I find that weighing the possibility of not ever achieving that goal against an alternative that might help get me there can help identify resistance and allow me to reprioritize what’s most important to me.  An example of this: Let’s say I was an aspiring writer but need to create some space and time for education and practice. If I never allow this space and time I may never realize this dream. When I compare never realizing this dream to moving out of my house for a year and renting it out, it starts to put things in perspective.  When you pit those two things against each other it helps you to see how small the home rental would be in the grand scheme of things.