How And When To Take A Mini Retirement
Have you ever thought about retiring early and then realized that you aren’t ready to stop work forever, just yet? Well, why not consider a mini-retirement instead?
Think of it as a gap year or a sabbatical for grown-ups that have enough money to have a good time. Before we started Money Nuts, Darren and I did just this. We spent a year with our children in South East Asia on a mini-retirement.
Does that sound good? It was great. So let’s look at how you might be able to take a mini-retirement too.
The Lies People Tell About Mini-Retirements
I have a friend, let’s call her Cheryl. Cheryl is the most negative person that I’ve ever come across. She can find a reason NOT to do anything. This is what she says about mini-retirements:
- You can only do it if you are rich! This isn’t true. It does mean that you need to be realistic about what you can achieve but anybody could take a whole month off and have a great time for less than $2,000. You don’t need to take a whole year off when you’re 25 to have a mini-retirement.
- If can only be done by the self-employed. Also, not correct. In fact, if you bookend two vacation years, you can take a month off from work in almost any job. Though if you want to be self-employed; we recommend that you start your own blog.
- You need to be debt free. Look, debt free is important. You know that Darren and I no longer have any debt, but you still have a life to live too. You can take a break from paying off the debts for a short while without feeling guilty. As long as you start again when you get back.
- It’s going to hurt your quest for financial independence. It could if you let it. But Darren and I managed our blogs from abroad and we kept earning while we were away. We earned a little less that year as we had to pay some temporary staff to help out but we didn’t starve and our we saved and invested plenty that year too.
So, Pick Something To Do For Your Mini-Retirement Now
I’ve found that people who enjoy a min-retirement the most tend to have a plan for it. It’s not just “slob around on a beach for as long as possible drinking tequila”. Which might be fun for a day but would get very boring, very quickly for much longer than that.
I think there are four great uses of an extended break from work:
- Do something you would otherwise never do. We went to Bagan in Myanmar and rode in a hot air balloon over the temples below. We went diving in Palawan in the Philippines. We ate with monks in Thailand. We met with the survivors of genocide in Tuol Sleng, Cambodia. Our year in South East Asia wasn’t a vacation, it was a learning experience. Darren, I and the children all grew from the experience.
- Pick a passion project and do it. If you’ve always wanted to volunteer or to create amazing art or whatever, a mini-retirement can be a great way to do that. The more you can save each year, the more often that you can fund a passion project mini-retirement.
- Spend it developing your financial freedom. If you go somewhere cheap, like South East Asia, and rent out your home while you’re away – you can find that you can earn a lot of extra cash. That can self-fund the time away or even add to your savings and investments. You really don’t need to be rich to take a mini-retirement, it might make you richer.
- Start or grow your online business. As you know Darren and I blog for a living now. We spent a lot of time in South East Asia starting new blog projects. Two of which worked out brilliantly for us and we’ve been very glad that we went somewhere for fresh ideas. It’s also where Money Nuts occurred to us but we built this after we got home.
How To Budget For Your Mini-Retirement
By now, you should have your own budget. If you don’t – you really need to start. I’ve shared a really simple process for this in the past; check out how you can start budgeting without becoming an accountant here.
Take your base rate for the month and then subtract all the things you won’t be using. Get rid of water bills, electricity bills, etc. and add any rental income from your home. That’s the money, you have to spend without the cost of the mini-retirement.
When Darren and I did this, we found that the rental income was more than our outgoings. So, we found it very easy to afford a mini-retirement. Airbnb was a great way to make extra cash. You might want to try AirBnB to save some money while you take your mini-retirement too.
Work Out The Costs Of The Mini-Retirement Itself
Then work out what the cost of your mini-retirement will be. So, if it’s a month in Mexico, it might be $2,000. If it’s a year in the Galapagos, it’s going to be quite a bit more.
Add the cost of the time away (or subtract any surplus you have from renting out your place) and now you have the full cost of your mini-retirement.
Divide that number by 12. That’s how much you have to save each month to fund a mini-retirement. Most people find at this point that this isn’t a very big number. Darren and I spent, on average, just $1,500 a month on our year in South East Asia and that was with the kids!
Now, if you can’t work out how to save that much money each month, don’t give up.
Then the question becomes, how do I get that extra money each month? Here are 52 ideas to get you started with that.
Get earning. You’ll be so glad you did when you’re enjoying your first mini-retirement.
If you’d like to retire for good, then check out this article Darren wrote which explains how to retire in just 10 years!