Zach Lytle, a 26-year-old software engineer, decided to leave his job in April 2024 to embark on a journey along the Pacific Crest Trail, a route extending over 2,600 miles from Mexico to Canada. Lytle's story reflects a growing trend amongst his peers-the rise of so-called "mini-retirements". Far from being unique, more and more Gen Zers and millennials are choosing to take periodic career breaks or "micro-retirements" despite being early in their careers.
This trend of taking extended periods off, rather being confined to the traditional retirement age, involves several months-long breaks throughout one's professional journey. This concept isn't new. Over 15 years ago, Tim Ferriss, author of "The 4-Hour Workweek", championed mini-retirements. Academia has known the concept of sabbaticals for over a century. Millennials and Gen Z are increasingly applying this idea to their career paths.
Travel content creator Leona Marlene said in 2024 in a TikTok video, “The way we think is changing. Millennials are rewriting the rules. We don't need to be stuck in an office for 40 to 50 hours a week."
One reason this trend is gaining traction is because many young people are becoming disenchanted with the conventional concept of working incessantly until retirement. Priya Malani, founder of Stash Wealth, feels this shift in attitude has been partly fuelled by witnessing their parents' struggle to balance work and life.
However, a successful micro-retirement requires a lot of planning, including financial provisions, health insurance, and potential explanations for future employers. According to Malani, the feasibility of a micro-retirement largely hinges on an individual's savings and ability to sustain themselves during these periods of non-work.
To properly evaluate whether a micro-retirement is plausible, Malani advises jotting down the duration of work hiatus along with estimated monthly expenditures. This calculation should then be augmented by an extra 20% to factor in the uncertain period of job hunting upon return.
Lytle, for instance, had saved up $20,000 and allocated $8,000 for his Pacific Crest Trail hike. He didn't need to worry about insurance as he was covered by his parents' policy during his break, albeit for a short period after turning 26.
Post his hiking venture, re-entry into the job market was tougher than Lytle anticipated and he worked at a restaurant till he found a job he liked five months later. Despite minor setbacks, Lytle believes his experience was worthwhile.
As for concerns about lost retirement savings during career breaks, Malani assures it's not something to panic about, especially for young individuals with already established retirement savings. She considers these micro-retirements an invaluable investment in oneself.
If contemplating a micro-retirement, comprehensive planning and careful financial preparation are necessary. But once you've meticulously thought through your strategy, it's essential to take the leap, savor the experience, and make the most out of your 'retirement'.