Personal finance blogger JD Roth at Get Rich Slowly has been interviewing Tim Ferriss, author of The 4-Hour Workweek, about a new concept of retirement: the mini-retirement. Ferriss suggests that instead of working and saving during our careers to eventually retire and enjoy life, that we instead plan regular times of “retirement” throughout our lives. He deems these “mini-retirements.” Mini-retirements seem like they could be the same as either sabbaticals or vacations, but they differ in the following ways:
* A sabbatical is a one-time event. Mini-retirements are meant to recur throughout a lifetime.
* A vacation is short, and often involves a tourist lifestyle with little immersion in a new way of life. A mini-retirement is long (one to six months), and allows one to fully participate in his new environment.
The first question that pops up in most people’s minds when considering such an issue is “how would I be able to afford it?” Ferriss actually claims that taking mini-retirements improves your finances:
“I think one assumption that [you're making] is that you spend and not save money on a mini-retirement. Let me offer a personal example. The personal stories in the book are mostly from experiences I had between 2004 and early 2006, traveling around the world for about 18 months. During the first twelve month period of time, I actually saved $32,000 when compared to sitting on my couch watching The Simpsons in my apartment in the Bay Area.
So if I saved $32,000 by taking a mini-retirement to Panama or to Argentina or to Thailand, and I do that once a year, that’s an additional $32,000 that I can invest into a 401(k) or a Roth IRA or a profit-sharing plan…You end up at break-even, but had a mini-retirement to Thailand and you have an additional $32,000.”
Lots to consider. Is the definition of retirement changing? If so, is it moving towards what Ferriss suggests or the (more likely) delay of traditional retirement due to rising healthcare costs? And what about the concept of taking more time off during your work years while you’re young and can enjoy it? Sounds like a good idea, but can doing so be a break-even proposition financially or can you (almost unbelievably) actually earn/save more while taking mini-retirements? What’s your take on the issues?
How to Take a Mini-Retirement: Tips and Tricks from Timothy Ferriss [Get Rich Slowly]
(Photo: saramarie)
Travel the world and save $32,000 while doing it? Where do I sign up?
While some of what Tim has to say is pretty valid, I just get the Aleksey Vayner vibe from him.
[gawker.com]
I understand what he means by the ‘saved $32K’ I used to live in Chicago and then I moved to Hungary for half a year. Compared to how much rent, food, public transportation, etc was in Chicago vs. Budapest I saved a lot of money over those 6 months. Now of course I did not have my crappy paying part time jobs while in Hungary and I had to pay to get there and I was robbed – twice so I yeah I did not save any real money.
But the point is that if you can still find a place where the dollar is strong and people make way less that you do here if you take a ‘I will live there for six months’ attitude rather than ’6 month vacation’ you will save a lot of money.
“So if I saved $32,000 by taking a mini-retirement to Panama or to Argentina or to Thailand, and I do that once a year, that’s an additional $32,000 that I can invest into a 401(k) or a Roth IRA or a profit-sharing plan…”
The $32k was saved in the first 12 months of an 18 month trip. How in the WORLD would you able to take a 12-18 month trip once a year? That would leave no time to work . . . so I don’t see how that would be a mini-retirement at all. And you “save” $32k, but you also have no income to cover your “cheaper” living expenses.
Am I understanding this incorrectly?
Not only have I been doing this to an extent, but acquiring skills for secondary “mini careers” that allow me to take a break once in a while. These tend to be greatly different from my primary occupation (though have been applied to the latter).
My employment durations tend to be project-based, and you bet they benefit from my enthusiasm for a new environment (not to mention positive yet confidentiality-compliant procedure input from other settings).
Presently, you have to be flexible. It’s not like in the days of your grandparents, when you could stay in one position for 40 years.
@chinadoll724: You’ve got it exactly. The OP is a crackpot. Obviously independantly wealthy.
Lets do a little basic math. I mkae ~45K a year and after taxes and expences I have ~6 or 7 left over for retirement/toys. This makes my cost of living and US citizenship about $38 or so. Lets say I move somewhere that only costs me $6K to live there for a year. OK, I saved $32K! Horray, oh, but wait, I DIDN’T HAVE AN INCOME, so I actually lost $52K that year.
I “retired” in July of 2005. My Wife and I moved to Canada, bought a house, we had a child in May of 2006. Last January when I began my job search, found that 15 years of experience and success were a liability in looking for a position comparable to my previous salary and responsibilities. Granted this (Waterloo Region) differs from the Chicago market I moved from. It was a rewarding experience that I am glad I did, but be prepared to “start over”