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]