Instead Of One Big Retirement, Take Mini-Retirements!

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]

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Comments

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  1. Sure…except for that whole middle part (20-40 years) where you’re raising children and putting them through college. So by the time you’re done with that, it’s basically “real retirement” time.

    But what do I know, I’m just a dumb white breeder. Nobody listens to us anymore :D

  2. trecool95 says:

    i’m in

  3. backbroken says:

    I can just envision a future interview…

    Prospective employer: “So, I see you have several gaps of time in your resume. Care to explain?”

    Me: “Those aren’t gaps. Those are mini-retirements.”

    Prospective employer: “Thank you for your time.”

  4. B says:

    Sounds like Step one is find a publisher who will pay me to write about my “mini-retirement” That might be the most difficult step.

  5. BuddyGuyMontag says:

    Making 32K in Thailand? Doing what? Oh, never mind…

  6. Everybody is not fortunate enough to have a job/reliable income waiting for them when they get back from mini-retirement.

  7. BlondeGrlz says:

    So he ‘saved’ $32,000. But he made nothing. Quitting your job and canceling your cable do not balance each other out.

  8. redkamel says:

    I dont understand how he saved money by not working and traveling around the world. Live in hostels when at 40? camp with your 40 y/o wife? or did he rent his bay area apartment? cause I dont have one of those.

    also,what about getting a job when you get back? as you get older thats going to be harder and harder to do…

    I like the idea, but I dont think it will work for many people.

  9. BuddyGuyMontag says:

    @backbroken: Only someone who is uncreative would admit the truth like that. There’s a million answers that’s better than that.

  10. savvy9999 says:

    @Ash78: I have known several single people who have done this, and one couple who were infertile. All of their ‘retirements’ were supported by trust-funds.

    Normal people with kids cannot possibly fathom doing this. Kids need routine & stability, as much as possible, in their relationships with other kids, family, and their schooling environment.

    How is one going to guarantee having health insurance for one’s whole family, daytripping about SE Asia?

  11. MCShortbus says:

    I agree with all of the above posters, and will add this: I have not had a job for a month before (job hunting) and honestly, I felt like I was going to go ****ing crazy. Where I live (MA) there is just not enough to do to keep me occupied. There are only so many hikes/bike rides you can go on before it starts to get a little tiresome for me. I guess I just like to work…

  12. jamesdenver says:

    @backbroken:

    That depends. If you are traveling, learning a language, bike touring, or DOING something I think it would be a positive thing to bring to an employer.

    No one should feel ashamed about taking time off do pursue personal goals, raise kids and what not. Its time for employers to realize that too. If I take six months off and look for work again you bet I’ll be proud of that experience. Those who are chained to a desk for their lives are simply jealous.

    I save as much as I can, share a car, and since I have four weeks of vacation I actually CAN take two weeks off two times a year and travel to cheap places like South American and Eastern Europe.

    Its not exactly a “mini-retirement” – but its close enough for now.

    james [www.futuregringo.com]

  13. Tracy Ham and Eggs says:

    I’m actually in one of these now. After my self employment crashed and burned I took classes, worked maybe a week out of every month and looked around for the perfect job (which starts next week). Of course it killed my savings, but Im a much happier person and am looking forward to going back to work.

  14. mike says:

    I agree with the “coming back to work” issue. Most employers question breaks in work.

    So do most banks.

  15. fostina1 says:

    im in a position that i accrue vacation days at 1.5 a month up to 30 days max. so in theory i could take almost a whole month off paid every year. i have yet to save over 6 days. but one day i will take a month off.

  16. foxbat2500 says:

    Awesome article. Thanks for posting it.

  17. dewsipper says:

    I could “save a lot of money” by taking what I have and running off to a much lower cost-of-living country for six months.

    It doesn’t sound like he really quit work and “retired”, either. To quote him, “I think one assumption that [you’re making] is that you spend and not save money on a mini-retirement.” Take a good look at that one. If you are shelling out cash and not getting an income (ie not working and taking a mini-retirement before retirement age), how are you not spending money?

    However, with the comment “I actually saved $32,000 when compared to sitting on my couch watching The Simpsons in my apartment in the Bay Area.” Sounds like you save money moving to the lower cost-of-living country, instead of staying in the US. Well, duh. But you are still SPENDING money unless you’re earning money. And if I’m earning money, I’m probably working. And if I’m working, then I really don’t think I’m going to be calling that a retirement.

    I would think it safe to assume that his house is paid off. Moving/storage or rent expenses for those six months would not lead to much of a savings either.

  18. jamesdenver says:

    @linus:

    So you should work from age 22-55 straight only taking a two week vacation here and there?

    Let employers question “breaks in work” – and have a good/compelling experience to share on how it sets you apart to handle the job.

  19. akronharry says:

    Well, if your employer realizes that you weren’t missed during a mini retirement……..

  20. Vicky says:

    I love the idea of taking a month of now and again throughout my career to do what retirees I know actually do – that is, take some time to volunteer for a good cause, tend to my garden, learn new skills, read a few good books, write a novel, and spend time with family.

  21. thoog says:

    Why do people feel the need to sugarcoat everything? Why not drop the bullshit and call it what it is – continuing to work? It’s not a retirement, it’s a different job. I guess there are a lot of people who have to use soft, fuzzy terms because they don’t have the spine to face the truth.

  22. ideagirl says:

    I’ve been doing this for 25 years, with and without kids. My life has definitely been more interesting than my friends. And no, my children are not behind in anything. Both finished high school and have gone on to careers and college.

  23. enm4r says:

    Don’t teachers have mini-retirements every year?

    I think it’s a good idea, in principle, but hardly the way he suggests. Probably the easiest time is between jobs. Leave one with the start date for the other a month or so out. I know a couple people who have done this. I also plan to take a solid 3 weeks of vacation off straight next year, but this is hardly something everyone has offered to them.

    The “mini retirement” is great, but the logic is completely skewed in his finances. If he “saved $32k” why would he ever come back? Why not save 64k by taking two in a row? Obviously he knows the answer to this and is misrepresenting the financial situation.

  24. samurailynn says:

    I knew a professor at a college in South Korea. Every seven years (something like that) they get to take one year off work with paid salary for a sabbatical. He used the time to come to the US where his kids were in high school abroad and develop his English skills. I would love it if I could find an employer that would let me take a year off work every seven years.

  25. DubbleB17 says:

    The only advice i can give is to take a look at his book, i have recently gone through it and i can tell you that it does present an alternative to what most people see as a way of living now.

    Also, it explains how it is very possible to take your kids with you on these mini-retirements. Great book and great article.

  26. kariokie says:

    I had my first mini-retirement five years ago, though I didn’t think of it that way at the time. I quit my job, moved across the country, and lived on a sailboat in a marina. After about six months I took a job testing video games for fun, and six months after that I started a new “big girl” career.

    It was so nice to just get my head on straight and to be able to do whatever I liked. (Much of which was wandering around on the beach, working on a movie set as a PA, reading, playing video games… it was just one very, very long lazy weekend.)

    When this job wraps up — it’s a small company and at some point we’ll either get big or move on — I’ll do the same, though likely in another country now that I have more travel experience.

    Anyhow, having a year gap in my employment didn’t cause any problems in getting this job, and I doubt it will cause problems in the future. If it does, well, it’ll still have been worth it. (As someone who quit a very comfortable job to live on a damp sailboat and use communal bathroom facilities for a year I feel like I can say that!)

    Not saying it’s realistic for everyone. But it’s nice to view my life as something more than hopping on railroad tracks on one end at 22 and tumbling out the other at 65.

  27. Nytmare says:

    @backbroken: I know, and it really stinks that we are so beholden to our corporate masters.

  28. backbroken says:

    @jamesdenver: I agree that you shouldn’t feel ashamed about it. But turnover is a huge unnecessary cost and if an employer thinks you might head for the hills (or Swiss Alps) in 3 years, they probably aren’t going to take you on as anything more than a contract employee. Admittedly, those situations work for some. (single, unattached, or independently wealthy)

    But, the single, unattached, and independently wealthy among us probably are least in need of a mini-retirement.

  29. backbroken says:

    Since somebody else is going to post it anyway:

    Step 1: Retire
    Step 2: Move to Singapore
    Step 3: ????
    Step 4: Profit

    Hey, I just realized I can save $14,000 a year on gas alone if I quit my job!! Millionaire lifestyle, here I come!!

  30. Whitey Fisk says:

    I call them “weekends.”

  31. MissPeacock says:

    I get two weeks of vacation a year and I think my employer would laugh me out the door if I requested a sabbatical. How is this supposed to work for me?

  32. missdona says:

    My dad is past retirement age and takes off 4 months a year. It’s a sales-type job, where if he’s not there, he’s not making money.

    It’s an understanding he has with his employer.

  33. Parting says:

    And where will I get the money? Huh?

    Dealing drugs and prostitution are not viable options. And I don’t have rich relatives to mooch off.

    Also, what crazy employer will hire you?

  34. Parting says:

    @backbroken: I think the purpose of retirement is that when you’re old, and don’t have as much health/stamina to work around the clock, you can finally rest some before dying.

  35. krom says:

    @MCShortbus: you’re in MA and have nothing to do? Tried hopping the bus to Boston, or somewhere else out of the boonies?

  36. You mean all that time I was unemployed in SF, I was really mini-retired?

  37. chrisjames says:

    Is this the same idea behind Da Vinci’s/Kramer’s polyphasic sleep cycle?

  38. TWSS says:

    @savvy9999: I disagree. My sister-in-law’s husband was offered an opportunity from his employer to pursue a project in Italy, and they and their three children lived there for four months. The kids got to explore a different culture and learn a new language in a new school. The college counselor at the eldest’s high school was ecstatic at how it would set him apart from other college applicants.

    Of course, it helps that they were all well-adjusted kids to begin with.

    Obviously, if the notion of mini-retirements doesn’t appeal to you, you shouldn’t do it. My father, however, worked his ass off his entire life only to be diagnosed with ALS (Lou Gehrig’s disease) four months after retiring at 65. He was dead at 67. He’d planned his entire adult life around his perfect retirement, and he was stuck in a wheelchair for most of it.

    I’m certainly considering mini-retirements now.

  39. Wormfather says:

    Ya know, there’s something wrong with me. When I take a friday and a monday off, I feel like I’ve been away for months. I come back to work and for the first 5 minutes I’ve got a smile on my face.

    Last year I took 2 weeks off and felt like I abandoned my job.

  40. Coelacanth says:

    @savvy9999: Not to mention, while it’s costly to maintain COBRA, it’s worse yet to have gaps in your health insurance.

    Perhaps it’s all just as well if you’re perfectly healthy, but the odds are against most everyone by the time retirement is on the near horizon.

  41. dtmoulton says:

    Okay, let’s say you have no kids, debt, outstanding responsibilities and have a reasonable boss/work for yourself and can unload all of the monthly payments that would accrue in a normal life…

    Even in this scenario, a normal person on an 18-mo mini-retirement would lose 18 payments into their 401k/IRA, which could add up to a lot if you lose it at the age of 35 (30 years till real retirement doubles 3 times if at 7% [rule of 7 and 10]).
    With these numbers a 30 year old who contributes 500/mo–or 9,000 dollars in 18 mo– would lose a total of $72,000 by the time you were 65.

    An option if you’re wealthy, not so much for the rest.

    Granted, this excludes the intangible value of the mini-retirement. Is it worth $72,000?

  42. Snakeophelia says:

    I have to confess, I was reared by workoholics, and became one myself. I will be 40 this year. I knew what I wanted to do when I was 19, and I’m still doing it. With the exception of one 18-month gap in my early 20’s (during which I was working part-time in my field anyway) and one two-week gap after I finished my dissertation, I have either been in school full-time, working full-time, or both, all within this one field, for the past 21 years.

    I can’t imagine it any other way. Of course, I love my field, and it pays well. Mini-retirements would be excellent, I think, for anyone who was considering changing fields, and/or who had the money saved up to afford them some exciting experiences outside of the workplace.

  43. jamesdenver says:

    @Wormfather:

    I love the predictability and stability of my job – and agree I get bored without it.

    One day I sat home while having a new a/c unit put in and was bored out of my mind.

    But that said when I travel somewhere, whether another country for two weeks of just adjacent state for a weekend I’m glad I have the opporunity to do it

  44. meefer says:

    Laziness isn’t bad, I’ve worked my ass off the past 3 years and take a Monday off once in a while just to recharge a bit. But not working for months at a time would drive me crazy eventually. There’s only so many things you can do before you run out of money. That said I do have a month of vacation tucked away, but I usually burn through 2-3 weeks of that for the holidays anyways.

  45. synergy says:

    Foreigners I’ve worked with have repeatedly and scornfully said that Americans don’t know how to relax, how to take a vacation. From reading some of these comments, it sounds very true.

  46. agency says:

    Ferriss is a questionable character of doubtful credibility. Before looking to someone as an authority figure, look at what concrete, verifiable and verified achievements he has under his belt.

  47. RetailGuy83 says:

    How do you take a 12 month vacation once a year? Isn’t that just called retirement?

  48. Skankingmike says:

    @Wormfather: DEFINATLY!

    I took a week+ off and went to Puerto Rico and was forced back on the plane at some point against my will.. when i got back to work, i thought i was in another world everything was foreign to me..

    I like the idea of mini retirements. Personally I’ve been saying i plan on retiring when I’m 40 since i was 15, it’s a little dream of mine, i haven’t quite gotten too yet.

  49. LibidinousSlut says:

    sorry to sound troll like, but so many of you guys are like oh it can’t be done. or oh it will affect my finances. you know what, you can’t take the money will you, and if you want to do it you can; the question isn’t can you do it, it’s how can you do it, and do you want to do it? you know. I spent 7 months living in france and getting paid for it (survival wages but still) while only having to work 12 hours a week and getting a month and half of paid vacation.

  50. mmstk101 says:

    I could go for a good mini-retirement right about now!

  51. anachro882 says:

    Travel the world and save $32,000 while doing it? Where do I sign up?

  52. William Mize says:

    While some of what Tim has to say is pretty valid, I just get the Aleksey Vayner vibe from him.

    [gawker.com]

  53. mzs says:

    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.

  54. chinadoll724 says:

    “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?

  55. richcreamerybutter says:

    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.

  56. RetailGuy83 says:

    @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.

  57. daviddunnem says:

    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”