This Is the Secret Trick to a Successful Micro-Retirement

Leaving your nine-to-five job to backpack through Southeast Asia or to spend more time with your friends and family may seem tempting, but if you want your micro-retirement to be successful, you’ll want to iron out the specifics before you resign.

A micro-retirement, is essentially a career break, a pause in your working life to reset, explore, or regroup. People take these breaks for many reasons: to recover from burnout, reevaluate career goals, raise children, or simply enjoy life outside of work.

However, quitting a job without another role lined up isn’t for the faint of heart: you’ll want to have a financial plan for covering expenses and many months of savings built up.

The Importance of Planning

“Step one is creating a financial plan,” said Nathan Sebesta, a CFP and owner of Access Wealth Strategies. He recommends figuring out the length of your career break and then saving up enough money to cover your expenses for that period.

“When you’re not working, you’re going to be spending more money than you think because you’ve got this extra free time,” said Sebasta. “I would be very conservative with those numbers.”

When it comes to figuring out where to keep your money, experts suggest putting it in an account that offers interest and provides easy access to cash, like a money market fund or high-yield savings account.

Be Ready for Roadblocks

Ashley Rittershaus, CFP and founder of Curious Crow Financial Planning, notes that people should also be prepared for any potential hiccups that may arise.

“There are risks involved with quitting your job and taking a break, including potentially having trouble finding a job at your desired salary when you’re ready to re-enter the workforce,” she wrote in an email to Investopedia. “It’s best to have a backup plan, which could include accessing other assets, reducing expenses, or taking a lower-paying job.”

Both Rittershaus and Sebasta suggest drafting a budget for healthcare costs, too. Since most people receive health insurance through their employer, quitting your job can mean losing access to your insurance.

“There are marketplace options, so if someone’s income is low enough, they can even qualify for some subsidies,” said Sebesta.

Evaluate Your Personal Priorities

Beyond the financial aspect of planning your break, you’ll want to think about what you want to get out of your micro-retirement and how you plan to spend your time.

“It’s also important to understand the ‘why’ behind the career break and to take some time to think about what a successful break looks like for you,” Rittershaus wrote.

And if your goal is to feel rested and ready to return to work, you may want to plan for a longer micro-retirement.

Kira Schabram, an assistant professor at the University of Washington, has studied people who have taken career breaks and found that people generally need longer breaks to feel recharged.

“In order to come back just mentally refreshed, the amount of time you’re taking seems to be quite important,” said Schabram. “Six months to a year is the sweet spot in order to come back restored and recovered.

The Bottom Line

Leaving your job to take a micro-retirement can be daunting, but with advance planning, it doesn’t have to be. Before you call it quits, draft a financial plan, but remember, it’s only one piece of the puzzle.

Ironing out your personal priorities is important too. Do you want to get a new certification in order to pivot careers, or would you prefer to rest and relax with your kids at home?

“It’s not just my own work, but other scholars’ work that points to the fact that human beings really thrive when they have these periodic career breaks,” said Schabram. “In general, there seems to be an understanding that we cannot work from 18 until 65 and be healthy.”