Witten by AJ Cohen https://www.businessinsider.com/author/a-j-cohen https://www.businessinsider.com/invest-your-money-mini-retirements-cfp-2022-9
I can't post the whole article as Business Insider makes you pay to read, but here are my quotes:
Colin Overweg, a financial planner with an all-virtual practice, said that taking "mini-retirements" might be a happy medium for workers who need to recharge and pivot their careers instead of dropping out of the workforce and permanently retiring early.
He said that taking this approach acknowledges the "push and pull" relationship with retirement that many of his clients seem to have.
"I have clients who cannot wait to get out of their job because they hate it, so they're pushing away from it," Overweg said. "And I have other clients who are kind of pulled into retirement because they're chasing their dream, and they're so excited that they can't wait to leave their job, because they're running towards something."
Overweg is not the only person who has made this observation about early retirement. Many investors who achieve financial independence have made similar comments about the process, and said that it's crucial to have a game plan for what you're going to do after you quit your job.
Overweg added that the most important question you should ask yourself before you decide to plan for a mini-retirement is "What are you going to do with all this free time?"
"If the answer is lay on the beach and do nothing, then maybe you do need to go lay on the beach and do nothing — for a week — and then realize how bored you're going to be," he said.
From a tactical perspective, Overweg thinks that making adjustments to your retirement planning for long sabbaticals is a less onerous task than trying to achieve full financial independence in a short period of time.
Typically within the FIRE movement, adherents attempt to save 50% of all their income to supercharge their retirement accounts. This can be extremely difficult.
Ideally, Overweg said that you should be saving 20% of your total income toward a standard retirement. But if you're trying to take mini-retirements, you need to think about what vehicles you're using, and how you're saving that 20%.
"A tactical approach might look like saving 15% for long-term retirement and then 5% for sabbaticals," he said, adding that these numbers are a general guideline and that optimal saving figures are subjective and dependent on the needs of the individual in question.
"I think it would be important to run the numbers so that you don't end up having to tap into your 401(k), and incurring any fees, penalties or taxes," he said.
Picture of Me and a friend in Santa Monica Mountains!