Embarking on a “micro-retirement” can be a transformative experience, offering a chance to recharge and realign your life goals. Unlike full retirement, micro-retirement is a break from working with a plan to go back after a set time period.
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This concept isn’t about stepping back entirely, said Dana Ronald, president of Tax Crisis Institute, but taking a strategic career pause, providing new perspectives on both personal and professional fronts. To determine if micro-retirement is right for you, he said it’s important to assess your readiness for a temporary shift in lifestyle and responsibility.
“It’s not only a financial calculation; it’s also about knowing whether a break aligns with your long-term goals and priorities,” he explained.
Below are some clear signs you’re ready for this career shift. And if you are, take a look at some steps you should take to prepare.
“When I evaluate a client’s readiness for micro-retirement, I look for at least 12 months of living expenses saved separately from their emergency fund,” said Abid Salahi, finance expert and co-founder of FinlyWealth.
He’s found that clients who take career breaks with less than this buffer end up cutting their break short 82% of the time.
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Salahi assesses whether his clients have maintained in-demand skills. Those who successfully return to work after micro-retirement typically spend five to 10 hours monthly keeping their professional skills current.
“I’ve seen this reduce the average job search time by 47% when they’re ready to return,” he said.
“In my practice, clients who successfully navigate micro-retirement have mapped out their health insurance strategy,” said Salahi.
He recommended setting $15,000-$20,000 aside specifically for healthcare costs during a one-year break.
If you want a nice long break from work and you have addressed the big challenges, you’ll want to take these steps, as well, to be sure your micro-retirement doesn’t end early because you run out of money.
Salahi advises his clients to eliminate all high-interest debt before micro-retirement.
“My data shows those who enter their break with only mortgage debt are 3.5 times more likely to complete their planned time off without financial stress,” he said.
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