Mid-Life Priceless: The Value, And Cost, Of A 'Mini-Retirement'

12 September 2019 by Lifetime in Retirement, Financial Planning

Mid-Life Priceless: The Value, And Cost, Of A 'Mini-Retirement'

Mid-Life Priceless: The Value, And Cost, Of A 'Mini-Retirement'

Go to school, get a job, work hard, retire at 65 and enjoy your golden years. That’s how it is supposed to go right? Well not necessarily according to a new and exciting global trend.

How would you like to retire in your 30s, then again in your 40s, then again in your 50s, then again in your 60s and so on? Well, for short periods of time anyway – maybe 6 to 12 months or so each. That is the idea behind the so-called ‘mini retirement’ trend.

Many people around the world are starting to take these mini-retirements during their working life, and the trend is growing. Going on mini-retirement can be a liberating experience for anyone keen to travel, spend time with their family, pursue interests or hobbies further, or start that business you’ve always wanted to. And by having multiple mini-retirements during your life it means you are often able to start new careers in completely different industries even after the traditional retirement age comes along.

But be careful because these mini-retirements require some serious planning!

Whatever you think of the idea, mini retirements are growing in popularity, especially among the younger generations who seek a true work/life balance and want to be able to experience as much as possible during their lives.

Says Nic Smith, “When I sold my business of 10 years, I had no set plan of what to do with my time after the official handover period to the new owners had ended. Then when that time came, I found myself wondering what to do when I got up in the morning.

Initially this was exciting, and the golf course (and the pub if I’m honest) called my name frequently. Sounds idyllic right? Well, after just a matter of a few weeks I was bored – like a school kid who is off school with no friends to play with. After considering what I wanted to do with my time, I decided to embark on educating myself in eCommerce because I liked the idea of owning a web-based business that could be run from anywhere. Subsequently I started a new online business and began applying what I’d learnt. I had a lot of fun doing this and found it extremely rewarding.

Along the way, my self-education deviated into financial services/investing and an opportunity came up with Lifetime to train as a Financial Adviser which I decided was something I really wanted to do for the next phase of my career as it would satisfy my passion for all things financial and also allow me to meaningfully help others create their own financial path through life.

In retrospect, I think having this mini-retirement was hugely beneficial and I would recommend to anyone who is either seeking a change, wanting to renew their passion for life or simply just wanting to experience something new. No matter what stage you are at in your career, or if you know someone that may benefit from one, a mini-retirement could be something worth planning for.”

The main challenge people face when planning their mini-retirement (or retirements) is budgeting and saving. You need to consider the fact that you will need to have enough funding to live on during your mini-retirement as well as allowing for your future needs so you don’t end up impoverished in old age when you’re unable to generate an income other than NZ Super (if that still exists when you retire). And this means years of commitment and discipline, often forgoing the luxuries today to be able to enjoy the time off tomorrow.

Breaking things down, let’s consider these two key components of the financial planning for a mini-retirement, as these are the areas your Lifetime Financial Adviser can help you with.


There are potentially three core steps to take when budgeting for a mini-retirement:

  1. Decide how long you will be retiring for and make sure you stick to it. For example, you may decide on a mini-retirement of 12 months.
  2. Calculate your anticipated weekly or monthly expenses for your mini-retirement period. This is not a simple task and will require a lot of thought and research. For example, you may be considering traveling to numerous countries so you will need to account for travel costs and living costs in other countries. Consider using a budgeting tool like the one on www.sorted.co.nz to help with this step. Don’t forget to account for any outstanding debt obligations like the current mortgage!
  3. Finalise your total numbers, then add a safety buffer (the higher the better, such as 20%). This buffer could end up being the difference between achieving your mini-retirement comfortably or having to cut it short due to running out of funding early.

So now you have your target dollar value. Great. So how do you get here as quickly as possible?


This is the point to start considering the trade-offs and opportunity costs of taking a mini-retirement, and. weigh up long-term costs against short-term benefits.

  • Will your current employer consider re-employing you on your return?
  • How will you explain this gap on your CV to potential employers?
  • What would these savings be able to be used for other than your mini-retirement, such as growing your net worth?

Assuming you are comfortable going ahead with your mini retirement, the monetary total will need to be broken down into weekly or monthly saving targets to reach your savings goal within a time-frame you are happy with. 

Using some round numbers as an example, let’s say you're 35 and have decided on traveling around Australia for a year with your family in a 4WD and a caravan (check out “5 do the drive” on Facebook for an actual family doing this right now). You budgeted for expenses of $50,000, not including the cost of the 4WD and the caravan which will have some residual resale value at the end of the trip. And let’s also say you want to achieve this mini-retirement in 5 years’ time. 

Assuming you find an interest rate of 2.85% on a savings account or similar and assuming you’ve not saved anything so far, you would need to save around $180 per week for the next five years to reach this goal.

Opportunity Cost

Now for the sake of a balanced argument, I need to point out one of the ‘down sides’ to taking a mini-retirement in terms of longer-term finances. Let’s say instead of taking the mini retirement, you decide that you’re quite happy in your current role/situation and taking your usual annual holidays etc, and will continue to be happy until you reach 65.

If you now take that $180 per week and invest it into something like a high growth managed fund (or increase contributions into your similar high growth KiwiSaver fund) at an average annual return of 7% after tax and fees*, you would have around $914,000 ($505,000 adjusted for inflation) at age 65. That’s quite a trade-off in anyone’s language, and certainly requires consideration.


Ultimately, the decision to take a mini retirement or retirements is a very personal one. There are a lot of factors to consider. Each person has different attitudes towards risk; some people will find the idea of walking away from a perfectly good job absurd, while others would jump at the opportunity to take a year or so exploring their interests while they still feel young.

Whatever you think of the idea, mini retirements are growing in popularity, especially among the younger generations who seek a true work/life balance and want to be able to experience as much as possible during their lives.

Could we be seeing the next big shift in how we approach work in our lives? As society moves on from the previous ideology of working then retiring, we may be seeing the future of working careers emerging.



Are you considering a mini-retirement of your own or do you know someone that may be interested? Get in touch with your Lifetime Financial Adviser to discuss your options and make a plan for the future – who knows, you may be on track already and could take that mini-retirement sooner than you think.


Article by Nic Smith - Read More


*These calculations are purely for demonstration purposes only and not an indication of future returns.

Disclaimer: This article has been prepared for the purpose of providing general information, without taking into consideration any particular investor’s objectives, financial situation or needs.  Any opinions contained in it are held as at the report date and are subject to change without notice.  This document is solely for the use of the party to whom it is provided.

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