Should I Take A Mini-Retirement or Stick It Out? (WITH AN UPDATE!)

I received an e-mail from a reader heading into the next chapter of his life: a soon-to-be empty-nester! 

He has a big question for us: should he take a mini-retirement while he’s still young, or stick it out until fully financially independent (FI)? He has a great salary and a high net worth, but doesn’t find his job fulfilling. It is quite the conundrum. 

Dear Financial Mechanic,

Any advice for someone trying to decide between a mini-retirement or sticking it out until fully FI?  Two key factors:

backpacking the tahoe ridge trail
Here we are on the Tahoe Rim Trail

Let’s Get Gritty– Money Details

I currently have a guesstimate that $1.5 million would be a comfortable FI number.  I understand the FI number is yearly expenses multiplied by 25.  I certainly expect my expense to decrease in the coming years but it is hard for me to be certain by how much.  Some reasons:

  • I have two teenagers who are about to start college.  One starts this week (yay!) and the youngest starts next September.  We have money set aside in Coverdell ESA’s for each of them which should cover most of their college expenses.  I expect my expenses to drop this year and further drop next September when we are empty nesters.  How much will my expenses decrease?  I can’t say for sure yet.
  • I am in the process of selling my five bedroom home and purchasing a 3 bedroom townhouse.  If all goes well, by December I will have no mortgage and a much smaller home to maintain and heat.  However, I can’t be certain until these transactions are completed.
  • Like everyone else, I have no idea what health care will cost in a few years.  My wife and I are both relatively healthy but costs continue to rise faster than inflation and the future of healthcare policy is uncertain.

Net Worth

Our net worth is currently $1.1 million with a split of about 70% in retirement accounts and 30% invested in non-retirement accounts.  Although I only became aware of JL Collins last year, I have been a Vanguard enthusiast since my early 20’s.  All our money is in Vanguard Index funds.

Career and Income

I am a Software Engineer with a large software company.  I have been in software for over twenty years.  My wife is a public school teacher. Together, our combined adjusted gross income was about $235k last year. My wife is 100% on board and in support of FIRE.

Our expenses were around $60 – 65k last year.  We live within our means and have zero consumer debt but still, this spending seems high. Ouch!  For sure those expenses will go down when the kids are on their own and we no longer have a mortgage (hopefully in a few months!).

We are both feeling a bit burned out with our careers and eager to focus on non-career goals.

Our Goals

We both love the outdoors and hiking.  I especially like backpacking and would like the opportunity to hike some of our nation’s long trails (i.e. Appalachian Trail and Pacific Crest Trail).  These long-distance backpacking goals require both time (up to 6 months for each trail) and physical and mental endurance. I worry that as each year passes it will become more difficult to accomplish these goals.

backpacking
Passing the lake on our hike.

We would also like to travel and possibly try van life.

Here are some quick pros and cons for mini-retirement vs sticking it out until FI (let’s assume that’s another five years).

Mini-Retirement

Pros

  • Would give me the opportunity to start working on my ambitious backpacking and travel goals.
  • Would provide an escape from careers that we no longer find fulfilling.
  • Not quite sure if this is a “pro” but it’s possible that after a few years of mini-retirement I may find a strong desire to return to work.

Cons

  • Would mean walking away from the highest salary years of my career.
  • Eventual return to working would most likely be at much lower salary.
  • The software industry evolves quickly.  A return to the workforce after up to five years away would require a significant effort to ramp up on the latest technologies.  I would guess that it would take up to 6 months of self-training just to be ready and able to score a decent position.
  • The software industry has a reputation for ageism which could make it difficult for me rejoin the workforce.

 

Sticking it out to FI

Pros
  • If we can stick it out another five years or so we can meet or exceed our FI number and retire for good with a very comfortable nest egg.
Cons
  • Ugh.  We really don’t want to keep working.

So, should we take the mini-retirement, or stick it out to FI?

Sincere thanks for any guidance and advice you can provide.  It is much appreciated.

Sincerely, 

Justin*

*Name revealed with permission

Mechanic's Musings

First off, wow! You are seriously killing it on all fronts. No matter what you decide, you and your wife have built a solid foundation that gives you a lot of freedom to make big life moves.

Secondly, you are definitely not alone with this question. Most of the core questions in money management are trying to find a balance between the here and now and the distant future. 

The way I see it, you have 5 options:

Let’s explore each of these, then I’ll summarize with my final advice.

Option 1: Full Retirement

For full-retirement to work, you would have to drastically cut your expenses. It sounds like you plan on spending much less once your children are out of the nest and you won’t have a mortgage to pay, although by how much is uncertain.

If you dropped your expenses dramatically, you could be FI right now. 

With your current portfolio of $1.1 million, if your spending dropped from $60-65k to $40-44k, you could be considered financially independent. 

Of course it is difficult to radically change one’s lifestyle, and to drop over 20k in yearly expenses would mean a big lifestyle overhaul. With all of the question marks around how much you will be spending into retirement, it is unlikely (though not impossible!) that your expenses will drop that much. 

In addition, health care is still a looming question mark, so this is likely a higher risk and less desirable option overall.

Verdict: Not ideal

Option 2: Mini-Retirement

One option you mentioned is taking a break for a few years, then returning to work later. The obvious downside is that you start drawing down on your portfolio and give up your current high salaries.

Ideally, your portfolio should be left to compound and eventually launch you into  retirement. If you start drawing down early, it will prolong the amount of work you have to take on later.

Also, you pointed out that due to ageism and quickly changing technology, it might be difficult to re-enter the workforce after an extended break. I agree that this is a factor to consider when thinking about a mini-retirement. With all of these drawbacks, it is hard to recommend a mini-retirement, but I think there are steps you can take before taking off for multiple years to decide if this is the right thing for you.

Verdict: Not Ideal.

Option 3: Sabbatical

Burn out can make it feel like we need to get out now. It can lead to drastic measures like quitting a job without a plan. However, a radical change might not be necessary! Rather than taking off 1-5 years, a sabbatical would be a great option to explore.

Negotiating a Sabbatical

If you can negotiate a sabbatical with your employers, you could take off for six months to do the Pacific Crest Trail (PCT) or the Appalachian Trail. Look at it this way—you would be very expensive to replace. They would have to post job descriptions, interview many candidates, and then train them up. It generally takes about half a year for new hires to start to feel comfortable and competent in their job. In fact, two of my close friends both quit their jobs last year to do the PCT. They worked different jobs at different companies, but both companies asked for them to come back after their adventure.

Experience the Pros of Mini-Retirement

It is possible that your employer won’t want to hold onto your job while you are gone, and that is okay. You should be able to find a job after a 6 month gap without missing a technological beat. Certainly it will be much easier to find a job after 6 months than the few years a mini-retirement would take.

If you take a sabbatical, you still get to experience the pros of a mini-retirement. You get an escape from your job and get to take on some new adventures. It’s possible that after six months you will feel refreshed and reenergized to hit the ground running at your job. If not, then you can reassess what changes need to be made.

Verdict: Ideal

Option 4: Coast FI

There is a bridge between quitting completely and sticking out a job you dislike.

You and your wife both have monetizable skills that could be used in freelance work. You are well on your way to FI, so you can do what some people call “CoastFI.” 

Coast FI is the idea that you “coast” with enjoyable jobs that cover your expenses, which lets your portfolio compound in the meantime. Although this might mean longer years working overall, the journey is made much more enjoyable.

You have the leverage to design your life. You could shift to part-time freelancing, which could bring in enough to cover your current expenses while letting your portfolio continue to grow.  Programming is easy enough to take abroad, and your wife could try out tutoring online or try other freelancing gigs. 

You have the leverage to design your life.Click To Tweet

 

This would allow you to try out van-life or a traveling lifestyle without completely dropping all sources of income.

Verdict: Ideal

With some planning and flexibility, you could try out van-life

Option 5: Stick It Out

I noticed that in your e-mail ‘sticking it out’ has less pros and one defining con:

“Ugh.  We really don’t want to keep working.”

Yes, you could continue working for a couple more years and hit your FI number. By the look of your current numbers, you are extremely close to FI. 

I plugged your numbers into the calculator Networthify to get a better idea. With annual expenses of $55,000 and annual savings of $115,000 (I left a large gap for taxes and other unknowns) you can retire in 1.5 years.

Screenshot from Networthify calculator

That is a lot faster than your projected 5 years! Just to be safe, we can assume you would be working 2-3 years to add a little padding. Does that seem more doable? 

Sometimes just seeing how close you are is enough to motivate you to the finish line. If your annual spending stays at $55,000 and you have $1.1M saved already, that means you just have to save:

0
Dollars to save for retirement

Your portfolio should generate a large portion of that, and your large amount of savings should make up the rest. In the meantime, are there ways you can make your current job work for you? 

If you don’t have it in you to stay at your current job as it is, 

Here are some things to try :

1. Drop to part-time work. One friend of mine (a software engineer) only works Wednesday-Friday. Could you figure out a schedule that gives you room for longer weekend trips?

2. Join a different team. Taking on a new role might make things a bit more interesting and give you new people to work with.

3. Change the scenery.  If you can work from home more often, it might make all the difference to how you feel about work. Whether working from  coffee shops or an Airbnb in Santiago, Chile, it could be helpful to change things up without changing jobs.

4. If those don’t work, change jobs. You have the skills, experience, and salary– but your job is unfulfilling. It’s possible that you can find a job you really love for the next 2-3 years until you hit your FI number.

You have enough of a cushion to take some risks and design a life that works for you without sticking out a less-than-ideal lifestyle that burns you out. It is almost never worth it to ‘stick it out’ if your job is affecting your mental health, but there are steps you can take to make a change and find a more fulfilling, engaging role.

Verdict: TBD

computer with code IDE next to a cup of orange juice
A change of pace could be what you need.

Two Books To Read

In their book Designing Your Life, Bill Burnett & Dave Evans go into detail about how to find that balance of work and life. Whenever anyone is at a crux in their life, from graduation to empty-nesting, I would recommend checking out this book.

 

In Work Optional, Tanja Hester does a fantastic job covering the different options I discussed in this post, from mini-retirements to full on retirement. She also deep dives into healthcare, which is a critical piece to the retiring-early puzzle.

Conclusion

Based on your situation, I would urge you to try out a sabbatical. Negotiate taking six-nine months off to do either the Pacific Crest Trail or the Appalachian Trail. Hopefully this will give you the break you need, and it may rekindle some enthusiasm for work. 

If, after taking a longer break, you are still feeling restless, it would be good to explore “CoastFI,” where you find a balance of work you enjoy and the adventurous life you want to live.

Lastly, you are so close to FI on your current schedule. If your work life is making you miserable, it’s probably not worth just ‘sticking it out.’ However, there are ways to improve your current work situation, especially if it’s just for the next couple of years.

The Final Verdict:

Time For An Update!

I cannot tell you how excited I was to see an update email in my inbox from Justin. I had been wondering how he was, especially since his timeline to FI was so short and his burnout so strong.

Dear Financial Mechanic,

A lot has happened since you created this blog post about my dilemma: Should I Take A Mini-Retirement or Stick It Out?  I see that a lot has also happened for you since then.  Congratulations on your move to Europe!
 
A quick update from my side:
  • Not long after your blog post, I took a software architect position in the same company.  This was very challenging and kept me engaged in my work over the next year.
  • We did sell our home and move into a smaller townhouse.  That left us mortgage free and lowered our expenses.
  • COVID times began
  • Eventually, career burnout returned in a big way.
  • The market continued to go up, up, up.
  • Given our lower expenses and increased net worth, we more or less reached FI.
  • I took a 3 month leave of absence from work (aka sabbatical without pay) to see if my burnout would ease.  It did not.  Shortly after returning to work I gave notice that I was leaving for good.
  • I guess that means I’m retired now!  I don’t know if it will be a mini-retirement or not.  If I get bored or financial circumstances change, then I’ll spend some time revamping my skills and return to the software game.
  • For now, I’m focused on spending time outdoors and documenting my outdoor journeys on Youtube.  It’s a fun way to share my love of the outdoors with others.  I don’t have any grand plans for this YT channel to become a side income but if it grows organically then it will be a nice surprise.  🙂
  • My wife has decided to continue working in education for now and that’s how we will get healthcare.   
    With my wife working, does that make me ‘Wi Fi’? 🙂Click To Tweet
  • As mentioned in your original blog post, “My wife is 100% on board and in support of FIRE.”  This remains true and without her support and encouragement I doubt I would have had the courage to retire from my career at age 49.
Anyhoo, today I created a new Twitter account: @justin_hikes.  I plan to use this account to reflect on my FI journey and to share my hiking adventures.  I also plan a series of Tweets that are essentially shoutouts to those people who had an impact on my FI journey.  This will include a shout out to you because your blog post provided a lot of great ideas and sparked many conversations between my wife and myself. 
 

Best regards, 

Justin Hikes

What Do You Think?

What steps have you taken to make work more enjoyable?

Have you ever taken a break from working?

Do you have any more advice for Justin and his wife?

 

Share in the comments below!

 

*feature image is from Unsplash by krakenimage, and is not Justin nor his wife .

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Jim
Jim
26 days ago

Love the update, I’m happy to hear things worked out well for Justin. I find myself in a similar situation. Very close to some version of FI and not enjoying the grind of my current work. Mini retirement sounds just right, but struggling to feel comfortable that it’s not a huge mistake. I’ve worked so hard to save, the thought of screwing it up in the last inning would be unbearable. Where do people find the courage to take the leap?

Justin_Hikes
23 days ago
Reply to  Jim

Jim, I know EXACTLY how you feel! As for finding the courage to take that leap, there were a few factors for me: (1) My career burnout had progressed to the point where I had to do SOMETHING. Either reinvent myself (eg. new skills, new job, etc) as I’ve done several times throughout my career or pull the trigger and leave knowing that I’ll likely NEVER have a salary this high again. (2) The events of the past year forced me to reflect on what’s important in my life. The pandemic was one aspect of this. Also, someone I know passed away this year (non COVID related) and it really hit me hard. He was still very young and lived a healthy life. It made me realize you don’t know how much time you’ll have in life. I want to focus on things outside of work while I have my health. (3). Lastly, my wife was not just supportive but also encouraged me to take this leap. That made a HUGE difference. All those things combined helped me find the courage to take that leap. That’s my perspective Jim. Best of luck to you. Let us know what you decide. Cheers!

Jake
Jake
26 days ago

One other big thing to keep in mind is that the vast majority of the portfolio income is in retirement accounts that are not accessible (without penalty) until they get to 59.5 years of age. That is ~12 years of only taking money from the money in the brokerage account ($330k). Definitely needs to be considered in this case since they are so young.

Justin_Hikes
23 days ago
Reply to  Jake

Hi Jake. You make a good point about retirement vs non-retirement accounts. For my case, the Net Worth figures posted in this blog were from 2 years ago. Our non-retirement accounts are considerably larger than $330k now. However, your point is still valid and it’s something we have considered. We are hoping to avoid pulling from our retirement funds early, however it is an option as FM noted in her reply. Another thing to consider, it’s not clear that I’ll never have income again. Who knows how I’ll feel after I’ve had some more time out of the work place? Maybe I’ll get re-invigorated about my career. Maybe I’ll work part time.