Budgeting & Savings

Is Micro Retirement A Smart Move? Or Are You Just Burning Through Your Retirement Funds?

Your alarm goes off. You snooze it… for the third time. Then, with a groan, you finally drag yourself out of bed, knowing that that was the last snooze you could afford before being late. You start getting ready for work and mentally prepare yourself for the long day ahead. It’s just 6am, but already, you feel tired.You’re not alone.Every day, millions of people drag themselves through the same routine, grinding for money. It’s exhausting and demotivating, and over time, it starts to eat away at you.We start to question what all this is for. To pay the bills? To one day afford our own place? To eventually (or hopefully) retire in comfort?But while the first two seem attainable, retirement feels like a distant dream that is decades away. Moreover, by the time we finally get there, many of us will probably be too old or burned out to enjoy it.What you need isn’t a vacation. What you need is a break from the cycle. Now.And just like you, that is why more and more people are turning to micro retirement.The rise of micro retirementThe idea of working non-stop until you’re 60 or 65 before you can enjoy your life is slowly evolving. In its place, many people are practicing what is known as micro retirement, where they take short, intentional breaks from full-time work throughout their lives.Whether this means travelling the world for a year, volunteering for a cause for six months, or simply taking a few months off just for self-care, micro retirement gives you the chance to enjoy life now, rather than saving everything for one long retirement at the end of your working life. Importantly, micro-retirement doesn’t mean giving up your career or retiring early. Instead, it’s about intentionally stepping away from work at intervals to recharge, explore passion projects and reconnect with what truly matters.And it’s easy to see why micro-retirement is blowing up right now. In today’s increasingly fast-paced, demanding, and sometimes even toxic work environments, many workers are burning out and feel the need to step away. Taking a break from work can lead to better mental health, higher life satisfaction, and even personal growth or self-discovery.This shift is especially evident among younger generations, who are reshaping traditional career paths. They often crave flexibility and prioritise meaningful experiences over climbing the corporate ladder – a trend reflected in the rise of remote work and the gig economy.Behind the scenes: How will this affect you and your finances?While we are all for prioritising your mental health and taking meaningful breaks, the reality is that micro retiring does have financial implications. Taking extended time off work, especially without an income, means you’ll likely need to dip into your savings, or even your retirement fund, to cover expenses. I mean, how else would you be able to pay for your mini breaks?The financial trade-off is clear: regularly dipping into your savings now will reduce what you will have later. On a broader scale, failing to plan your micro retirement properly can lead to serious financial consequences such as debt, cash flow problems, and long-term financial instability.Beyond the dollars and cents, there are career-related considerations too. Taking too many career breaks may affect your chances of a promotion or make it harder to remain competitive in certain fields, especially industries that evolve quickly. Over time, this can impact both your earning potential and your professional development.Ironically, this could mean having to work longer, even past the regular retirement age to make up for the shortfall. Without a clear strategy, these short breaks can essentially cause more harm than good.But having said that, micro retirement is totally doable with a bit of planning.How to micro retire responsiblyTaking a break from work can be fulfilling, but it requires careful planning, especially if your funds are limited. Here’s how you can make it work: ​1. Come up with a solid plan​Start by calculating your monthly living expenses, including essentials like rent, bills, groceries, insurance and loan payments. Knowing how much you need every month will give you a clear idea of how long your savings can sustain you.​Aside from having enough savings to cover your basic needs, you also have to account for one-off expenses and potential emergencies. That’s why building an emergency fund is crucial for micro retirees. Ideally, set aside extra savings that can cover you for at least a few extra months on top of your planned break. This is to create a financial buffer, in case your return to work takes longer than expected.But before you hand in your resignation or request for a break, take the time to map out your micro retirement in detail. Set a clear timeline for when you intend to reenter the workforce, along with a realistic budget. Most importantly, remember to stick to them!Having a specific plan helps you stay disciplined, avoid overspending and maintain financial control, reducing the chances of needing to dip into your emergency savings.2. Live below your means and prioritise savingMicro retirement isn’t something you just do on a whim. It requires a lot of planning and even some sacrifices along the way. As the goal is to save as much as possible while you are still working, you’ll need to cut out all unnecessary spending and adopt a more minimalist lifestyle.This requires a lot of discipline and self-control, so be prepared to make some trade-offs. Remember, the more you save during your working years, the more flexibility you will have during your break. ​3. Realistically plan your re-entry into the workforceSince micro retirement isn’t permanent, you will eventually need to return to work. And depending on the industry you are in and how long of a break you took, you may need to refresh your skills or even upskill to give you a competitive edge over your peers.To make the transition smoother, start preparing early. Stay informed about changes in your field and keep up with industry trends, even during your time off. This will help you stay relevant when it is time to step back into your career.4. Consider part-time work during your breakYes, we know that you are micro retiring to take a break from work, but if your funds are limited, so are your options. Think shorter breaks or having to cut back on activities that cost money.One way to ease that financial pressure is by taking on part-time work. This can help you stretch your savings and give you a bit more freedom during your time off.But as you don’t want to overwhelm yourself with another demanding job, because that would defeat the whole purpose of micro retiring, consider taking roles that are low-stress and flexible.Perhaps the biggest takeaway we can gather from all of this is that we don’t need to wait until we are 65 to start living our best lives. Make time for the things that bring you joy now, and if that means opting for a micro retirement, so be it. But just do it responsibly, with a solid plan in place and clear financial boundaries. After all, the last thing you want is to extend your working years just to compensate for your break.