Micro-retirement: a new approach to work-life balance

In recent years, the concept of micro-retirement has gained traction, particularly among younger generations seeking a better work-life balance. This trend is reshaping how some people think about their careers and retirement, offering a fresh perspective on how to integrate leisure and professional growth throughout one's working life.
 

What is micro-retirement?

Micro-retirement involves taking short, planned breaks from work to focus on personal interests, travel, education, or simply to recharge. Unlike traditional retirement, which typically occurs at the end of a career, micro-retirement can occur throughout your working life. This approach allows individuals to enjoy life's pleasures and tackle their bucket lists while they are still young and active.
 

Who coined the term?

The term "micro-retirement" was popularised by entrepreneur Tim Ferriss in his 2007 book, The 4-Hour Workweek. Ferriss advocated for designing a lifestyle that integrates work, leisure and personal growth, challenging the traditional notion of deferring enjoyment until the later years of life.¹  
 

Why is micro-retirement gaining popularity?

Several factors contribute to the growing popularity of micro-retirement:

1. Changing workforce dynamics: Millennials (those typically born between 1981 and 1996) and Gen Z (those typically born between 1997 and 2012) tend to value experiences and work-life balance over traditional career success. The rise of flexible work arrangements and ‘gig economy’ roles makes it easier to pause work without jeopardising long-term career prospects.

2. Health and well-being: Frequent breaks from work reduce the risk of burnout and promote positive mental health. Micro-retirements offer opportunities to recharge, which can lead to increased productivity and job satisfaction upon returning to work.

3. Personal growth: These breaks provide time to explore hobbies, learn new skills, or focus on personal goals. This can lead to enhanced creativity and innovation in one's professional life.

4. Financial planning: With careful financial planning, individuals can ensure they have the resources to support these breaks. This involves saving a portion of income specifically for micro-retirement periods and maintaining up-to-date professional skills, to facilitate a seamless transition back to work.
 

The financial impact

While the idea of taking regular extended breaks throughout your lifetime may sound appealing, keep in mind that it may have an impact on your super savings over time. Experts estimate that a 26-year-old who takes a year off each decade could end up with 20% less in their super by the time they retire.² This could have a significant impact on your lifestyle in retirement. Those thinking of taking up this trend might want to consider making additional contributions to their super, to help make up the shortfall.

Micro-retirement is more than just a trend - it's a shift in how we approach our careers and personal lives. With careful planning and saving, it could offer a promising alternative to the traditional career path, allowing individuals the opportunity to enjoy the present while still planning for the future.

¹ Gen Z Mocked for 'Micro-Retirement' Trend: Taking Time Off to ...

² Career news: Experts warn new micro-retirement trend growing in popularity comes with risks