Some younger workers are pausing their careers for travel or other endeavors to experience a "microretirement," The Wall Street Journal reported Sept. 3.
This differs from another separate trend among younger professional workers, dubbed FIRE, or "financial independence, retire early," whereby personal expenses are radically reduced so that upwards of 75% of income is saved for retirement.
While the microretirement trend is relatively rare, nearly 80% of new college graduates said they were interested in taking time off from work to pursue personal projects or volunteer, according to a survey from job-search app Handshake.
What happens when they return to work?
Taking microretirements in one's 20s and 30s can entail a drop in retirement savings and difficulties landing a job quickly. For Dana Saperstein and her fiance Ben Pecher, who paused their careers to hike the Pacific Crest Trail, landing a full-time job afterward took longer than expected, Ms. Saperstein told the Journal.
A career break can also mean losing ground on savings for retirement, given that money in a 401(k) compounds over time, the Journal wrote.
For example, a 30-year-old who invests 15% of their $90,000 salary with a 5% raise each year worked could end up with $600,000 less in their investment balance at age 65 if they took a year off work once a decade, compared to if they did not, Julie Everett of Financial Finesse told the Journal.
Those interested in taking a mini-retirement should set aside more than 15% for retirement earlier in their careers, Ms. Everett said. Someone interested in retiring by 67 should have double their annual income saved by 35, according to Fidelity Investments.