People younger than 50 resist thinking about retirement because it seems so far away. Yet with changes in the way workers are planning their careers, you may want to give yourself the opportunity to take several breaks over the course of your working life.
Breaking up your retirement
Traditionally, having multiple careers was relatively rare. Workers tended to get all their education early in their lives, got jobs that they held for 30 or 40 years, and then retire with a pension, a gold watch, and a pin for long service. Switching careers in midlife was difficult, with age discrimination and popular perceptions making it nearly impossible to start over from the bottom in a different field.
Now, however, the situation is much different for those entering the workforce. Employees can't count on their companies even existing three or five years from now, let alone for the rest of their working lives. The training that workers receive in school and on the job quickly goes out of date. Increasingly, workers who get laid off or displaced have to obtain a brand-new set of skills in order to compete for desirable jobs.
Also, even if you don't want to make a big career change, you may still want to take a break for a year or two in order to catch your breath. Given that many workers don't even take all the vacation time they're given, burnout is common, and taking some time off now and then may be just what you need to get perspective. According to CNN Money, many companies, including American Express
Making allowances for these breaks during your career requires a great deal of financial planning. While traditional retirement planning gives workers decades to save up enough money to go without regular income, thinking about a year or two without a paycheck when you're 35 or 40 means you have to start saving seriously right away.
Planning for a break
To be ready when opportunity strikes, you'll need to do a few simple things. First, estimate how much money you'll need. When thinking about your money needs, don't just include your everyday living expenses. You'll also want to provide for extraordinary costs, such as tuition and fees for an advanced degree or continuing education, travel costs, and money for a job search. In addition, unless you negotiate with your current employer to return to your job after your time off, be conservative about how long it'll take for you to find work once you finish your break.
Once you know how much you'll need, the next step is saving it. Planning for a break closely resembles planning for other one-time lump sums, such as a car purchase or a down payment on a home. Keep in mind that while traditional retirement savings take advantage of tax-favored accounts like IRAs and 401(k) plans, you'll want to keep your break fund in a regular account in order to have access to the money before age 59 1/2.
Finally, you'll need to choose investments. On one hand, you have less time before you'll need the money, so you'll be less able to weather sustained market downturns if you invest aggressively. On the other hand, you may have difficulty saving very much money, especially early in your career. If you only have a little bit of savings, you may need to increase your risk in order to have any chance of reaching your goal.
Get the scoop
If midlife breaks sound like a good idea to you, you're not alone. You can learn from those who've blazed the trail ahead of you. The Fool's retirement newsletter, Rule Your Retirement, features a number of stories from people who've done unusual things, including early retirees, people who've taken extended sabbaticals, and those who've already retired. Sign up for a free trial and see how they've taken time for themselves while they're still young enough to enjoy it.
As things change in the workplace, retirement planning has to follow suit. By acknowledging the new realities of having multiple careers during your lifetime, you can plan for the breaks you'll need both to compete in the workforce and to find the happiness you deserve.
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Fool contributor Dan Caplinger will be ready for his next break, though he's not sure when it will come. He doesn't own shares of the companies mentioned in this article. FedEx is a Stock Advisor recommendation. The Fool's disclosure policy never takes a break.
