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The Smarter Alternative to Early Retirement

By Catherine Brock – Jan 26, 2020 at 6:47AM

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Feeling unsettled in your job and life in general? A sabbatical may be your solution.

Feeling restless at work again? It won't help to count the days until you retire, especially if those days number in the thousands. That might only get you thinking about the contradiction of retirement: By the time we have the freedom to do what we want, we could be too old to enjoy it.

Of course, life doesn't have to go that way. More workers are choosing to give themselves a mini-retirement experience in the form of a sabbatical, an extended leave from work that can last a month or a year. Some employers support the break; according to the Society for Human Resource Management, 16% of companies have either paid or unpaid sabbatical programs. But even workers who don't have sabbatical benefits are opting to quit their jobs and live on savings temporarily -- in the name of experiencing life outside of the office.

Woman outside enjoying the snow

Image source: Getty Images.

Quitting a job for a sabbatical is a gutsy move. You obviously run the risk of not finding gainful employment once you're ready to reenter the workforce. That's not the only downside. Spend your savings now on a sabbatical and you eliminate any chance of early retirement -- and probably commit yourself to a late retirement instead. And then there's the possibility of a market downturn. If your portfolio suddenly drops in value, you might regret the decision to leave your job.

Even with those risks, the time away from work might be worth it. Here are five reasons why.

1. You can enjoy a wider range of activities

Rugged adventures are far easier to enjoy when youth is on your side. There is a point in life when you'll feel too old to backpack across Europe or road-trip through Australia. If your bucket list includes high-energy, outdoor experiences that you can't accomplish within regular paid vacation time, a sabbatical is your solution.

2. You can try your hand at entrepreneurship

A sabbatical doesn't have to involve jet-setting around the world. You could also take time off to start a business or write a novel. If this is your aim, set a clear timeline for yourself and define the circumstances that would send you back into the traditional workforce. For example, if you launch your business and it immediately generates $500,000 in revenue, you'll probably stick with your entrepreneur role. But what if your business makes $20,000 in its first year? Establish what success looks like upfront so you know clearly when to start looking for new opportunities.

3. You can learn a new skill

If you're interested in changing or expediting your career path, you could devote the time off to education. A new degree or new qualifications may propel your professional life in a more interesting direction. And if an outcome of that is a bigger paycheck, then the sabbatical ends up being worthwhile financially.

4. You can return to the workforce with a fresh perspective

Workers who have sabbatical benefits and return to their old jobs often say they gain new perspectives during their time away. As a result, they come back to the office with more resilience and creativity. Those are two career-boosting qualities that make you a better employee, whether you return to the same job or a different one.

5. You can clarify what type of life you want

A new perspective might improve your work skills, but it can also prompt you to rethink your life path. If you're feeling restless about life and work, a sabbatical can give you the time and space to define the life you really want. Plan on test-driving ideas by volunteering or working part-time in a field you're passionate about. 

Next steps for sabbatical planning

Dreaming of a sabbatical is quite different from actually taking one. As a first planning step, review your finances. Assuming you're under the age of 59 and a half, you can't fund your sabbatical with 401(k) or traditional IRA funds, unless you want to pay steep penalties. You could, however, access other savings accounts or your Roth IRA contributions.

As part of your pre-sabbatical financial review, consider:

  • What effect your time off work will have on your retirement planning
  • How you'll pay for health insurance
  • What household expenses you can cut out if you plan on traveling
  • How much money you'll need to cover living expenses

If you decide you're not financially ready now, make a savings plan to get there. Review your budget and look for expenses to cut out, then send those savings to your sabbatical fund. You may find it easier to get motivated around this savings goal versus retirement savings, but don't give up on your retirement plan. You'll still need that money later, even if retirement is still thousands of days away.

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