The rise of the mini-retirement

More Americans are rethinking the traditional career trajectory, opting for a break well before the typical golden years of retirement. Dubbed “mini-retirements,” these extended breaks from work are gaining popularity among Millennials and Gen Z professionals who prioritize work-life balance, want to recover from burnout or wish to enjoy some of their retirement while they’re healthy or unencumbered with family responsibilities.

A recent survey by Handshake, a job-search platform for students and recent grads, found that nearly 80% of students graduating from college in 2025 are considering taking time off from traditional employment.

But experts warn that leaving the workforce for six months or a year comes with financial risks, from lost income to gaps in retirement savings. Planning ahead can ensure that a temporary break doesn’t permanently derail long-term financial stability.

How to plan for a mini-retirement
A successful mini-retirement starts long before you give your notice. Planning for a career break is similar to planning for full retirement; it requires careful budgeting, an emergency fund and contingency plans, said Alonzo Nieva, a retirement plan education consultant at BOK Financial®.

Step 1: Define your goals
Nieva recommends asking three key questions:

• When do you want to take a mini-retirement? The more specific your timeline, the better you can plan financially.
• Where will you be? Will you travel, relocate temporarily or stay home?
• What will you do? Some use the time to learn new skills, volunteer or focus on personal development, while others simply seek rest.

“Answering these questions will help you determine how much money you need to save and what your expenses will look like,” Nieva said.

Step 2: Build a mini-retirement fund
While many people save for vacations, a mini-retirement requires a more substantial financial cushion. Nieva advises against using emergency savings or retirement funds for this purpose. Instead, create a separate savings account specifically for your mini-retirement.

“You want to consider this a secondary goal in your overall financial plan,” Nieva explained. “That means saving for it separately—just like you would for a down payment on a house or a child’s education.”

Step 3: Account for opportunity costs
Beyond covering everyday expenses, consider the potential earnings and retirement contributions you’ll miss.

• If your employer offers a 401(k) match, stepping away could mean missing out on months of free retirement contributions.
• The lost compound interest on those savings can add up significantly over time.
• Health insurance may become an out-of-pocket expense if you aren’t covered by a partner’s plan or COBRA.

To counteract these losses, Nieva suggests front-loading retirement contributions before taking time off or planning for extra savings upon returning to work. “If you’re going to miss six months of savings, consider increasing your contributions ahead of time to make up for the gap,” he suggests.

Step 4: Prepare for reentry
A common mistake mini retirees make is assuming they’ll reenter the job market quickly.

To help make the transition back into the workforce smoother:

• Network before you leave to maintain professional relationships.
• Save additional funds to cover three to six months of expenses post-break.
• Consider upskilling during your time off to stay competitive.

“Many people assume they can find a job within a few months, but what if it takes longer?” Nieva warned. “Having extra savings for a transition period is crucial.”

What if you didn’t plan ahead? Getting back on track
If you’ve already taken a mini-retirement and are feeling the financial pinch, don’t panic. Nieva says there are ways to recover:

1. Assess your finances. Start with a realistic look at your financial situation. Create a budget to track expenses and identify areas to cut costs while you regain stability.
2. Prioritize savings. Getting back into the habit of saving is key. If you paused retirement contributions, restart them as soon as possible—ideally with a higher percentage to make up for lost time.
3. Consider alternative income streams. If returning to your previous salary level isn’t immediately possible, look for gig work, freelance opportunities or contract roles to bridge the gap.
4. Speak with a financial advisor. They’re used to having tricky conversations about money and can help you in a nonjudgmental way. If you have access to an advisor through your employer’s retirement plan, their advice is usually low- or no-cost.
5. Bonus: Take advantage of lower income years for tax benefits. If your income was significantly lower during your break, Nieva suggests looking into Roth IRA conversions, which allow you to move pre-tax retirement savings into a Roth IRA account at a lower tax rate.

Can’t afford a mini-retirement? Try these alternatives
For those who can’t step away from work entirely, there are other ways to recharge without taking a full-fledged career break.

Option 1: Negotiate a sabbatical
Some employers offer unpaid sabbaticals or extended leave options, allowing employees to step away from work without fully exiting the workforce. If your company doesn’t have a formal policy, consider negotiating an extended leave by demonstrating how it could benefit both you and your employer—such as returning with new skills or fresh perspectives.

Option 2: Maximize time off for meaningful breaks
Instead of taking months off, you can stretch your time away by strategically using paid time off, remote work and long weekends to create the feeling of a mini-retirement without the financial strain. Pairing vacation days with holidays, taking a month to work remotely in a different location or even scheduling more frequent long weekends can offer the reset many people seek.

“You don’t necessarily need to quit your job to get the benefits of a mini-retirement,” said Nieva. “If you’re strategic, you can build in meaningful breaks without sacrificing financial stability.”

Option 3: Define what you’re really seeking
Before making a drastic decision, consider why you’re drawn to a mini-retirement. Are you feeling burned out? Looking for more purpose? Seeking better work-life balance?

Nieva encouraged people to take a step back and assess their physical, emotional and spiritual well-being—not just their financial health. “We’re all a puzzle,” he said. “If you’re feeling the urge to take time off, ask yourself what’s missing. Can you solve it without walking away from work completely?”

For some, this could mean switching to a less stressful role, improving daily routines or setting better boundaries between work and personal life. “It’s important to enjoy life now, not just in retirement,” Nieva said. “Sometimes, what we really need is a mindset shift rather than a career break.”

The bottom line
A mini-retirement can be a life-changing experience, but it shouldn’t come at the expense of your financial well-being. Whether you’re in the planning phase, recovering from an unplanned career break or simply looking for ways to recharge without stepping away, taking a strategic approach ensures that both your present and future self benefit from the decision.