semi-retirement

Mini-Retirements

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photo credit: Joe Lazala
The concept of mini-retirements was one of many ideas in The 4-Hour Workweek that I like. Before reading the book I’d already come up with my own similar concept of semi-retirement. The idea is that instead of waiting to have one retirement at the end of many years working you take occasional mini-retirements during your working years.

Now that I am out of school I am ready for my first real mini-retirement. My hike on the AT later this year is what I’m considering as my first real mini-retirement. I’ve taken similar trips and breaks in the past but this one is different. The main difference is that I won’t be spending all my money to take it and should actually have about as much money at the end of it as the beginning of it. The other difference is that I will have the ability to resume making money as soon as I return from my trip. In the past taking a trip of this sort usually meant quitting a job before the trip and then looking for another one after the trip was over. Now I’m not nearly as dependent on job income. I may look for a seasonal job when I return though to increase my income. This method of taking mini-retirements will likely delay my ultimate retirement but I consider the trade off worth it.

Could I Retire Now?

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Last month my alternative income was larger than my expenses.  This is the first time that has happened.  If I could continue to do that I could potentially “retire” now.  It would be more accurate to call it semi-retirement.  I’d still do things to make money I just wouldn’t have a job and I could set my own schedule.

There are several factors that keep me from being able to retire now though.  The first is that last month my income was unusually high and my expenses were unusually low.  In a normal month my expenses will still be higher than my alternative income.  Also, once I’m finished with school I’ll have to start repaying my student loans.  I’ll be on an income-sensitive repayment plan so my payments might not be more than I’m paying towards debt now but there is a chance they will go up.  One more thing is even if I do get to where my alternative income is usually higher than my expenses I need to have a safety net for emergencies and unexpected expenses.  Right now I only have about $3,000 in savings outside retirement accounts.  I don’t consider that anywhere near enough.

For me to be able to retire I need to increase my income so it is consistently more than my expenses.  My expenses are already pretty low so I can’t cut much more there although I do believe I could still lower them more.  I need to focus on increasing my income and saving money outside of retirement accounts and I still have a long way to go on those.  The fact that my income was higher than my expenses last month though makes me feel good about my chances of retiring at 50.