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On this episode of the Personal Finance Podcast, why wait until 65 to enjoy your money? Maybe you should take a mini retirement. What's up everybody and welcome to the Personal Finance Podcast. I'm your host, Andrew, founder of MasterMoney Co and today on the Personal Finance Podcast, we're going to be talking about mini retirements. If you guys have any, any questions, make sure you join the Master Money newsletter by going to MasterMoney Co newsletter. And don't forget to follow us on Apple Podcast, Spotify, YouTube or whatever podcast player you love listening to this podcast on. And if you want to help out the show, consider leaving a five star rating and review on Apple Podcasts, Spotify or your favorite podcast player. Now today we're going to be talking about mini retirements. I'm going to talk through what a mini retirement is. I'm going to talk through some situations on when you could take a mini retirement and when you should potentially not take a mini retirement. I'm going to talk about why you would want to even take a mini retirement to enjoy some of your money early on in life. And we're going to go into step by step exactly how to take a mini retirement. Because the selling point here is that some people don't want to wait until the age of 65 before they enjoy their money. And if you're the type of person that is listening to this podcast right now and feels as though you are trapped in the job that you are currently in, you are trapped in your office, or maybe you're working from home, or maybe you're trapped in a cubicle, or maybe you're trapped on a job site, or you are just burnt out from working at a hospital. Doesn't matter what industry you are in, many people over time can get burned out. And when you get burned out, it really does not make you someone who is enjoyable to be around. It does not make you a good parent, it does not make you a good friend, a good spouse. And so in reality, many retirements could be the option that gives you the rest that you actually need. Need. And sometimes you can take a mini retirement when you are transitioning in careers. Sometimes you could take a mini retirement when you just need that rest. And sometimes you take a mini retirement because your lifestyle has changed. But I want you to know that this is an option for you. And the beautiful thing about building wealth and the beautiful thing about getting your money right is it allows you to have flexibility and options when it comes to life. One of the reasons why we do this and Why I want you to be so disciplined when it comes to your finances is because once you begin to do some of this stuff, it opens up options like mini retirements or maybe even taking a sabbatical. And there is a difference between the two and. Or doing some of these things that I think can really, really help you. Plus, you open up the options for Coast Fire, you open the options up for Barista Fire. And so all of a sudden, maybe you get a boss that you hate. Maybe you are working at a company that you feel as though you can't get out of. Maybe you feel as though I am going to be way too old before I can actually enjoy some of the vacations and the trips that I actually want to do. Maybe you wanted to backpack through Europe. Maybe you wanted to spend some time learning Muay Thai in Thailand. It doesn matter what it is. We've got to figure out a plan on how you can actually enjoy that stuff if that's something that you want to do. And so the key word here when it comes to many retirements is being intentional. I want you to be as intentional as you possibly can. I want you to be intentional with your dollars, intentional where, where you put them so that you can enjoy this money as time goes on. So many of you may be asking, well, okay, as a mini retirement, just a sabbatical. And sure, they can be interchanged in a technicality. Maybe you could call them the same thing. But here's how I define it. I define a sabbatical as something that you have worked out with your employer, meaning you and your employer have kind of chatted through this and said, I'm going to take some time off. And sometimes it's paid, sometimes it's partially paid. But it is a negotiation with you and your employer, and you try to get some compensation out of it, but to take some time off with the understanding that you are returning to the exact same job that you are currently working in. Whereas I see a mini retirement as a bigger overall thing. This does not depend on anybody else's decision. And I think that you might fund it entirely yourself. And this is something that could be a longer period of time. Now, for some people, maybe a mini retirement's only a month. We'll talk about that in a second. But for some people, it could be longer. It could be six months, it could be a year, it could be two or three years even. But it's a gap that you are thinking through with intention that you're gonna take some time and take a step back from working as much. And you're gonna enjoy some of your money and you're gonna enjoy some of the things in the fruits of your labor. Now, the simplest way to put this is that a sabbatical is basically a pause from your job, while a mini retirement is a pause from the work itself. Meaning it is a time frame where you are going to literally stop working for a certain period of time. And that's where I see the difference between the two. Now, some people will interchange these two terms, but I do see a difference in terms of how you go in to think about this. And so there are some requirements that we can think through. And a mini retirement needs to at least be one month at a minimum. I think it should be a little bit longer than that. But one month at a minimum because anything less than that is just a vacation. And really one month is even a vacation. I know plenty of people this summer who stepped away from work and they took a month off. Two, you are stepping away from your primary work. Now, this doesn't necessarily have to be forever, but it is truly a step back. You're not going to get phone calls from your boss, you're not going to get all these people calling you. No, instead you're truly taking that step back. And then three is you are focusing on something that meaningful. Maybe it's travel, maybe it's family, maybe it's health. And health is a great example of something. Hey, maybe you feel as though your health is declining and you're getting out of shape and you feel as though if you don't make a change right now and put some time into this, you will not be able to bounce back from it. That is a great reason to take a mini retirement. Maybe it's for therapy because your mental health is suffering and so you need to take a little time to get everything right. Maybe you're starting a business or you're volunteering, or you want to learn a brand new skill and you want to spend a lot of time learning that skill. I know people who have done this with a bunch of different skills. Or you just want to spend more time with your hobby while you can still do it. Because maybe your hobby requires you to be young. Maybe you love to ski, maybe you'll love to row, maybe you love to hike. And so you want to make sure that you have time to do some of those things because memories are so important to you now when it comes to folks out there who are self employed, should you really take a full mini retirement? Probably something where you just don't disappear completely. Instead, you kind of come up with a situation where you're spending just a little less time in the business and a little more time doing some of the stuff that you need to do. And if you can get ahead with some of this stuff, then I think that can be a really, really powerful thing. Because realistically, you could probably disappear about 90% and still get by, but you're going to come back to some problems. Tim Ferriss had this great quote where he said, hey, I took six months off from my business. I actually took a. He called it a sabbatical. It's basically the same thing as a mini retirement where he traveled overseas, took a full six months off, and there were some of these big problems that happened. And he came back and was able to solve those problems. And he realized pretty quickly, well, if I could solve problems this big when I come back, then it was freeing for me because now I knew I could go back and take more of these sabbaticals and many retirements and have the ability to come back and make sure that the problems, the whole place doesn't burn down. And so I think that's something that can be really, really cool for a lot of folks out there. Now, what are some reasons why you would do this? What are some reasons why you would even consider mini retirement? Well, first, there's some psychological reasons. If you are burnt out, if you feel as though you can't push at your job anymore, you can't really push to get those promotions or raises like you want, you feel burned out and your mental health is suffering, then maybe you need to take that step back. But you got to have the financial plan in place first. We can't just take a step back because we feel like it. We have to have our finances in order, which we'll talk about. But maybe that's what's happening. You feel burned out. I know at times I can feel burned out. And when I do, I need to take a step back and take a couple of days off. This is not something I have not personally taken in many retirements. In fact, I haven't taken a week off in a long time. And this is the reason why I'm creating this episode. Because I'm going to challenge myself to take a little bit more time off moving forward. It's one of those things that I want to challenge myself to consider doing this over the course of the next couple of years, because the reality for me is that I can feel these weeks. And for some of you you may relate to this where I just get brain fog and I'm sitting there and I'm like, I have been nonstop for months and months and months on end. Many people, maybe they'll take a full week off for Thanksgiving, maybe they'll take another full week off during the holidays. I haven't even done that in a really long time. It's one of those things where I work a lot and that's just part of being a business owner and I realize that and I enjoy my work. I mean, doing this and being able to spend time with you all, being able to coach people one on one and being to help master Money Academy students, that is my passion. I mean, I love doing that day in and day out. I love talking to you right now. Imagine us as a one on one conversation right now. I love doing this. This is absolutely incredible. But I need to learn to take a little more time off because why? It actually makes you a better overall person when it comes to your career. It makes you a better overall father or mother, it makes you a better overall friend, it makes you a better overall family member and it gives you clarity. You're actually going to come back clearer than ever when you take a little time off. Now some of you may be saying to yourself, okay, I could take some time off, but I need to stay busy. That's the way I am. I need to stay busy and I need to keep doing something. So you got to have something that you're going to if you're going to take this time off. Or maybe you just take a shorter mini retirement. And another reason is to rediscover your identity. If you are someone out there who is just really struggling, you are in a pit right now and you feel as though you can't claw your way out. Maybe you want to. People call this discovering themselves. What is discovering yourself yourself means? What that really means is that you want to figure out who you are. You want to figure out what your purpose is and what you were intended to do. My purpose is to do what I am doing right now because I have this passion to help you all as much as I possibly can. Maybe your purpose is not what you're currently doing and you've got to really evaluate if this is what you want to keep doing. Maybe you're making a lot of money and you have the golden handcuffs and you are stuck to your desk and you feel as though you can't get away and now you've built out this lifestyle that has also chained to those golden handcuffs and you feel as though I don't know what to do. And you need to take some time to think through this. Maybe you're the type of person who is right now just struggling with your job because you don't like the people around you, you don't like your co workers and you're trying to decide, well, should I go to a new company? Well, you can figure that out over time if you set this up properly. The first group that I just talked about was all psychological. But there are some practical reasons when it comes to thinking through lifestyle. Maybe you want to be present for folks who may not be around forever. Now, this could be aging parents, where your parents are, maybe they're getting older and you see their health going downhill and you want to spend some time with them. You want to be with them for the next, you know, four or five, six months so that you can actually enjoy the time, make some memories before it all goes away. Maybe you have young kids in the house and you want to take a mini retirement to spend time with your kids, whether you're a father or a mother. You can also always alternate on this. Maybe one of you wants to take a mini retirement and you want to spend some time with your young kids while they're still under your roof. Then maybe the other parent wants to take a mini retirement right after that one and the other person goes back to work. That's a great alternating strategy and a great reason to take that mini retirement. Maybe you have some friends or some family members who are really struggling with something and you know they need you and you have the wherewithal and you have this plan in place where you want to take a mini retirement anyway. And maybe you take them and you go travel. Maybe you wanted to spend some time cross country skiing or you wanted to spend some time in the mountains, or you want to discover if you actually want to be doing anything that you're doing right now. I think there's a lot of real practical reasons to consider this. But another great one, and this is one of my favorites, is to actually test drive retirement. Because retirement is something that can be hard for some people, especially if you're like me, you want to always keep your hands busy, you want to always keep doing something. Well, maybe you're in your 40s or your late 40s, early 50s, and you're like, I don't even know if I want to retire. Why don't you give it a little test run, why don't you give it a go and you can get out there and start go on maybe it's three months, four months, five months, or six months and see what you would do with your time, see what you would do with your energy and see if this is something that you would actually be interested in. And so there's a lot of different reasons why I would consider this. And there's some upsides and there's some downsides to mini retirement. So I'm going to talk about a couple of the upsides first and then I want to go into the downsides because I think for a lot of you out there realizing what the downsides are, especially when you're in the middle of your career, and a big part of that downside is going to be thinking through your career. Those are going to be some things that we need to talk about. If you've been listening to this show for a while, you know it's not just me anymore. It takes a great team behind the scenes to make everything happen. And if I had to hire someone tomorrow, I'd want someone who could jump right in and make an impact. That's why I'd use Indeed Sponsored Jobs. When workplace chaos hits, Indeed Sponsored Jobs helps you reach qualified candidates faster. Your job gets boosted in search results so you're spending less time searching and more time interviewing the right people. Plus, you only pay for results, which I absolutely love. Sponsored Jobs posted directly on indeed are 95% more likely to report a higher than non sponsored posts. That's a huge advantage when you're trying to grow your business. Spend less time searching and more time actually interviewing candidates who check all of your boxes. Less stress, less time, more results when you need the right person to cut through the chaos. This is the job for Indeed Sponsored Jobs and listeners of this show will get a $75 sponsored job credit to help get your job the premium status it deserves@ Indeed.com podcast. Just go to Indeed.com podcast right now and support our show by saying you heard about Indeed on this podcast. Indeed.com podcast terms and conditions apply. Need to hire this is a job for Indeed Sponsored Jobs. If you've watched the video version of this podcast lately, you've probably noticed the wood slat wall behind me here. Now that's actually one of my favorite upgrades we've made and we got it from Wayfair. I wanted something that looked clean, professional, without spending a fortune or making the project overly complicated. And the slat wall completely changed the look of the studio and it's now the backdrop for every single episode we record. You're probably looking at it right now if you're watching on video. And one thing I appreciated was how easy Wayfair made it to compare options between the customer reviews, real photos, and Wayfair Verified products that are hand vetted for quality and durability. I felt confident I was getting something that would look great. And last and if you're planning a home project of your own, Wayfair Rewards gives you 5% back every day, making those upgrades at an even better value. So join Wayfair Rewards today to get 5% back on every purchase and start saving on your next home Upgrade. Head to Wayfair.com to shop all things home. That's W A Y-F A I R.com Wayfair Every Style Every Home Wayfair Every Style Every Home. Some of the upsides are that you are probably thinking about this. When you are younger, you're going to be younger than when you actually traditionally retire. And so if you want to take that big trip, if you want to go on that big hike and you want to go on that big adventure and you're 35 years old and you feel as though your body is still able to do this, that's a great reason to take a mini retirement. And if you have young kids, listen, you only have little kids once and in fact, by the time they turned age, I think it's 13 or 14, you've spent the majority of your time with your kids. Once they become teenagers, then all of a sudden they want to be a little bit more independent. And once they leave the house, you spent like 80 or 90% of the time that you will ever spend with your kids during their lifetime. I'm in that stage right now where my kids are little. All three of my kids are under the age of eight and I think, you know, it's one of those things where you only get that time once. So maybe you want to take a mini retirement over the course of a summer because all your kids are going to be home. And so next year or the year after that, you want to be able to spend an entire summer with your kids because you feel as though as they get older, you're going to lose the days, you're going to lose the time, and you'll regret it if you don't do that. That's a great reason to think through this. Maybe you just feel as though you want to come back better and not feel so pressured and behind, you feel anxiety, you feel stressed because you've been working for so long and you've Been grinding for so long. Maybe you started at 23 right out of college, and now you're 35. Maybe you're 40 and you've been doing this for 15 to 20 years and you're like, hey, I just need a break in the middle of my career here. I need a break to step back, take a breather. I've been working so incredibly hard and I need to just stop for a second. I just need to stop. That's a great reason to take it. Maybe you just don't want to wait for someday. You've read the book Die with Zero and you know, hey, I need to enjoy some of my money now because I can't take it with me. And what am I going to do? Work a bunch of extra years so that I can die with some money and hand it down to someone which I will never even see when I hand it down to them? No, instead, I want to enjoy my money. I don't want to work additional years that I don't need to. I want my money to be preserved and I want it to serve me throughout my lifetime. But I don't want a bunch of extra money left over when I die. Instead, you want to be able to enjoy that. Well, that's another reason to consider this. And if you do this right, so you can still completely stay on track, I think that's where a lot of people are going to get misconstrued with this is, oh, this is going to knock me off track. No, you can absolutely stay on track with this. If you do it right and if you plan it out properly, but you got to plan this out properly, and if you can learn what enough feels like, if you can learn what enough actually looks like, you can get a real preview of what retirement can be if you do this. So those are just some of the upsides. Those are some of the things to think through. But there are some downsides to this. And one of the biggest downsides is obviously losing your income for most people when they take them any retirement, you're not going to have additional income coming in unless you have a side hustle or a side business that can produce some income passively, you're not going to have a ton of income coming in. And so you want to make sure that you are really thinking through that component and really understanding what the impact to your income could be. Because if you take a mini retirement and your company does not want you to take a mini retirement, well, that could be a bigger problem overall. And so then you have to figure out a plan to bridge the gap. Because if you absolutely need to do this, you need to take this mini retirement and they're saying, no, well, you need to figure out, okay, what am I going to do after this? How am I going to bridge the gap to the next job that I am going to be taking on? And so income being paused while you're off is something that you need to plan for and you need to understand the risks and the implications. I'm going to talk about an example here in a second of just how much you'd be losing out on when it comes to opportunity costs just by taking some time off. You can also take a long term hit to compounding if you pause for a very long period of time. But here's the thing, and here's one thing I want most people to understand. What I would recommend for a lot of folks out there is if you are considering doing this, try to figure out what your Coast Fire number is. Now we have an episode coming out on your Coast Fire number and how to figure out what that is, what it is. All those different things coming up next week. So make sure you're subscribed to this podcast if you are not already. But I want you to understand what your Coast Fire number is. I think this is a very early milestone that many people should target to hit. What is Coast Fire? Here's a preview of it. Coast Fire is when your investments hit a certain target. Whereas if you say stopped investing, they would actually still reach your financial goals through compound interest by the time you hit traditional retirement age. So let's say you're age 35 and you have $500,000 invested. Well, that $500,000 invested, let's say it grows to $2 million by the time you retire. And that's what you needed because you wanted to spend $80,000 per year in retirement. Well, that means you would be coast fire at 35. You could not add a single dollar to your investment portfolio and you would still be able to retire by the age of 30. That's what Coast Fire is. And many people try to target Coast Fire very early and often in their career. And if you have hit Coast Fire, many retirements can be a wonderful option for you because you have that backup plan already done, it's set in stone and you know that you can hit retirement. All you got to do is cover your living expenses with your income. And so that's a big key when I think about this. But healthcare and benefits is another big proponent of this. Because if you're going to take six months off or a year or even two years. You got to figure out your health care situation. Now you have options like cobra, for example, but you only can use COBRA for about 18 months, meaning you can use your employer's health insurance plan for the next 18 months, typically before you got to get your own health insurance. Well, health insurance, depending on what state you are in, can be very expensive without the support of something like your employer. So for example, you know, in the state of Florida, I have a family of five and we spend about a little over $2,000 a month on health insurance because I'm a business owner. And so we don't have a corporate entity that's kind providing health insurance for us. And so specifically for us, it is one of those areas in life where I truly think that you really got to plan this out if you're not thinking it through. COBRA can also be expensive because you're going to be paying for the difference. And so that is also another expensive route. So you want to plan for that with your finances, which we'll talk more about here. But also reentry. It can be harder to reenter the workforce when you got a gap. And the longer that gap is, the harder it is to reenter. And so sometimes if you're going to take a longer period of time, you want to have a reason on your resume as to why you're doing this and why you were thinking through this. And maybe it's to start a business. Well, if you're starting a business, that's a good fill in for a gap that you are trying to, you know, take this leap of faith and you're trying to work through this so that you can kind of start that business. But I also want you to think of another downside. Because if you have structure and identity in your workplace and you feel as though that structure and identity could be compromised by you taking an early retirement. If you like that structure, you like spending time with your co workers, you like spending time with with them, and you guys are like a family working together. Sometimes a mini retirement can actually be worse off for you than better. And so, you know, the grass is not always greener on the other side. You just want to make sure that you're considering those as well. If you have a lot of workplace friends or you just enjoy your work, you enjoy what you do, maybe you work in something that you really, really are passionate about, well then just reconsider what you're doing here, because this is not for everybody. Obviously, this is not for everybody. And if your finances aren't right, it doesn't matter how burned out you are, it's not for you. You got to make sure that you get these right, which is what I'm here to help you do. I'm here to help you with your finances. I'm here to help you, show you those steps that take to get to mini retirement level. And so I think it's really, really important to think through that. It also just takes serious discipline to fund this on top of things like keeping your emergency fund intact and investing and making sure that you are hitting these goals. It's not like something you could just flip a switch and now you're saving for this because then you'd be compromising other goals if you don't have enough extra income coming in on hand. So you may have to have a little bit of a higher income to be able to do this. But we can plan this out and figure out a plan that see if it actually may may work for you. Now, the other downside is obviously during mini retirement, you may not be investing during that time frame. And so we want to figure out how much you would actually be losing if you took a mini retirement. So here's what the skip returns would be by the time you retire at a 7% rate of return. Okay, so let's say she invested $7,000 per year. That's normally what she would invest in a given year. And so in 20 years, she'd lose out on $27,000. That's what that $7,000 would grow to at a 7% rate of return. And in 30 years, it'd be 53,000. At $15,000 of contributions per year, it'd be $58,000 in 20 years, in $114,000 in 30 years. If she invested $24,000 per year, in 20 years, that'd be worth 91,000. And in 30 years, 179,000. And then at $32,000 per year, it'd be 124,000 in 20 years and $244,000 in 30 years. So if you're deciding to take a mini retirement, that just gives you a good example of what that money would be worth. And what I would recommend is looking at how much you invest every single year and going to a compound interest calculator. If you go to MasterMoney Co resources, we have an investment calculator there for you if you want to check that out. But if you look at this, you will see pretty Quickly. Wow, I am losing out on some opportunity cost here. It may be totally worth it for you to be able to go into your 30s and take a year off so that you can actually make these amazing memories and go travel the world or spend time with your kids. Absolutely. You're not going to regret missing that money if you have a plan to continue to keep investing. Like if you invest $32,000 per year, you're still going to be completely fine. I want you to know that you're going to be completely fine. Just because you're missing out on that opportunity cost doesn't mean you still won't have millions of dollars by the time you. But you just want to know the numbers so that you can make an educated decision. When we think about some of this stuff. Now, who should not be taking many retirements? Let's talk about that next. Now there's a couple of people who should not be taking many retirements and I do not want you considering this if you fall into some of these different categories. Okay? So the first one is if you're carrying high interest debt, if you have any high interest debt whatsoever, a mini retirement is not for you. Your priority needs to be paying off that high interest debt and then you can start to plan for your mini retirement and make sure you have the financial foundation. Now, we're going to talk about the steps here in a second on what you should be doing if you want to plan for a mini retirement. But that's going to be a big one for a lot of folks. So credit cards or any other costly debt like a personal loan or high interest student loans or high interest debts just need to be paid off as fast as you possibly can. Two is if you don't have the cash set aside now, mini retirement cash is not your emergency fund. Mini retirement cash is not your investment money. Mini retirement cash is not the money that you set aside for other personal finance goals. No, this is its own category that you want to set aside for the timeframe that you want to spend. So let's say you spend $50,000 every six months. Well, if that's the case, some of you that may be high, some of you that may be low. But if that's the case and you spend $50,000 every six months, then you want to make sure that if you're going to take a six month mini retirement, you at least at a minimum have that plus a little more, which we'll talk about. So you gotta make sure that you are saving for this. If you want to now, one cool thing you could do is you could save over time. So you can start to set this up in a way where you're saving over time, it'll compound and you can see a big difference there. Another reason not to do this though is if you have no re entry plan, if you have no plan on how you will reenter the workforce and you're just going to leave your job and your boss is like, I don't want you to take a mini retirement. You're like, sayonara, I'm not going to come back anyway. Well, I would definitely reconsider that and make sure you have at least some sort of plan to come back. If you have family members who own a business that can, you know, hire you, if you have friends who own a business that could hire you, if you have a reentry plan where you can work at a Starbucks at 40 hours per week until you find the next job that you want to work at, if you have a small business on the side that can fund part of your lifestyle while you work part time somewhere else, if you want to go get certified to be a Pilates instructor while you're taking your mini retirement and you want to go out and be an instructor where at least that's going to give you some income until you come back, you gotta have a plan in place and get enough Runway for you to be able to have a re entry Runway. So what a lot of people do is they give themselves a little extra cushion so that you can start to think through that. Also, if your career or industry punishes gaps, like if there is a gap in your resume and they're gonna be like, what the heck were you doing during this gap? That's gonna be another thing to really reconsider. Because if you are in an industry like there's a lot of fast moving or promotion track fields that a lot of people are in and if you have a long absence that could set you back as being a qualified candidate for some of those. And so you want to make sure that that's something that you really are thinking through and weigh this honestly, don't just say, nah, it's not really that, but you know deep down that it is something that you need to be considering. That's another reason to not really, really do this. So I want you to get clear on this and I want you to make sure that you check all those boxes and ensure that that's not you before you consider this mini retirement. Now let's get into step by step what you need to do if you are going to take that mini retirement. All right, let's dive into the mini retirement steps. I know a lot of you are waiting for this portion. You want to be able to take that mini retirement. And so let's get into it. One is, let's get clear on your why and what that looks like. So if you don't understand why you're taking a mini retirement, if you just want to spend some time off and you want to rest and relax on a beach and you want to drink Mai tais on a beach and you have no plan whatsoever, there's nothing wrong with that. But at the same time, this is most likely going to be less positive for you long term. Meaning if you're not planning on traveling or spending some time with your kids or spending some time with your spouse or just recovering overall from burnout, or maybe you want to write a book or maybe you want to learn a skill. So many different things you could be doing. And so I just want you to make sure that you know why you are doing this. We did an entire episode. If you haven't checked that out, make sure you check it out on folks and what they should consider when they retire. And in that entire episode, what I explained was that most people who retire to nothing usually become depressed during retirement. You need to have a plan of what you're doing. Maybe you want to volunteer, maybe you want to start working on a couple of different hobbies, maybe you want to go spend some time with the grandchildren. But you got to have a reason why you're retiring. And a mini retirement is no different. Because if you have too much time on your hands and your hands have nothing to do, all of a sudden that's going to lead to anxiety and depression. I can guarantee it. Every single time time. Too much time doing nothing is not rewarding for most humans. We as human beings are meant to be doing something. And so if there is something that you are considering doing, you want to make sure you know that what that why is because your purpose is going to drive the length of time and the budget and all this different stuff as well. It's also going to ensure that we know what our North Star is. Because if you want to travel for 15 months, we got to make sure we have enough cash on hand for you to be able travel for 15 months. Or if you just want to stay home with the kids and spend more time with the kids, well, maybe that's a great reason. And a lot of times for parents, you also Might be able to save on some daycare costs too if your kids are really young. And so it could be a cost savings move for that short period of time as well. That could offset some of your salary, which I think is kind of cool. Next is let's think about the duration and the target. Now I want every person to realize this. You can set up a duration and you can set up a target, but if you have to re enter the workforce, you are most likely going to be off on your guesstimate of what that duration will be. So you want to decide how long you want this to be. Is it three months, is it six months? I really think if you're just taking one month off, that's more of a sabbatical or vaca. Honestly, it's a vacation. So I really think it needs to be longer than just what you're thinking in terms of that timeframe. And so you want to pick a rough date when you think it would start, and you want to pick a rough date when you think it would end and try to think through exactly how you'd feel that time. But you want to have a duration and a target date, then you want to build up your number. And so once you have how long this is going to take, you need to figure out what your expenses are, what your burn rate is, and you want to calculate that number. So you want to look at housing, food, insurance, healthcare, emergencies, transportation, all of those different things. And you want to make sure you have enough cash on hand to live the lifestyle that you currently live for the time frame that you want to take this mini retirement. So if you spend $75,000 per year, then you want to make sure that you save $75,000 if you're going to take a one year mini retirement plus some cushion. Okay, so it's going to be the timeframe plus the cushion to re enter the workforce is what we are looking at here. And so when you do this, you have that number in place. You're thinking through what am I looking at here when I'm building this out? Okay, well maybe I need a hundred thousand dollars. Let's say you're taking 12 months, you want $100,000 because you'll be doing some travel, you want to really, really enjoy this. We'll do 120,000 so that you have a little bit of an extra cushion that is going to allow you to re enter the workforce is the way I would look at it. An extra 10 to 20% cushion never hurt anybody because it helps you Buffer that reentry point. And I would also make sure I had an emergency fund already in place separate from this next. When you're saving it, I want you to save it in a separate dedicated account. Now, you have two options here. One is if you feel as though your mini retirement's 10 plus years away, you can actually invest a portion of this for the next five years or so and allow that money to compound or grow even a little bit more. But if you feel as though this money needs to be set aside for the next couple of years, then just a high yield savings account is perfect for this, which it needs to be in a separate dedicated account. Now, I have my favorite high yield savings accounts that we will link up down below in the show notes for you. We'll also link up some of my favorite brokerages if you want to check those out as well. But my favorite high yield savings account companies like SoFi, for example, allow you to compartmentalize some of your savings. So you could set up a mini retirement bucket and it allows you to take that time off and spend that time off. But this needs to be on top of your emergency fund. You need to have that six month emergency fund fully funded. So again, many retirements are luxuries. There are luxuries. They're not something every single person can do and I want you to make sure that you understand that. But they should be something that you could plan for over time. Now, when it comes to this savings, some of you may be like, well, how am I ever going to save $50,000? That sounds crazy. But if you start now and you do it over time, over the course of the next decade, you may be able to do it and you may have it there and you may have the ability to be able to take that many retirement. You'd be surpr at how much money you can start to sock away once you just get the ball rolling. Once you just get started, I don't care if it's $50 a month, just start saving towards it. And if this is a really big goal for you that you actually want to do, just start putting money towards it. And you'll be shocked at how fast this money will grow and you'll be shocked at how you just kind of find more money. And as your income increases, you can put a little bit more towards it. And all of a sudden over the course of the next couple of years, you've got 10 grand in there that you never thought you would have had. And then you got 20 and then you got 50 all of a sudden, and then all of a sudden you've achieved that goal. So I just want you to make sure that, you know, small amounts of money over time can grow to what, very large amounts of money? Yes, that is correct. So I just want you to make sure that you do that also is you want to solve healthcare before you leave. So when you're about a year out from doing this, you want to start to think through healthcare and start to have conversations to figure out exactly what you want to do when it comes to healthcare. Because the last thing you want to happen is some sort of medical emergency while you're on your mini retirement and you don't have health insurance because then you have a huge liability there that could really just ruin and put you back years with your finances. So please do not do this and try to say, I'm going to just risk it and have no health insurance for six months. The next thing I want you to do though is decide, okay, how am I going to leave work if I do do this? You got to have some conversations and see if your boss will let you come back. You can see if your employer will let you come back. Maybe you can move departments and they're going to have an opening where they know someone is going to be leaving over the course of the next, you know, couple of months in a different department, maybe you move over there, maybe you say, okay, if I get enough work done ahead of time, maybe you have a job where you can get all your work done ahead of time, where you get a little buffer going and then you can come back. I mean, there's a lot of things that you can do when it comes to this. And in reality, if you can arrange this with, you know, your boss or line up another job, maybe just a couple months down the line or a year down the line, that could be something that would be really, really cool. Again, if you have debts, you need to be debt free, you need to have your emergency fund in place. And if you do have any debts outside of like your mortgage or whatever else, then you need to make sure those are paid off. I would make sure to even have my cars paid off, any of those types of things, if you could. I think it's really, really important to do that. And so once you decide how you leave, decide how you're going to re enter if you do not know what you're going to do next, that would be the big, big key for me is I need to know how I'm leaving and I need to Know how I'm getting back in once I have my plan set and my plan in place. So it's gonna be a lot of conversations to be had and it could delay, you know, six months from when you originally thought you would take this. You're not going to nail the dates whatsoever. But it can be really helpful to just have these conversations early, start talking through them and start talking about them now. When you position taking a mini retirement, when you're having conversations with your boss, I wouldn't say I'm burned out. What I would say is that I've always wanted to do this. And you talk through what you've always wanted to do and then that will lead you to have a conversation where it's not complaining. You are just saying, this is something I've always wanted to do. It has been a dream of mine. It is something I have wanted to do since I was little. And yada, yada, yada, you go into it, that's going to be a much better starting point than going in and saying, I'm just so burned out, I can't do this anymore. They're just gonna be like, well, don't come back then, because you're just gonna get burned out again. So it's one of those things where you want to make sure that you position it in a very, very different way than what most people do. Most people storm in there and then just go from there. So I want you to think about these two things as well. Well is when you are picking out what you want to do, you got to think through how to pick the right mini retirement. Because with this, you know, early on, if you're doing this in your 30s or 40s, you can do things like, you know, the Appalachian Trail or backpacking Europe or going to all the national parks or taking adventure trips. Those should be done early. The stuff that can wait are like the cruises or the luxury travel or the relaxing vacations. Those can wait. And so a mini retirement is really for some of these things that are lifestyle based or they're based on stuff you can't do later on down the line if you want to enjoy your money. You know, the relaxing vacations are fine, but you can always do those in your 60s, you can always do those in your 70s. So instead, just make sure you're thinking through, you know, picking the right mini retirement. As you think about this, most of us picked a bank years ago and never really thought about it again. But when you stop and look at what you're actually getting, it makes you wonder if there's a a better option. That's where Chime comes in. 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One thing I've learned as a business owner is your CPA shouldn't only show up once a year. The best tax strategy happens all year long, not when you're scrambling to file your tax return. And that's what I like about Gilt. Gilt is the modern tax strategy firm built for business owners, hirers and entrepreneurs. They pair dedicated CPAs with modern technology to help make taxes part of your business plan instead of another deadline. And what really stands out to me is they don't just prepare your taxes, they revisit your strategy every single quarter, helping with things like entity protection, retirement contributions, and finding credits and deductions you might otherwise miss. Plus, they handle both your business and personal tax compliance all in one place so everything can stay organized. So if you've outgrown a CPA who is reactive instead of proactive, then guilt is definitely worth checking out. Schedule a call@joingelt.com today and learn how your taxes can become a lever for growth. That's join G-E-L-Com and schedule your discovery call today. Personal Finance podcast listeners get 10% off their first year of service. Just mention the show name Personal Finance Podcast on your intake form. My relationship with money has changed a lot over the years. Early on, I thought building wealth was about making more money. Now I know it's really about having clarity when you know exactly where your money is going and whether you're on track, you make better decisions. That's one of the reasons I love Monarch. It's the personal finance app that tracks everything from your accounts and investments to your savings goals and spending so you can see your entire financial picture in one place. One habit that's made a huge difference for me is my five minute drill. Every single morning I open Monarch, check my spending, investments, cash flow and net worth, and I'm done in just a few minutes. It gives me confidence that nothing is slipping through the cracks. I also love the AI Weekly recap because it'll flag spending changes, upcoming expenses, or shifts in my net worth before they become a problem. Instead of reacting after the fact, I can make adjustments early. It really feels like having a financial advisor in your pocket. Write your own money story with Monarch. Use code pfp monarch.com to get your first year of Monarch Core Half off at just $50. That's 50% off your first year at monarch.com with code pfp. Now who could this be great for? I'm going to give you a couple of different case studies here of who this could be good for, just to give you some ideas. I want you to get the ideas churning and then we're going to dive after this into a money Q and A. So first is the Coast Fire engineer who is Maya. Now, Maya is 38 years old. So Maya spent her 20s and early 30s aggressively investing and has $520,000 invested. She has already hit Coast Fire, meaning that even if she never contributes another dollar, that balance should grow into a comfortable retirement by age 60. We're going to talk about that in the next episode, by the way, so I want you to make sure you're there. So she takes a six month mini retirement to travel through Southeast Asia. She saves a separate $18,000 to cover the trip and her Runway and keeps her emergency fund untouched. And she pauses contributions for just half the year. Now, the skipped contributions cost her some future growth, but because her portfolio is already coasting, the dent is minor. And so she comes back, picks up a similar role and resumes maxing out. The lesson here for most people out there is if you are Coast Fire, that is a great milestone and a great indicator that you could take a mini retirement and be good with it. And when compounding is already doing the work, then you have to worry less about a big portion of what you're saving and investing because you don't have to worry about that 20% or 25% or 30% that you're putting towards this so anybody in my 20s or even the teenagers that are listening right now, making sure that you're investing early and often allows you to have opportunities like this in your 30s. And so making sure that you are doing stuff like this is really, really important. Let me give you another scenario though, because that's someone who's coast fire. But what if you're burned out? Well, if you're running on an empty tank and you're like, I cannot keep going for a couple more years like this, you know, I need to step away to prevent the kind of crash that can cause health problems, it can cause mental problems and all these different things. So let me give you Marcus. Now, Marcus is a 45 year old burned out ER nurse. As we know, nurses have to work their hind tails off. And so many times if you're a nurse, you can get overworked and burned out, especially if you're working a bunch of night shifts or 10 hour shifts. And so after years of overnight shifts, Marcus is fried in starting to make the kind of mistakes that scare him. Great reason to do this, by the way. He negotiates a three month unpaid leave rather than quitting. So his job and benefits are waiting when he returns. He had built a $22,000 buffer specifically for a break like this. And he spends the time resting, hiking and reconnecting with his kids. He returns clear headed, avoids the full blown burnout that would have forced him a much longer and costlier exit. And later credits the break with saving his career. So a break is not a luxury. So the lesson for this, especially if you're having burnout here, is that a break is not just for luxury. It's cheaper than crashing, it's cheaper than losing your career. And so you want to make sure that if you do need it, then maybe you take some of your money and you do this, you do this in a way that makes sense for you. But let's talk about the alternating example because I talked about this a little bit earlier too. But what if you're a couple and there's two of you and you're like, okay, well one of us earns, one of us doesn't. You have two options. You can take a mini retirement together, or you can do an alternating mini retirement and have the ability to be able to do some really cool stuff. If one person is earning an income and the other one isn't, one person can take a mini retirement. Then maybe a year or two later the second person takes a mini retirement. And this allows you to alternate and take longer Mini retirements because there's income coming in. So let's look at Priya and Sam. Okay, they're 40 and 41 and they decide to take turns. So Priya takes a nine month mini retirement first while Sam keeps working and carries the family health insurance, which is a good key and a good reason to do this. Their income drops but never hit zero. And their essential expenses stay covered by Sam's paycheck plus a modest $12,000 that they set aside. Priya uses the time with their young kids and plans a career pivot. Two years later they swap and Sam takes his own break. Because one engine always keeps running. They never have to touch their long. And so they're continuing to invest, they're covering their costs and so they don't have to worry about that kind of stuff. And with a partner you can alternate freedom and never have to fully cut off income. And if your income, if you can live off one income or one income can cover a lot of it and you know, then I think it's really, really cool to be able to do that. And now let's look at one more. Maybe it's someone who owns a business or they're a freelancer. Let's look at Jordan here. Jordan's 34 years old. He runs a small online store and does freelance design that together brings in about $2,500 per month fairly passively. So he leaves his full time job for a year to travel and grow the business. That $2,500 covers most of his lean monthly expenses. So he only pulls about $9,000 from savings across the entire year instead of a full year's worth. The side income also means that he is never starting from zero. And by the end the business has grown enough that he does not have to rush back into a job. And so even a modest side income can really shrink how long or how short a mini retirement needs to be. So these are just four examples in situations where you could take a mini retirement. And I want to show you those examples so that you can see is it possible for me, is this something I can do? Depending on how low your expenses are, that's going to dictate how soon and how fast you could take a mini retirement. If you can get by with much lower expenses or you have dual income or you have multiple income sources, this is going to allow you the opportunity to be able to do this kind of stuff. So really, really hope you guys are letting your mind think through this and consider this. And before we dive into those questions, Let me know down below. Are you considering taking a mini retirement? And do you dream about taking a mini retirement? And tell me where you want to take this mini retirement? I would love to hear from you guys because I read all of your Spotify comments, I read all your YouTube comments and Apple Podcasts is releasing them now too. I read all those comments. So I want you to tell me if you are going to be taking a mini retirement and what you would want to do with your time. That's a really important component. Now let's jump into your questions. All right, the first question coming in from Pamela. Pamela says I'm already retired and I only have a brokerage account and I have a lot of stocks that you mentioned it. What options do I have to lessen my tax drag? Well Pamela, this is a wonderful question and thank you so much for listening and congrats on being retired. That's absolutely amazing. I think it's really, really exciting to be able to do that. And you can tell us all about these many retire retirements, by the way, as we start to think through this. But the good news for Pamela is that being retired actually opens up some of the best tax tools available. So if you are not working, your taxable income is often significantly lower than someone who is in their working year. So you can use something like a 0% capital gains rate. And we've talked about this a couple of times in the past, but it's all the way up to like if you're married, filing jointly, you can get up to like 120,000 plus is what you would still stay in the 0% capital gains rate. And so that's something that you can look into. And if you are single or you're head of household, depending on how you're filing, then it could be anywhere within a couple of different ranges. And so you could be either 0%, 15% or 20%. And so taxable brokerages aren't as bad tax wise as most people think. And it's a really, really great thing to to consider. Now another thing you could do is what is called tax loss harvesting. So anytime you have an investment that is down, you could sell that investment at a loss or at a reduced amount of what it currently was. Maybe you bought some Apple stock recently and all of a sudden you know over the course of a year that Apple stock went down a little bit.
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Well, if it went down a little bit and you sell those shares, it can offset some gains that you also have in your portfolio and then you just buy an investment that is similar that you want to buy now, you don't want to buy the same exact investment. You can't buy back into Apple right away because of the wash sale robo, but you can consider it. Now I would use a professional to help you do this or you can use like a robo advisor too. So a financial advisor, robo advisor, something like that would be the best option. But a couple of other things that you could do is if you're charitably inclined, you can also donate shares that helps reduce tax drag where you know it's better than donating cash sometimes, especially when you have appreciate shares. And so you can definitely do that through like a donor advised fund. There's a, there's a website called DAPI that helps you do that for, for individuals that you can look into and you can think about the step up basis. What a powerful thing the step up basis is. But if part of this portfolio is money that you plan to leave to heirs, the smart move can be to not sell the most appreciated lots. So if something has appreciated, let's say you bought Apple stock in 2005 and it's appreciated by, you know, tens of thousands of dollars over the course of the last couple of years. Well, sometimes those are the shares to not sell because you can have step up basis. If you're going to hand it down to anyone, well, they will not have to worry about that appreciation. So instead when you pass that down to them, they will get it at the value that the current shares are when you pass it down. So really powerful stuff there and a really great way to, to hand money down. So here's a couple of things that I would say is to control the timing on your gains. Use your low tax bracket in retirement to reduce the overall taxes that you're paying. It's a lot more than you probably think it is. And be strategic about when you sell and which ones that you sell. And so those are gonna be the three things that I would look at. A taxable brokerage is still a wonderful account for a lot of folks out there. But just being considerate about that stuff can be very, very helpful. So thank you so much for the question. If you have any other questions, feel free to reach out. All right, the next one's from Desi. So Desi says, Andrew, thanks so much for the work you put into this business. It's been really helpful for me. Well, thank you so much, Desi, I appreciate you. I find myself in a very privileged position with investments at 29 years old and would love to start looking at buying a house or land to build on in the next year. So would you recommend any type of security backed mortgages or loans or just pay a small down payment a chip away at a normal mortgage? So Desi, great question and congrats to you on building wealth already at 29 and now being able to consider buying a house. What I would say here is that if you're looking at something like a securities back option, I would probably not be as inclined to do something like that upfront. For those who don't know what that is, a security back line of credit is essentially what it is is. Or a pledged asset mortgage lets someone borrow against their portfolio rather than selling their portfolio. And the appeal is real because you keep your money invested in compounding and avoid triggering capital gains taxes that you'd owe when you fund it with a down payment. But there's risk that comes to this because collateral can be volatile and if the market drops, the lender can issue a margin call, meaning that at some point in time they can force you to either add cash or they can force you to liquidate your holdings at the worst possible time that you could possibly do that. And so you got to make sure that you're careful with this. Plus, these loans a lot of times can carry variable rates. I don't like variable rate mortgages. They have, you know, some people like them more than I do. I like to know what my rate is and I like to stick to it. Now it can make a lot more sense in high interest rate environments if you have a variable rate, but it's a lot less sense in lower interest rate environments. Right now we're kind of right in the middle. And so this is one of those things that I definitely weigh out, but I would weigh it against a normal mortgage where like a traditional mortgage, you know what you're getting, you know what you're getting into. In fact, when you close on a house, they give you this sheet that shows the exact, exactly from month to month, exactly what you're going to be paying and how your interest is going to go and how your, your principal is going to get paid down and all that kind of stuff. When you look at that sheet, a lot of times you're like, man, I got to pay off my house faster. Look at all this interest I'm paying. It's hundreds of thousands of dollars. But in reality it's just one of those things that you get. Whereas with something like a security backed mortgage, it's less predictable and if it gets called, I mean that's the real risk. If it gets called by a lender, ugh, that's, that's tough stuff for me to really want to do. So. So if you want to buy within a year, I would earmark, you know, some cash on the side. I really am more of a traditional mortgage type guy. If anybody has like a, you know, a rebuttal of that, let me know. But I, I just, that's the way I am because the safer overall in my opinion and in addition, I just don't ever want any loans called. Uh, I think, you know, mortgages, long term mortgages are just more secure in that way. And it's one of the things that I think I would consider, you know, long term is, is kind of sticking with that. So yeah, it's not something I'm super interested in doing but there are some, there's some pros and cons to it. I mean if you wanted to do like a small portion of it, you could consider that. But not, not something long term that I would really want to do. I prefer like a traditional mortgage or a FHA or even a veterans get a va. There's a lot of other options out there obviously, but that's the way I would go with this. Instead of trying to do something that could have that risk of variable rates and could get risk of getting called if the market drops, that's the two things I wouldn't want to happen. So. So if you can find one that doesn't do those two things, then that's potentially a very strong choice. But it's not something I've seen in a while, so. But let me know if you have any other questions on this. And awesome, awesome work so far building wealth. Congrats to you. I think that's absolutely amazing. At 29, you're crushing it. So great job there. I truly appreciate you listening too. And listen, thank you guys so much for listening and let me know again, are you going to take a mini retirement? What are you going to do with those dollars? If you want to work with me me, we have two options for you. One is you can apply for one on one coaching. We will leave the link down below in the show notes. But two, you can join Master Money Academy. And Master Money Academy is the place where bunch of wealth builders come together and we are all working towards building wealth together. We do weekly coaching calls. We have all of our courses in there and we just moved it to school and it's going to be a really, really cool platform I think that we're really excited about that allows us to do so much more for all of our members over at Master Money Academy. So really, really excited and can't wait to see you inside. We have free trials so get a seven day free trial if you click the link down below. As a podcast listener, really, really excited. If you want to check out, you know, a couple of things. You want to meet me? You can meet me inside and have the ability to be able to take some of our courses and just see if it's. If it works for you, if it doesn't work for you, no worries whatsoever. No skin off my back. I'm there to help people in there. That's why I'm there. And so my entire goal is to help as many of you as possible. So thank you guys so much for being here. I truly appreciate each and every single one of you. You and we will see you on the next episode.
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