Making the decision to retire is a major one. Not only does it affect your financial picture, but it’s also a huge lifestyle shift. To avoid having retiree’s remorse, it may be worth it to take an extended break from work as a “retirement test-run” before making your exit from the workforce permanent.
It Can Help You Figure Out What You Want To Do With Your Free Time
Leaving the workforce means you’ll have 40-plus extra hours of time to fill every week. You can use a sabbatical to figure out what you would like to do with that time.
“I regularly recommend a sabbatical to my clients as a way to find out what is important to them,” said Jay Zigmont, Ph.D., CFP, founder of Childfree Wealth. “Look at a sabbatical as a way to ‘Marie Kondo’ your life — find out what brings you joy. The key in retirement is to know what you are retiring to rather than just what you are retiring from.
“You don’t have to work in retirement or volunteer or whatever, but you do need to have something to do besides just stopping work,” he continued. “After all, if you don’t have something to do in retirement, you will run out of shows to stream on Netflix in a month or so and then be lost.”
It Can Help You Assess How Much Money You Will Actually Need in Retirement
When you have money coming in every week or two, you may not be super in tune with how much you are actually spending. Taking an extended time off of work can help you to determine how much money you need to cover your fixed expenses, including housing, groceries and healthcare.
You also will want to make sure you have enough financial wiggle room to plan for a retirement you will enjoy. Do you want to travel? Try new restaurants? Take up a pricey new hobby? Ideally, you can fit the things you love into your retirement budget.
If you realize that you likely won’t be able to cover these costs with your current retirement savings, you can take this time to determine how you can generate additional income in retirement. This may mean upping your investments or getting a part-time job.
It Can Test Your Emotional Readiness
A sabbatical is a good time to find out how you feel not working. Are you OK not having a regular schedule? Do you feel fulfilled with the new ways you have found to fill your free time?
“For some people, their career is a major part of their identity,” said Scott Lieberman, founder of Touchdown Money. “You can use a retirement test-run to find hobbies, good causes or a place to volunteer that inspires you. Without this, boredom can lead to depression and self-destructive activities.”
It Can Help You Professionally in the Event You Do Want To Return To Work
After taking a sabbatical, you may realize that you actually don’t want to retire yet. If that’s the case, taking an extended work break can actually benefit you when you return to your job. Kristina Wallender, chief experience officer at Human Interest, a 401(k) provider, has taken a sabbatical every six years and said it has helped her in her career.
“I set out to focus my first sabbatical on non-career goals like travel,” she said. “What surprised me were the many unanticipated professional benefits. A sabbatical leads you to places you don’t have time for during limited vacation days. It helps you make new connections, strengthen your identity and explore new pathways — including those you may want to pursue prior to retirement. I’ve found that this experience helps you become a better leader and a refreshed contributor when you do return to work.”
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