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Mini Retirement vs Early Retirement

Taking A Work Approved Leave Of Absence

I used to scoff at the idea of a mini retirement… working for a few years and then taking a few months off. It never made sense to me to interrupt your earning potential early in your career without having reached financial independence.

Then I came across a different group of mini retirement practitioners, investors. Those who put all their cash aside and invest when Wall Street is down and those who wait to invest in real estate after a bubble or crash. Perhaps the more successful individuals of this group tend to work hard only when needed, when there is blood on the street, as the saying goes. And once stocks are overvalued and the real estate market becomes a fad, these savvy individuals take off on their RV’s or boats and disappear.

In this post I want to talk about how those of us in medicine could structure something like this. I see it being relevant to those of us who either feel a bit burnt out or those who just don’t find their work that interesting yet know they want/have to do it for a few more decades.



If you are in a totally different boat, hating your job, miserable being a doctor then you are better off either finding a whole new career stat or just continue work gritting your teeth for another 1-2 years and then getting out with a decent stash or with having put a nice dent in your debt burden.

If your living expenses are $2-3,000 per month then it’s fairly easy to save up ~$30,000 to live off of for the next 12 months. The wise will spend their mini retirement in a location where their money has more buying power. Living overseas or in a cheaper state in the USA is perhaps the best choice.

A mini retirement should serve to rejuvenate you, let your mind rest a bit by allowing your subconscious take the helm for a while. This is a time to get back into good habits of spending time with loved ones, being active, and hopefully honing your non-clinical skills by reading a few books.

There are other advantages to being a bum for a year. Without income you are eligible for dirt-cheap health insurance through the various exchanges. With no income you don’t even need to file taxes. If you are willing to game the system there are other assistance programs which you could benefit from but I’m not a fan so you can look into those yourself.

It’s always best to start this the January of a new calendar year, it makes your tax work much easier. The concept is as easy as the execution. You request that your job give you a 1 year leave of absence or you resign for a year. The former is much, much more powerful. With an approved leave of absence (LOA) you are pretty much guaranteed your same hours, wages and working arrangement as before you left.

The benefit of a LOA extends to your work benefits as well. Generally your 401k and other defined benefit plans stay in place until you return. Your vesting remains on track which is really important if you have a pension or cash balance plan. Health insurance would have to be continued through COBRA in most cases, though I mentioned above that your lack of income would qualify you for much cheaper health insurance.

I researched my own medical group’s policy before writing this post and did some research online as well. Seems that for the most part, the average employer follows similar rules, some info can be found on glassdoor.com for such info.

Saving the money for your mini escape isn’t too hard. The right thing to do is to just keep the money in cash, investing it may leave you with less than you need in the short-term. The hardest part will be coming up with a good destination for your mini retirement. Those of you with a lot of overhead will probably have the biggest obstacles. Though mortgage payments can be turned into interest only payments if you can prove that you will not have any income for the next 12 months. In some instances this will hurt your credit report.

Alternatively, you could rent out your home for the time that you are away. This may cover the majority of your monthly overhead when it comes to real estate. A property management company is advisable unless you have experience with such things.

The downside to taking a mini retirement is that you will have 1 less year of income and therefore 1 less year of savings. However, sometimes the need just arises or there is a great opportunity that comes your way. If you can clear your head and come back making much better decisions for your life then one measly year of lost income is quite insignificant in the big scheme of things.

In my case it would make sense to do this for a year because my medical group would likely approve my leave of absence, or possibly let me take a sabbatical. My overhead would be low wherever I decide to move to. I have a paid off condo which I could rent out for a small bit of extra income. Thankfully I am in good health and have no dependents. I don’t have a car I have to worry about and no pets.

I know of 2 doctors that have done this in their careers. 1 doctor owns some property in Hawaii and likes to go and live there for a few months at a time. So he works per diem on the mainland and then disappears for a few months to the islands. He was divorced but had 2 daughters who he was still supporting and overall he seemed like a happy guy and loved that sort of lifestyle.

The other was a colleague who used some sabbatical time mixed in with a LOA from our medical group, moved to Bolivia with his wife for a little over 6 months. He had a blast, enrolled his kids in a Spanish language school and worked on setting up some clinics there.

 

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