Melbourne woman Zara Lim recently took an 18-month micro-retirement to travel around Europe and Asia. (Source: Supplied) <\/p>\n
A young Aussie has shared how she took an 18-month \u201cmicro-retirement\u201d<\/a>, quitting her job to travel around Europe and Asia. The trend is growing in popularity amongst younger generations<\/a> who no longer want to wait until they are 65 to enjoy the fruits of their labour, but there can be major financial risks involved<\/a>.<\/p>\n Zara Lim decided to quit her full-time digital marketing job in mid-2023 to take a micro-retirement<\/a>, which is a shorter, self-funded career break. The 30-year-old Melbourne woman told Yahoo Finance she had spent the pandemic period working<\/a> and saving as much as she could, and was eager to travel<\/a> once things opened back up.<\/p>\n Over the 18 months, Lim used her savings<\/a> and took on occasional freelance work to fund her trip. She was able to see the cherry blossoms bloom in Korea and catch a glimpse of the Northern Lights in Norway.<\/p>\n RELATED<\/p>\n \u201cHaving a really long break allows you to do the things that you just normally wouldn\u2019t be able to,\u201d she said.<\/p>\n \u201cHaving that flexibility to stay longer and to experience the thing you actually wanted to go there to experience is very, very privileged and I\u2019m very grateful to be able to do that.\u201d<\/p>\n Lim returned from her micro-retirement<\/a> earlier this year and has now secured another full-time digital marketing role, having started putting feelers out while she was still travelling<\/a>.<\/p>\n Do you have a story to share? Contact tamika.seeto@yahooinc.com<\/p>\n She hopes she\u2019ll be able to take more career breaks<\/a> in the future, with the ultimate goal to be “work-optional” by the time she is 40. She has been building a property and share portfolio to help support this.<\/p>\n \u201cI think that the younger generation, in a way, is just a lot more impatient. We do want to see gratification earlier and we just don\u2019t want to wait until we\u2019re 65 to have our retirement<\/a> and to travel,\u201d Lim said.<\/p>\n \u201cThere\u2019s so much to our lives outside of work that we want to experience, and I think having that time off lets us do that.\u201d<\/p>\n Aussies rethinking traditional retirements post-pandemic <\/p>\n Gareth Croy, founder and managing director of Your Future Strategy, said he had noticed more interest in micro-retirements amongst his clients with the trend emerging post-pandemic.<\/p>\n \u201cOnce upon a time, people would have called it a gap year<\/a>, but it\u2019s not necessarily off the back of school,\u201d Croy told Yahoo Finance.<\/p>\n \u201cPeople are going, look, I\u2019m young, I want to go and backpack through Africa, I want to get a campervan and travel around Australia.<\/p>\n \u201cThose things that we might have considered to be the first things people do when they retire later<\/a> in life, they\u2019re saying, ‘look, I want to do it while I\u2019m young and able’.\u201d<\/p>\n Croy said younger workers usually took micro-retirements to help quench a \u201cburning desire for a sense of adventure\u201d.<\/p>\n But he has also seen those in their 40s and 50s taking micro-retirements when they have a career or industry change.<\/p>\n Croy said it was important for people considering taking a micro-retirement to have a financial strategy in place that suited their circumstances.<\/p>\n Otherwise, they could be left in a worse financial position down the track.<\/p>\n The impacts can be huge, with calculations<\/a> finding a 26-year-old who took a year off each decade could end up with 20 per cent less super by the time they retire. That\u2019s a hit of around $105,000.<\/p>\n \u201cBy taking time out without contributions that will affect your balance later in life,\u201d Croy said.<\/p>\n \u201cBut if you\u2019ve got a strategy around that, then you can still get to where you need to be, but it\u2019s an awareness rather than sort of a surprise.\u201d<\/p>\n That could include considering additional contributions<\/a> when you return to the workforce or doing it beforehand, along with taking advantage of the five-year carry-forward rule for unused concessional contributions<\/a>.<\/p>\n Croy said it could be worth building up a capital base, such as property or other investments, so there is the ability for that capital to continue to grow and generate income<\/a> while you are taking time out of the workforce.<\/p>\n \u201cClients of ours I\u2019ve seen successfully build up quite deliberately a capital base, but rather than using that to cover their expenses while they\u2019re on a micro-retirement, all they\u2019re doing is setting themselves up to then use, like we would in retirement<\/a>,\u201d he explained.<\/p>\n \u201cSwitch gears, use the capital to generate income and use that income to fund their micro-retirement so they\u2019re not actually chewing through their capital base.<\/p>\n \u201cThen being able to come back, re-engage with that capital to continue with whatever they wanted to do through to long-term retirement.\u201d<\/p>\n Croy added that clients who had planned adequately usually tended to enjoy their micro-retirements more and felt more comfortable with their spending while they were on their break.<\/p>\n Lim owns multiple properties<\/a>, which are either positively geared or neutral, including the home she lives in, which she rented out during her micro-retirement.<\/p>\n She bought her first property as an investment when she was just 22, a two-bedroom apartment for $130,000 in rural Victoria, which she purchased with a $26,000 deposit.<\/p>\n She started investing in the share market<\/a> during the second half of her micro-retirement and now regularly invests in ETFs.<\/p>\n \u201cSelf-retirement or work optional by 40, that would be the ideal,\u201d Lim said.<\/p>\n \u201cSo when I\u2019m working, I\u2019m making sure every dollar is working for me, I\u2019m investing it, I\u2019m going to try and get to that goal.\u201d<\/p>\n Croy said he was seeing a shift of people being more active with their retirement plans<\/a>, with some actively looking to retire early like Lim.<\/p>\n \u201cEven just being more aware as to what retirement is going to look like and am I on track to achieve what I need for retirement?\u201d he said.<\/p>\n Lim said micro-retirements won\u2019t be for everyone and it helped that she was able to do some freelance work to supplement her funds<\/a> while she didn\u2019t have a full-time job.<\/p>\n \u201cReally knowing and understanding your budget and being able to forecast it for however long you want to take off is probably the most important thing,\u201d she said.<\/p>\n \u201cIf you don\u2019t have emergency savings saved up or you have many, many responsibilities, I\u2019m not sure it would be the right move.<\/p>\n \u201cI was fortunate enough [that] I don\u2019t have any kids, I don\u2019t have my own giant home mortgage<\/a>, I don\u2019t have to care for elderly parents or anything.<\/p>\n \u201cI thought this was the perfect time because I don\u2019t have any responsibilities other than myself.\u201d<\/p>\n Get the latest Yahoo Finance news – follow us on Facebook<\/a>, LinkedIn<\/a> and Instagram<\/a>.<\/p>\n Your Future Strategy founder Gareth Croy said micro-retirements were becoming more popular but it was important to have a financial strategy in place. (Source: Supplied) <\/p>\n
Lim owns multiple properties and invests in the sharemarket and hopes to be work-optional by 40. (Source: Supplied) <\/p>\n