$105,000 superannuation warning over growing ‘mini-retirement' trend driven by Gen Z, Millennials
Perth man Riley McPherson recently completed his first mini-retirement, taking two months off between jobs in property. The 39-year-old said he planned to take a micro-retirement every five to 10 years.
"I wasn't spending as much time with my family and connecting with my kids," he told 9News.'Mini-retirement' trend offers young workers 'happiness' as Baby Boomer 'glory years' dream dies
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While taking a micro-retirement could mean more time with your loved ones and boost your mental wellbeing, Colonial First State head of technical services Craig Day said it was not without long-term costs.
"You may end up actually having a much bigger impact on your retirement nest egg than you may otherwise have thought," he said.
Calculations found a 26-year-old who took a year off each decade could end up with 20 per cent less in their superannuation by the time they retire.
That's a hit of around $105,000, which means their retirement savings could run out six years earlier.There can also be downsides when it comes to your career. Unlike a sabbatical, where you can take a break and come back to your same job, a mini-retirement often means you will have to find a new job when you return and won't be paid during your time off.
Realistic Careers recruiter Tammie Christofis Ballis said taking a few months or even years off could backfire down the line when you're looking for a new job.
"If you keep taking career breaks, it's not going to look good, because it looks like you're just going to pack up and go. Employers want longevity," she told Yahoo Finance.
Ballis said employees could also risk seeing a dip in their salaries and face stiffer competition from those who have more recent experience.
Perth financial planner Fran Hughes is a mini-retirement specialist and took her own mini-retirement last year.
"We're working longer but also we're living longer and if we continue this trend, we might actually continue to work till age 70 and only have a short period of time that is 10 years to enjoy our golden years,' she told 9News.
Last year, KPMG analysis found the average age of retirement in Australia was now 66.2 years for men and 64.8 years for women.
Hughes said people seeking a mini-retirement may have to 'pay it forward and go without today' in order to achieve it.
"The biggest planning mistake is not to plan it out," Hughes said.
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