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A sabbatical may be a smarter move than early retirement

Online Niel November 9, 2024

Editor’s Note: “Take a Sabbatical Over Early Retirement” is part nine of an ongoing series throughout this year focused on how to retire early and the FIRE (Financial Independence, Retirement Early) movement. The first part is How to retire early in six steps. To view all articles on early retirement, go to the “read more” section at the bottom of this page.

If your soul longs for a sabbatical, you are not alone. According to OSHA, over 80% of American workers report experiencing stress at workand more than half believe it affects their home life. With burnout on the rise, how can people create a healthier work-life balance?

While self-care tips such as meditation, better sleep and exercise are common recommendations, some workers are looking for more sustainable solutions. A growing number of people are aiming to retire early by saving aggressively and living frugally.

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But is quitting work entirely the answer?

A sebatic is what you do

A smarter and more achievable alternative to early retirement might be a sabbatical – an extended break from work, often for rest or personal growth. Unlike early retirement, a sabbatical can provide lasting benefits beyond basic self-care without the long-term commitment of leaving the workforce.

As a writer Anne Lamott says, “Almost everything will work again if you unplug it for a few minutes, including yourself.”

Although not yet the norm, sabbaticals are becoming more popular, especially as workers prioritize mental health. Platform data from the payroll processor Joy shows a steady increase in the share of workers taking sabbaticals since 2019.

For many, a gap year offers a chance to recharge, pursue personal interests and improve overall well-being. What’s more, it can also be a great way to do so prepare for retirementwhenever you’re really ready.

The benefits of a gap year

Burned out as a nightclub promoter, Scott Harrison took a break and volunteered in Liberia, where he saw the need for clean drinking water. The experience inspired him to found charity: waternow providing clean water to millions of people around the world.

Conformable Harvard Business Reviewresearchers studying sabbaticals might classify Harrison as a “free diver”. Through interviews with professionals in various fields, they identified three types of sabbaticals: “working vacations,” where people pursue a passion project and return with greater independence; “freedives,” intense explorations that usually involve travel, helping people discover their authentic selves; and “quests,” where individuals take time to recharge before pushing their limits, often by learning new skills.

Across the board, those who take a sabbatical report greater confidence, clarity, and renewed enthusiasm. Some, like Harrison, use the experience to change careers, while others bring fresh energy and skills back to their roles.

Employers are increasingly recognizing these benefits, with some offering paid sabbaticals to attract talent and support wellbeing.

Such an employer, Morningstaroffers six-week sabbaticals, a perk that director of personal finance and retirement planning Christine Benz took twice, one of which was “working holiday” to write a book about retirement. She calls it “an opportunity to reflect” and “experiment with different work activities to see how you like them and if they give you a different sense of purpose.”

Why a sabbatical might be smarter than early retirement

For some early and traditional retirees, the transition can be marked by a lack of purpose, loss of identity or even boredom — especially if you don’t back down on something. A sabbatical, however, offers the chance to enjoy retirement-like freedom without the financial constraints or permanence of leaving the workforce entirely.

That’s why Benz calls it “a good middle ground to explore.” She found that sabbaticals allow you to identify specific work-related issues, such as your commute, hours or job responsibilities, that may be affecting your well-being.

With this perspective, she explains, you can make “incremental adjustments” rather than a complete life change through early retirement. For Benz, the sabbatical highlighted how much he missed the daily contact with colleagues – a key insight he brought back to work.

In this way, sabbaticals offer a unique way of taking mini-retirements, offering a valuable glimpse into what life after work might look like. If you’re thinking of retiring to a new location, for example, a gap year allows you to experience the everyday reality there rather than as a tourist.

As Benz says, “There are questions you can’t answer in a long weekend.” Taking a sabbatical allows you to “try your hand” at these unknowns, helping you truly prepare for retirement.

Plan your gap year

The planning required for a sabbatical varies depending on your employer’s support.

Paid sabbaticalswhich may include health coverage, makes things simple. In this scenario, you like your job and your employer, but you need a break. Several industries are more likely to offer paid sabbaticals, such as academia, law, finance and ministry. Research your employer’s policies. and make sure you understand what will be covered and whether you will be paid in full or in part. For example, professional services firm Deloitte offers employees two types of sabbaticals: unpaid for one month for any reason or partially paid for three to six months to pursue personal or professional growth. Also, research whether the employer will require a commitment to work overtime when you return.

Unpaid or longer sabbaticals requires more planning. You may not want to go back to your job or even your industry. or you need more free time. Jamie ClarkeCFP® and founder of Ruby Pebble Financial Planning, advises those considering an unpaid sabbatical to take a hard look at their finances.

“You should first understand your assets and liabilities, income and fixed and discretionary living expenses,” says Clark.

Clark recommends setting aside three to six months of expenses as an emergency fund, plus additional funds for sabbatical and post-sabbatical job search costs.

If the sabbatical is not covered by the employer, health insurance may be another consideration. Options include continuing your employer health plan through COBRA, joining a partner’s plan or, if your income drops, qualifying for ACA subsidies.

Clark also cautions against drawing on retirement savings, which can derail long-term goals: “Ideally, you should use cash savings or non-retirement investments to cover your time off.”

Beyond financial preparationcareful planning is essential for a fulfilling sabbatical that is personal. It can be an opportunity to reconnect with loved ones, pursue passion projects or travel. Benz stresses the importance of structure, advising, “Be deliberate and realistic about what you’re going to be able to do.”

She suggests including “both fun things and things that will give you a sense of purpose,” having discovered on her own breaks that “relaxation is best when you’re also doing things that feel like you’ve really earned that relaxation”.

Finally, a gap year can be an active way to change your trajectory, explore new options, and avoid the trap of stressful routine. To echo a famous saying attributed to the rather intelligent physicist Albert Einstein, “Insanity is doing the same thing over and over and expecting different results.”

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A sabbatical may be a smarter move than early retirement

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