To many people, retirement sounds like a dream: not having to work, taking lavish vacations, maybe even moving to a new, luxurious home to enjoy your newfound freedom. Unfortunately, retirement also sounds like a dream because it’s becoming more and more difficult to achieve. As inflation swells and the cost of living continues to rise, having enough savings to retire in your 60s, the historically average period to retire in the United States, seems unlikely for many young people in the workforce. However, some Gen Zers have found an alternative to traditional retirement, and they’re calling it “soft retirement.”
In order to retire, people typically need enough money in their savings to sustain their lives without receiving any additional income. Soft retirement, on the other hand, doesn’t focus on finding the right time to stop working altogether. Rather, soft retirement is about achieving financial independence so that in the future, you have the freedom to work fewer hours or have a more flexible work schedule. Ideally, this would happen before typical retirement age, so that you can soft retire in your 40s or 50s and enjoy more years of better work-life balance.
The process of soft retirement can look different for each person. Finance TikToker Mia McGrath has shared tips about what soft retirement looks like for her. “It means hustling extra hard in my 20s and cutting back on things like daily coffees and getting my nails done,” she shared on TikTok. McGrath acknowledged that soft retirement can be more difficult for some people to achieve, depending on their financial situation and whether they have dependents. Her goal, however, is to be able to support herself financially while working less.
Other TikTokers have recently discovered another similar phenomenon: micro-retirement, which is basically like enacting the soft retirement concept, except right now, and in shorter increments of time. Essentially, micro-retirement is all about combating burnout from work and focusing on yourself by taking short vacations now, instead of waiting until you’re fully retired to do things like travel and relax. The concept is originally from a 2007 book called The 4-Hour Workweek by Tim Ferriss, but has recently seen an uptick in popularity on TikTok.
TikToker Anais Felt recently shared her experience with micro-retirement, in which she took six months off from her corporate life. “I have never felt better,” she said in a video. “I’ve never felt healthier, I’ve never felt more rested. It’s been amazing.”
Of course, there are financial risks that come with micro-retirement. Taking extended time away from working can impact your long-term savings and interrupt your salary growth and investments. It can also be difficult to return to work after quitting a job. The U.S. job market is stagnant currently, meaning that the hiring rate at many businesses is sluggish and that finding a job after taking a vacation isn’t guaranteed. So, if you plan on trying out the micro-retirement trend, consider if that might impact your ability to soft retire later on down the road.