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Mini retirements: Americans target $530,000 for 6 to 12 months off
A HSBC survey found 37% of Americans are aiming for a mini retirement of about six to 12 months, ideally starting around age 46, while many who try it say it improved their lives.
A HSBC survey cited by Yahoo Finance found that 37% of Americans say they want a nearer retirement, a mini retirement of about six to 12 months, ideally beginning around age 46. The article says Americans who are considering such a break often feel they need substantial savings before going offline.
In the HSBC study, 10,797 investors across 12 markets, each holding between $100,000 and $2 million, reported that 87% of those who already took a mini retirement said it made their life better. However, many still hesitate, with four in 10 expecting the break to cost less than $100,000 but wanting about $530,000 in the bank first.
The piece notes that the savings target can shrink quickly once expenses, health coverage, and a path back to work are considered. It gives an example of how a household spending $5,000 per month would need about $40,000 for eight months off, closer to $50,000 when accounting for job searching after the break.
Financial planner James Hargrave, cited in the article, says some people budget to replace their paycheck but do not account for how they will fill their days, while travel plans are the most common estimate drivers. Yahoo Finance also cautions that retirement accounts like a 401(k) are not a simple funding source because the IRS imposes an additional 10% penalty on early distributions from a 401(k) or traditional IRA taken before age 59½, on top of ordinary tax rules.