Why Gen Z and Millennials Are Embracing ‘Multi-Retirements’

Retirement used to be a pretty predictable thing. People worked for 45 years or so, then called it quits as they reached 65. But some younger workers don’t want to wait that long. That has given rise to a new trend called multi-retirements.

If you’re not familiar with the term, don’t be surprised. All sorts of terms that made no sense in 2020 have become part of the national conversation in the last few years: Quiet quitting, quiet cracking, quiet firing, job crafting.

Multi-retirements (or micro-retirements), the latest in that growing list, is a strategy largely being employed mostly by affluent workers. It refers to a series of intentional pauses from their careers to realign or reinvent their goals.

A report from HSBC examined the phenomenon, speaking with 10,000 adults, aged 21 to 69, in 12 markets who had assets ranging from $100,000 to $2 million. Of those, just under half said they planned to take mini-retirements two or three times over the course of their lives, with 11 percent saying they plan to take three or more.

The Rise of Multi-Retirements

The breaks typically happen every six years and last between six and 12 months. Respondents said the ideal age to take the first pause in their career was 47. Generation Z and Millennials are the most likely to embrace multi-retirements, HSBC found. That’s because, at least with Gen Z, wealth is no longer viewed as a material term. Instead, financial success is seen as having a good work-life balance.

They were not, however, the only generations to express enthusiasm for the idea of multi-retirement.

“Multi-retirements are a mindset shift, with some individuals increasingly taking time out to focus on living their wealth, not just accumulating it,” wrote Dr Cora Pettipas, a financial planner and retirement specialist at HSBC. “They’re creating space for it now—with careful planning to ensure they can fund multiple pauses over the course of their lives. They aren’t viewing it as stopping work or their careers, rather taking new directions that feel more aligned to their values and needs of their families.”

Of the people who have taken a mini-retirement, 87 percent said it had made their overall quality of life better.

Why Workers Are Choosing Multi-Retirements

The reasons for wanting to take a series of mini-retirements vary. Here are the top five most common answers.

1. Family needs. Some 34 percent of the people surveyed said they wanted to spend more time with their family, helping raise their children or spending time with their parents before they die. 
2. Health reasons. 31 percent planned to use the time to focus on their physical, mental and emotional health, which have all been under assault the past few years, with burnout rates skyrocketing.
3. Travel. 30 percent simply wanted to take a break to travel and explore new places and cultures without having to return to work in a short time. 
4. Following passions. 28 percent want to pursue their passions and focus on personal development. 
5. Career change. A quarter of people surveyed said they would use the time to reassess their career goals and, should they find a new calling, pivot to a different type of job.

What It Means for Business Owners

The increased popularity of mini- and multi-retirements could present yet a challenge for business owners. To avoid the resource strain and workforce gaps, one workaround could be to reexamine the benefits offered to workers.

Flexible hours and opportunities to take unpaid sabbaticals could help mitigate burnout and foster the loyalty of younger employees. Formalizing those policies to show that the company encourages employees to recharge from time to time and focus on their own personal development will be, in the long run, less expensive than having to recruit and retrain new employees. 

The Cost of Multi-Retirements

So how much does one need to have in their savings account to consider a multi-retirement strategy? A lot. HSBC says the affluent in the U.S. are saving $517,644, on average, before taking a mini-retirement. And during those breaks, they’re spending $339,800.

That makes this dream unachievable for much of the population. The average American makes just $62,088 per year, according to the U.S. Bureau of Labor Statistics. And just 18 percent of individual Americans make more than $100,000 a year—with four out of ten of those still living paycheck-to-paycheck.

To afford it, some multi-retirement enthusiasts are starting their own businesses or building alternative revenue streams. Others are renting out property and raiding their pension. Gen X is relying heavily on crypto investments.

“What it means to be wealthy is changing,” wrote Lavanya Chari, head of wealth and premier solutions, at HSBC. “Across the world, we’re seeing a fascinating shift—especially amongst younger generations—away from traditional markers of success, such as wealth accumulation, towards a deeper desire for personal fulfilment, balance and purpose.”