What Are Mini-Retirements?
Mini-retirements, as defined by the HSBC survey, are essentially deliberate career breaks lasting from a few months to a few years. These breaks are taken
to explore personal passions. The study highlighted that Indians are increasingly interested in taking time away from their regular jobs to pursue activities like travel, spend time with family, engage in hobbies, or upskill themselves. In the study, a substantial 85% of respondents believe that mini-retirements have the potential to enhance the overall quality of life. The survey revealed that nearly half (48%) of those surveyed are planning to take at least one such break, and a similar proportion, 44%, are even considering taking multiple mini-retirements during their lifetime. The survey suggests a deep-seated desire among Indians to prioritize personal well-being and growth alongside their professional commitments, with many planning to take multiple breaks over their working lives.
Who's Driving the Trend?
The survey data indicates a clear generational shift, with younger Indians leading the charge toward mini-retirements. Gen Z (ages 21-28) and millennials (ages 29-44) are particularly enthusiastic about the prospect, with 64% of Gen Z and 58% of millennials expressing their interest. The driving factor is simple: a desire to pursue personal goals. The survey indicated that individuals in these age groups are planning mini-retirements in order to focus on personal goals, progress in their careers, or to devote quality time to their families. The survey revealed that the ideal age for the first mini-retirement is 44 years old, with 44% planning to take two to three breaks over their lifetime. This behavioral change calls for a deeper look into their financial planning to meet their goals, with some planning to take mini-retirements every six to seven years. This indicates an evolving attitude toward work-life balance and a growing willingness to prioritize experiences and personal fulfillment over a singular, continuous career path.
Financing Career Breaks
Funding mini-retirements requires careful planning and consideration. According to the survey, personal savings are the top source for financing these breaks, accounting for 38% of the funding. The financial support from family or parents is a significant contributor at 36%, as is part-time or freelance work, also at 36%. Financial planning is essential, especially considering the intended spending during these breaks. A significant majority, over 60%, of Indian respondents plan to spend USD 100,000 or more per mini-retirement. Specifically, 39% aim to keep costs below this amount, 37% plan to spend between USD 100,000 – 249,999, 20% are targeting a budget of USD 250,000 – 499,999, 19% are looking at USD 500,000 – 999,999, and 9% anticipate spending USD 1,000,000 or above. This underscores the need for robust financial strategies, including investment planning for retirement, to support these breaks.
Investment Preferences
Despite the growing interest in mini-retirements, financial planning preferences in India lean towards conservative options. Traditional insurance products are the most popular choice, favored by 47% of those surveyed. This is followed by investments in gold, which accounts for 46% of the choices, and mutual funds, at 31%. This preference for traditional instruments highlights a potential gap between ambitious life goals, such as mini-retirements, and the investment strategies currently in place. The survey indicates that only 20% of individuals prefer managed investments, 13% look towards alternatives like hedge funds or private markets, and a mere 3% opt for managed solutions. This preference for less aggressive strategies raises the need for a deeper understanding and adaptation of financial planning to support the ambitious goals of mini-retirements.
Challenges to Overcome
While the interest in mini-retirements is high, several challenges need to be addressed. The survey revealed that financial security concerns are the primary hurdle, cited by 37% of respondents. Additionally, family obligations are also a significant concern, mentioned by 36% of respondents. Furthermore, the perceptions of family and friends play a role in decision-making, with 31% of respondents acknowledging this influence. These hurdles underscore the need for a combination of robust financial planning and societal acceptance to make mini-retirements a viable option for many Indians. Addressing financial concerns, providing flexible work arrangements, and promoting a cultural shift that values experiences and personal growth are key to supporting the adoption of this trend.
