If you are a user of TikTok, you might have come across the latest trend for Gen Z and Millennials in the workplace. A new buzzword and a different outlook on work life and career building. That buzzword is ‘micro-retirement’ and it could become a reality for your workplace in 2025 and beyond.
But why are we using the word ‘retirement’ in the same sentences as those about Gen Z and Millennials?
The traditional concept of retirement that we are more familiar with is working for decades and then retiring in our 60s after, hopefully, securing enough funds to live out life comfortably.
However, retirement is now being redefined by Millennials and Gen Z.
Faced with economic instability, the possibilities of burnout and shifting values, younger generations are adopting a new approach: micro-retirement.
Micro-retirement is an emerging trend where young people are choosing to plan for – and take – multiple, shorter retirement-like breaks throughout their working lives rather than waiting for a single, decades-long retirement in old age.
Let’s take a closer look at the rise of micro-retirement; its benefits, its challenges and how it could be reshaping the future of work and leisure…
What Is Micro-Retirement?
Micro-retirement is essentially about young people getting the most out of retirement whilst they are young, rather than waiting until they are in their later years.
It is the practice of taking extended breaks from work life to travel, pursue passions or to simply take time out to rest and recharge the batteries. Unlike traditional annual leave from the workplace which typically lasts for a week or two, micro-retirements can last months or even years.
Obviously, young people need the finances in place to be able to fund these extended breaks so they are strategically planned. And they allow individuals to experience the positive aspects of retirement while they are still young and healthy.
This concept aligns with the values of Millennials and Gen Z who prioritise work-life balance and experiences over material possessions, embracing the motto, ‘Collect memories, not things.’ And whilst financial accumulation is important, personal fulfilment is often valued above those finances.
These days, rather than adhering to a rigid career trajectory, Millennials and Gen Z are seeking flexibility and autonomy. For many, micro-retirement is an appealing alternative to traditional work models that we might be more familiar with.
Reasons Why Millennials & Gen Z Are Embracing Micro-Retirement
So, what are the reasons for this embracing of the micro-retirement model? Several factors are contributing to the growing popularity of micro-retirement among younger generations.
Work Burnout and Mental Health Awareness
Over the last few years we have talked more openly about mental health and wellness, including also the possibilities of burnout and learning how to recognise that burnout might be occurring.
Whilst this openness about these issues has been a mid work-life introduction for older generations, Millennials and Gen Z are much more comfortable and more vocal about addressing mental health and work-life balance issues than previous generations.
We know that stress and burnout in the workplace are very real and this is causing many young people to rethink what it means to pursue a career and to look at different ways of pursuing career advancement. Overworking – not taking breaks and holidays – in the name of career advancement is not what a lot of younger people are looking for.
Micro-retirement offers a way to escape this cycle of overwork, allowing for rest and rejuvenation.
Shifting Career Trajectories
Unlike Baby Boomers and Gen X, who often spent (or are spending) their careers in one company or industry, Millennials and Gen Z are more comfortable with frequently changing jobs or with pursuing multiple income streams.
The gig economy, remote work and digital entrepreneurship have created opportunities for younger generations to make this work to their advantage. Rather than having all their eggs in one basket, many young people are now looking to pivot and take on different roles, making provisions to be able to take extended breaks between projects or different jobs without sacrificing their career growth.
The Impact Of Economic Uncertainty
For young people, traditional retirement after the age of 60 where the goalposts are changeable, is intangible. Since the pandemic and with so much uncertainty in the world at the moment – economic downturns, rising student debt, inflation, international conflicts – that distant prospect of the traditional retirement feels unattainable for many.
Instead of preparing for – and gambling on – a stable financial future decades from now, younger generations are prioritising the here and now. That which they know. Financial flexibility allows for the enjoyment of life now, whilst still planning for the future at the same time.
The Digital Nomad Lifestyle
Not all young people are looking to fully ‘retire’ during their micro-retirement. Adopting the digital nomad lifestyle allows them to travel and fund that travel at the same time by taking on remote freelance projects online.
Remote work and digital nomadism have made it easier than ever to blend work with travel. Many Millennials and Gen Z who take time out to travel choose to work part-time or freelance while travelling. This not only allows them to extend their time off to travel, it also allows them to build and maintain contacts within their field.
Many countries have now also introduced Digital Nomad Visas, giving young people the opportunity to experience living in another country for a couple of years.
A Shift In Values: Experiences Over Possessions
Back to the motto of ‘collect memories, not things.’
Many Millennials and Gen Z prioritise experiences over material wealth. Traditionally, older generations have worked to be able to afford a nice home, a car and all the best furniture and fittings to go into that home.
These days, however, studies have shown that younger generations prefer to spend their money on travel, concerts, hobbies and other leisure experiences.
Micro-retirement aligns with this mindset by enabling young people to focus on their chosen experiences while they are young, healthy and active.
How Does Micro-Retirement Work?
The micro-retirement model is not just about young people taking off and enjoying themselves, not wanting to work and making no plans for the future. Many are still seriously committed to building a successful career in their chosen field.
This means their micro-retirement choices require strategic financial planning and lifestyle adjustments.
On social media apps like TikTok, influencers have laid out how they and others make it work for them.
Financial Planning & Budgeting
If you took a year out yourself when you were younger – or you have saved up to do some extended travel, you will probably be familiar with planning your finances and budgeting.
To take extended breaks from work, young people need to build savings in advance.
This might involve:
- Creating a micro-retirement fund separate from regular savings. A separate bank account or other way of saving.
- Reducing expenses and living frugally before the break. We’ve all foregone nights out or buying extra clothes and other luxuries to prioritise for something else we really want to do.
Embracing Minimalism
Many micro-retirees adopt a minimalist lifestyle, cutting unnecessary expenses to save more.
This could mean downsizing their living space, limiting subscriptions or prioritising needs over wants.
Leveraging Remote & Gig Work
Some Millennials and Gen Z choose to work part-time during their micro-retirement, taking on freelance projects or remote gigs.
This allows them to sustain their lifestyle without dipping too deeply into their savings and also keeps them in the loop for when they return from travels to find other work.
Planning For Career Transitions
Micro-retirement can also be used by young people to plan for career shifts. Not all of us remain in the same field during our careers. Some young people use the time away from the workplace to upskill, explore new industries or start their own businesses.
Many employers are increasingly recognising career gaps as valid life choices, making micro-retirement less of a risk than it might have been before. The gig economy gives young people the opportunity to dip their toes into different fields and buıld some skills and experience in different areas.
Lower Cost Of Living
Some young people make micro-retirement work for them by relocating to countries with lower living costs. This is a key strategy for micro-retirees.
For example, if savings or earnings are in Sterling, moving to a country with lower living costs can stretch their savings significantly.
What Are The Challenges Of Micro-Retirement For Employers?
Despite its appeal, micro-retirement comes with challenges for both the micro-retiree and, of course, for you as an employer. Let’s take a look at the pros and cons of micro-retirement for employers.
Challenges For Employers
Workforce Planning & Continuity
One of the biggest challenges employers face with micro-retirement is maintaining workforce stability. When employees take extended breaks, businesses must find temporary replacements, redistribute work or deal with productivity losses. This can be particularly disruptive in specialised roles where finding short-term skilled workers is difficult.
Higher Turnover and Hiring Costs
Employees taking frequent breaks or leaving their job after a short time can lead to higher turnover rates. This means you would need to spend more on recruitment and in training new staff.
Even if you agree to allow staff the opportunity to take extended breaks with them returning to work afterwards, you could still experience knowledge loss or workflow disruptions.
Employee Benefits and Compensation Adjustments
Traditional retirement plans and benefits are designed around long-term, continuous employment.
Micro-retirements challenge this model, forcing you to perhaps rethink how employee benefits are structured. You might need to consider sabbatical policies to retain staff and accommodate employees who take frequent breaks.
Cultural and Team Disruptions
If you have young staff who take extended time off, this can cause a shift in the dynamics of your team.
The redistribution of responsibilities might create stress for remaining employees and reintegrating returning workers can be difficult. Employees who take micro-retirements might struggle to regain their previous roles or miss out on career progression opportunities, leading to dissatisfaction.
Benefits For Employers
With the challenges come the benefits.
And there are benefits for employers in embracing the fact that Millennials and Gen Z might be considering micro-retirements.
Increased Employee Satisfaction and Retention
Despite the challenges, micro-retirement can be promoted as an attractive benefit for employees. Offering flexible career breaks can enhance job satisfaction, reduce burnout and ultimately lead to higher long-term retention rates.
Employees who take time off to recharge may return with renewed motivation and loyalty to their employers.
Access To A More Diverse Talent Pool
Businesses that embrace flexible work arrangements might be able to attract a broader range of talent to the company – young people from a variety of backgrounds who value work-life balance.
Offering this flexibility can help you to stand out above the competition in competitive job markets.
Improved Productivity and Creativity
We have written in the past about the benefits for employers when staff are encouraged to take their breaks and allocated holiday time.
Employees who take time off often return with fresh perspectives and innovative ideas. Encouraging micro-retirement could help companies foster a more creative workforce and improve overall productivity.
While young people are away from the workplace, they are facing new experiences and developing new transferable skills and perspectives. These could all be beneficial to the workplace when they return.
Enhanced Employer Branding
And organisations that support micro-retirement can build a reputation as progressive, employee-friendly workplaces.
This can improve your employer branding, making it easier to attract and retain top talent who seek more flexibility in their careers. In turn, this can boost your reputation amongst your customer base who want to buy from companies who are seen to value their staff.
Has Micro-Retirement Affected Your Company?
As an employer, you might have already experienced employees of the younger generation taking some leave. Or you could be an employer in an industry that lends itself well to gig economy jobs and have found that young people are leveraging roles like this so that they can fund their extended breaks.
Whatever your experience, you can reach a targeted younger audience by advertising your vacancies with e4s .
