A Sabbatical May Be a Smarter Move than Early Retirement

Smiling mature man on motor yacht looking at distance.

(Image credit: Getty Images)

Editor’s note: "Take a Sabbatical Over Early Retirement" is part nine of a series on how to retire early and the FIRE (Financial Independence, Retire Early) movement. Part One is How to Retire Early in Seven Steps. To see all early retirement articles, jump to the end.

If your soul yearns for a sabbatical, you are not alone. According to OSHA, over 80% of American workers report experiencing workplace stress, and more than half feel it affects their home life. With burnout on the rise, how can people create a healthier work-life balance?

While self-care tips like meditation, better sleep and exercise are common recommendations, some workers seek more lasting solutions. A growing number of people aim to retire early by aggressively saving and living frugally. However, early retirement carries risk, so a smarter and more achievable alternative might be a sabbatical — an extended break from work, often for rest or personal growth.

From just $107.88 $24.99 for Kiplinger Personal Finance

Become a smarter, better informed investor. Subscribe from just ~~$107.88~~ $24.99, plus get up to 4 Special Issues

CLICK FOR FREE ISSUE

https://cdn.mos.cms.futurecdn.net/flexiimages/y99mlvgqmn1763972420.png

Sign up for Kiplinger’s Free Newsletters

Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.

Profit and prosper with the best of expert advice - straight to your e-mail.

A sabbatical could be the solution

Unlike early retirement, a sabbatical can deliver enduring benefits that go beyond basic self-care, without the long-term commitment of leaving the workforce.

As writer Anne Lamott put it: “Almost everything will work again if you unplug it for a few minutes, including you.”

While not yet the norm, sabbaticals are becoming more popular, especially as workers prioritize mental health. Platform data from payroll processor Gusto shows a steady increase in the share of workers taking sabbaticals since 2019.

For many, a sabbatical offers the chance to recharge, pursue personal interests and improve overall well-being. And what’s more, it can also be a great way to prepare for retirement, whenever you’re truly ready.

Three types of sabbaticals

Burned out as a nightclub promoter, Scott Harrison took a break and volunteered in Liberia, where he saw the need for clean drinking water. The experience inspired him to found charity: water, now providing clean water to millions worldwide.

According to Harvard Business Review, researchers studying sabbaticals might categorize Harrison as a “free diver.” Through interviews with professionals across fields, they identified three types of sabbaticals: “working holidays,” where people pursue a passion project and return with greater independence; “free dives,” intense explorations typically involving travel, helping people discover their authentic selves; and “quests,” where individuals take time to recharge before pushing their limits, often by learning new skills.

Across all types, sabbatical-takers report greater confidence, clarity and renewed enthusiasm. Some, like Harrison, use the experience to pivot careers, while others bring fresh energy and skills back to their roles.

Employers are increasingly recognizing these benefits, with some offering paid sabbaticals to attract top talent and support employee well-being.

One such employer, Morningstar, offers six-week sabbaticals, a perk that director of personal finance and retirement planning Christine Benz has taken twice, one of which was a “working holiday” to write a book on retirement. She calls it “an opportunity to reflect” and “experiment with activities different from work to see how you like them and if they provide a different sense of purpose.”

Why a sabbatical might be smarter than early retirement

For some early and traditional retirees, the transition can be marked by a lack of purpose, loss of identity or even boredom — especially if you’re not retiring to something. A sabbatical, however, offers the chance to enjoy retirement-like freedom without the financial constraints or permanence of leaving the workforce entirely.

That’s why Benz calls it “a good middle ground to explore.” She found that sabbaticals allow you to pinpoint specific issues with work, such as the commute, hours or job responsibilities, that may be impacting your well-being.

With this insight, she explains, you can make “incremental adjustments” rather than a complete life change through early retirement. For Benz, her sabbaticals highlighted how much she missed daily contact with colleagues — a key insight she brought back to work.

In this way, sabbaticals offer a unique opportunity to take mini-retirements, providing a valuable glimpse into what life after work might look like. If you’re considering retiring in a new location, for example, a sabbatical lets you experience the everyday reality there rather than as a tourist.

As Benz puts it, “There are questions you can’t answer with a long weekend.” Taking a sabbatical lets you “get your arms around” these unknowns, helping you truly prepare for retirement.

Planning your sabbatical

The planning required for a sabbatical varies depending on your employer’s support.

Paid sabbaticals, which may include health coverage, simplify things. In this scenario, you like your job and employer but need a break. Several industries are more likely to offer paid sabbaticals, such as academia, law, finance and ministry. Research your employer's policies and ensure you understand what will be covered and if you will receive full or partial pay. For example, professional services firm Deloitte offers employees two types of sabbaticals: unpaid for one month for any reason or partially paid for three to six months to pursue personal or professional growth. Also research if your employer will ask for a commitment to work an additional period of time when you get back.

Unpaid or longer sabbaticals require more planning. You may not want to return to your workplace or even to your industry, or you need more time off. Jamie Clark, CFP® and founder of Ruby Pebble Financial Planning, advises those considering an unpaid sabbatical to carefully examine their finances.

“You should first understand your assets and liabilities, income, and both fixed and discretionary living expenses,” Clark says.

Clark recommends setting aside three to six months of expenses as an emergency fund, plus additional funds for sabbatical costs and post-sabbatical job searches.

If your employer doesn’t cover your sabbatical, health insurance may be another consideration. Options include continuing your employer’s health plan through COBRA, joining a partner’s plan or, if your income dips, qualifying for ACA subsidies.

Clark also cautions against dipping into retirement savings, which can derail long-term goals: “Ideally, you should use cash savings or non-retirement investments to cover your time off.”

Beyond financial preparation, thoughtful planning is essential to a fulfilling sabbatical, which is personal. It can be an opportunity to reconnect with loved ones, pursue passion projects or travel. Benz emphasizes the importance of structure, advising, “Be deliberate and realistic about what you’ll be able to get done.”

She suggests including “both fun things and things that will give you a sense of purpose,” having found during her own breaks that “relaxation is best when you're also getting stuff done that you feel like you really have earned that relaxation.”

What if you don't want to go back to work?

A sabbatical can be an extremely rewarding experience — so rewarding, in fact, that you can't bear the thought of returning to work once it comes to an end. Instead of serving as an alternative to an early retirement, a sabbatical could be something that further drives your desire to end your career sooner rather than later. And that's not necessarily something that has to be off the table, says Filip Telibasa, Owner and Planner at Benzina Wealth.

"Run your numbers like it is retirement," he insists. "How much would it take to fund your lifestyle indefinitely? What trade-offs are you willing to make? Downsizing your home, moving to a lower cost of living area, part-time income — these levers give you flexibility and let you know what's possible."

Telibasa also says that if you're not financially ready to stop working completely, you can consider semi-retirement following a sabbatical.

"Consulting, freelancing, starting a lifestyle business, even gig work — these can cover your needs without returning to the nine-to-five grind," he says.

Of course, like many people, you may find that a sabbatical allows you to resume your career feeling enlightened and refreshed. If not, says Telibasa, "Use the sabbatical to test your next chapter."

Parting wisdom

Ultimately, a sabbatical can be an active way to change your trajectory, explore new options and avoid the trap of a stressful routine. To echo a famous saying attributed to the pretty smart physicist Albert Einstein, “Insanity is doing the same thing over and over again and expecting different results.”