Danica Nelson hit burnout from her first job as a marketer at a major telecom in 2019, and knew she had to take some time off. She was able to negotiate an unpaid, six-month leave — a “micro-retirement” — with her company.
“I planned what I call my liberty leave, or career break. I called it the liberty leave because it had a double meaning,” Nelson says. “I was living in Liberty Village at the time, so I was leaving Liberty Village to make it happen, and I needed a break badly. So I went to Thailand, Vietnam, Singapore, Indonesia, Malaysia and the Philippines for six months.”
Nelson, now a 34-year-old finance educator and content creator specializing in personal finance and travel, came back to her job, but in November 2020, she left for a position at a global e-commerce company.
When she got laid off in 2023, she got a visa though the International Experience Canada program, allowing her to legally live and work for a set period in her country of choice due to bilateral agreements between various host countries and Canada.
Nelson and her partner sold their Toronto homes and moved to Malaga, Spain, where they’re now living and working. She is now a content creator and an adviser with the program Trauma of Money, which helps people work through issues that may be affecting their finances. She also advises others on how to take their own career breaks.
The idea of a career break or micro-retirement is not new. It’s pretty much a rebrand of sabbaticals, the main difference being these “breaks” are often unpaid. What’s new is that due to the pandemic and the changing attitudes toward work-life balance by younger generations, more people are taking them.
A 2024 Deloitte study found that generation Z highly values work-life balance and also expects to spend more years in the workforce instead of retiring at 65. As a result, they’re more willing to take breaks mid-career, with the confidence that it will not affect their career path.
Of course not everyone can afford to take time off work. Canadians are in the middle of an affordability crisis. A September 2024 Leger survey found that 47 per cent of Canadian respondents were living pay cheque to pay cheque. It takes serious financial planning to take a break from your career, says Ainsley Mackie, portfolio manager at Verecan Capital Management.
“If you want to travel, you need to know how much money you’re going to need to travel,” Mackie says. She says if it’s more about trying out a new business idea, you have to figure out how to generate revenue, and if it’s about going somewhere to volunteer, you’re going to need enough money to cover your expenses.
Mackie says people need to figure out the goal of their micro-retirement and use that to determine their financial plan. “How much am I going to need to be able to do all those things during that time, and then work that into your budget,” she says. “And if you don’t have enough, then it’s not time to take that sabbatical, or it’s time to adjust what your goals are during that time.”
Funding your mini-break
When clients come to Samantha Sykes, a senior investment adviser and certified personal financial planner at Raymond James, expressing interest in taking a micro-retirement, she tells them to take a vacation first.
“Just get their head around it, to unplug from the day to day, and then also use that vacation time that they would have already had to allow themselves to run the numbers and to give themselves the headspace to think through what’s making them unhappy (about their career),” she says. “Is it exhaustion? Is it disliking people? Is it fundamentally disliking what you do? Then talk to your financial adviser, or run numbers, do some budgeting, always making sure you have your buffer.”
Nelson’s first “liberty leave” was funded through 18 months of savings beforehand — $16,000 worth. Plus, when she left to travel through Southeast Asia, she had a tenant in her condo covering her expenses. She also banked her vacation days for nearly a year, so her first month of the six months was covered.
“It also helps that I chose the region of Southeast Asia, where the Canadian dollar does stretch a lot further,” she says. “Honestly, I could have spent way less. But I was eating all the things, I was doing all of the activities, and I was living my best life. That was not the time to skimp if I didn’t have to.”
Nelson says she tells people to focus their finances into three buckets when they’re trying to save for a break: “How can I make more money? How can I save more money, which is essentially where I can cut my expenses? And the third one that I did as well was, ‘How can I manage the money that I have now?’ ”
That could be putting your savings in a high-interest savings account, or investing in some low-cost ETFs so you get some return on your investment if this is a longer-term goal for you, Nelson says.
Employer plans
Some employers have programs in place to help you fund a micro-retirement.
Niya Bajaj, a strategic adviser with the Ministry of the Solicitor General and a holistic yoga therapist, is taking a year off beginning this summer. She’s been living on two-thirds of her income for the past two years, deferring the final third.
“I looked at my budget and I could chat with my financial adviser and my tax strategist as well, and they were, ‘Yeah, you could reasonably live on two thirds of your income and put the rest away.’ ”
Her employer puts the deferred income, up to 33.3 per cent of the pre-tax salary, into a bank account at a financial institution designated by the employer. This funds the sabbatical. These plans are common among the federal government, universities, school boards and even the city of Toronto.
“This summer, that funding will be released, and that’ll be the income for the next year, which is not a difference in quality of life, because I’ve already been living like this for two years.”
She plans on focusing on her holistic practice and spending time with her parents in Mumbai, helping them move to Canada.
Mackie says to be aware of how you’ll make money while you’re abroad if your mini-break is not employer-funded, as well as the tax implications. “Where are you going to get your revenue from while you’re on this break? What do you need to plan ahead?”
Insurance
Mackie advises that people get health and travel insurance in the event of a medical event while abroad. Sykes agrees, adding that people should also max out their benefits before they take their mini-break.
“If people have health-care spending accounts, load up on those contact lenses, the eyeglasses, medical and dental appointments and therapy treatment.” She also suggests applying for credit or an increased credit limit prior to leaving because it’s harder to get approved without an active pay stub.
Planning a buffer for when you return home to cover expenses between your return and your next step is also key, says Sykes. “So I always add the 10 per cent whenever I do the financial planning for my clients. To me, having that buffer is what reduces the stress, knowing that when you’re looking at your bank account, when you’re away on sabbatical, you’re going to be OK, because you’ve planned for it.”
Repercussions
When the break is over, does it make it difficult to explain your leave to HR professionals when coming back to your career? In fact, says Joanne Acri, an executive recruiter and founder of recruitment agency Junction Collective, it can be an asset.
“Six months is nothing,” she says, pointing out that job searches take that long these days. “Even a year is nothing, I spoke with someone who took a year off, and I actually thought it was one of the best interviews I had, because she now has another kind of experience that she could add to whatever she was doing beforehand.”
Acri says taking a career break says a lot about a person’s resilience, including their ability to plan and organize their trip, and what happens to their home base while they’re away.
She admits that jumping back into the workforce may not be easy due to a tightening and more competitive job market, but says that companies aren’t holding micro-retirements against potential hires.
“I just think that highlights how interesting they are, they took an adventure, they took a risk, and they bounced back from it. Those type of things, you can’t teach people how to do that.”
