Younger generations will always look to put their stamp on language, and the world of finance is no exception. From “quiet quitting” to “loud budgeting” you’ll have heard many new terms on social media, often used to describe processes or strategies that you’re already familiar with.

One current trend among Gen Z is “micro-retirement”, which encourages employees to take early-career sabbaticals. Advocates argue that these small interruptions can help build a better work-life balance in the long run and improve overall wellbeing.

While you might think a break from work – and so from workplace pension contributions – would negatively affect long-term retirement savings, recent figures from Standard Life suggest this might not be the case.

Keep reading for your guide to what “micro-retirement” is, the pros and cons of this novel approach, and why it’s important to focus on your own long-term plan.

Micro-retirement could see you working for longer but at a higher salary, improving your retirement lifestyle

Maintaining a healthy work-life balance isn’t easy. You’ll want to build a successful career and save for your life after work, without neglecting the things that matter to you now. Looking after your financial and emotional wellbeing long term requires patience, focus, and a plan.

This wouldn’t usually involve intentional breaks in work, likely forcing you to put your pension contributions on hold. We’ve all seen the impact of the cost of living crisis on our ability to budget successfully while staying on track to our goals. But planned career breaks at the right time – to do the things you love, at a time when you’re free to enjoy them – could actually have a positive impact in the longer term.

Standard Life figures looked at the effect of taking a year-long career break at age 30 and then working for an extra six years. Their calculations suggest that working for longer, when your salary is likely to be at its peak, could have a disproportionately positive impact on retirement savings.

The average UK worker intends to retire at age 62, four years earlier than the current State Pension Age and six years earlier than the likely State Pension Age by 2044.

A 22-year-old worker earning £25,000 a year could build a pension pot of £163,000 by age 62. This is based on a minimum 8% auto-enrolment contribution, adjusted for inflation.

The report suggests that a one-year micro-retirement at age 30 would mean a £4,000 reduction to your pension pot at 62. But keep working until 68, and this retirement pot could rise to £205,000 (adjusted), or around £42,000 more.

While this plan requires an additional six years in work, this could feel much less arduous, and more enjoyable, because you’ve taken the time off to find fulfilment earlier in life.

A year-long micro-retirement, early in your career, might allow you to return to the workplace refreshed but can that feeling maintain you for another 37 years? If you think it might, micro-retirement could be for you.

Realistic goal-setting and a robust plan from the outset are key to reaching your goals

It’s important to sit down with an adviser early in your career. This allows you to think seriously about your end goals for retirement, such as when you want to give up work and the lifestyle you expect to lead.

Having a robust and clear financial plan from the outset, with a known path to your dream retirement, gives you something to aim for. And thanks to regular reviews, you’ll always have peace of mind that your plans remain on track.

If you decide a career break is right for you, we can use cashflow modelling to help you understand the impact of a micro-retirement. It’s worth noting that we can use the same process to factor in any potential changes to your circumstances or priorities as a result of life events, like births, deaths, or marriages too.

As with any decision you make, if it is understood and budgeted for in good time, only small adjustments should be needed to keep you on track.

Understanding the building blocks of financial wellbeing can relieve stress and provide peace of mind

Your physical and mental wellbeing should be your top priority, and a career break – or micro-retirement – might be exactly the right thing for you, whenever in your life you decide to take it.

If you want to travel, for example, the health and freedom you enjoy now might mean 2025 is the perfect time to take the plunge. Later in life, you might be in a position to leave a well-paid role open and take a small break once the kids have left home.

Taking time out for yourself might allow you to return to work refreshed, motivated, and full of determination to push your career forward.

It’s important, though, not to underestimate the role of financial wellbeing in your overall health. The confidence, peace of mind, and sense of control over your future that a financial plan can bring will help to relieve stress, knowing that your future is in safe hands.

Get in touch

If you need help to bridge the gender retirement gap and manage your long-term retirement plans, whatever they look like, get in touch. Email info@thepensionplanner.co.uk or call 0800 0787 182.

Please note:

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance. The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts. The Pension Regulator regulates workplace pensions.