451 | Mini-Retirements to Accelerate Your Path to FI | Jillian Johnsrud

25:57I was talking to a client last night who's considering this and his concern is what a lot of people's concern is, what are all my friends and family going to think? What are they going to say? Because I floated this idea by them. The response was not encouraging. All the advice I got was like, stay in this job, stay in this career path, like, just keep going. Why would you exit for a period of time? You're going to lose momentum. And the reality is, for me, my perspective is there's no bad advice. There's just advice that will take you different directions. That advice is good advice for someone who wants to go a specific direction.

26:37Our job is what direction do I want to go? And am I listening to the people who know how to get there. They know how to move in that direction because you'll get a lot of advice if you leave your job. It's very, especially in American work culture, some other work cultures is the same. There's such a strong pull to employment and to work. There's a purpose, there's a morality to it, there's an identity to it. And if you opt out of that, even for a short period of time, it makes everyone else feel super uncomfortable. And in an attempt to resolve their discomfort, they will try to get you employed again.

27:18And so you might have this like, you're kind of struggling, you're kind of adrift, and then all of these people are trying to pull you back. And so you do need that support and that community of other people who know what you're going through. The reality is if you're struggling at all in a mini retirement, none of your employed friends will have any sympathy for this challenge. Oh, you have too much time on your hands. Oh, you're pursuing too many hobbies that you don't think are going awesome. But you get to have too much time with your spouse to have conversations. Yeah, that sounds super tough.

27:51I'm really sorry for you. There's not going to be any help. Yep. Zero sympathy. Zero sympathy. So you need people who get what you're going through, but also understand the vision that you want for your life. Yeah. And having that vision and working through that vision and figuring out what that is. And like we said earlier, iterating and trying to figure out, it's not, there's not that one simple vision that you've set out and it's never going to change. I think it's part and parcel of a learning experience of just being alive. And I know you mentioned in there some of the things that these friends, neighbors, et cetera, might say is, oh, you're going to lose momentum.

28:31Now, that's an interesting one because I actually suspect that a lot of people who take the mini retirements have that exact same thought. Many of the other things are just them pulling back because they're jealous. But I suspect that's the one that resonated most deeply with me. And I think when we're contemplating, OK, what does a career look like? I want to take these mini retirements. And this now gets into the nitty gritty, Julian, of like, OK, what does this look like? How do we do this? How do we negotiate it? But I think that losing momentum is top of mind. I'd love to hear your thoughts.

29:01Yeah, there's two perspectives. So one, actually, I'll start with like worst case scenario. One of the things sometimes I do with clients, if they're like, ah, if I, you know, there's this idea of like, if I take a year off now, it's going to tack more years on to the end. Like, should I just push through, you know, compound interest, I'm going to end up with so much less money. And so we look at what exactly are the numbers we're talking about because so much money is a really vague concept and it's hard to pin down. And so we'll run the calculations and I'll say, okay, so if you took this year off when you're 70, instead of having 6.4 million, you're going to have 5.2.

29:40This is going to cost you like a million bucks. I want you to think through when you're 70, how you feel only having 5.2 and compare that to how you'll reflect on that year off and the things that you did and the time you spent with your family. And I can't make this choice for you, but which one of those feels more valuable? If you can kind of live in that 70 year old version of yourself for a minute, which one would you regret? What path would you regret? And what path would you be excited about? So there's that worst case scenario that like the math is straight, ignoring the fact that taking a year off alters other things in your life.

30:21In actuality, when you look at how this plays out in people's lives, for a lot of people, and it doesn't make sense on the onset, it accelerates their path to FI. And one of the simplest ways is that in switching careers, if you leave and if you come back, oftentimes people come back at a higher salary. It then increases their lifetime earning potential a lot. I had one client in a strange turn of events. I told her to ask for a raise when she resigned. And she was I was like, I don't know if that's a thing. When she resigned? Yeah, same day, same conversation. Asked for a raise, a large raise, like a 20 % raise.

31:04So not like a baby raise. And they said yes, because I knew they would. Of course. And then she got her mini retirement. But that 20%, her mini retirement was like three or four months. It set her lifetime earning trajectory on a whole different path that it massively accelerated her path to FI. You know, if you take a month or three months, you might rest, you might travel, you might do those other things. But for people who take six months or a year, it gives you the opportunity to pursue things that you don't have the mental and emotional bandwidth for. And for some people, it just shifts their trajectory.

31:42They go into new professions, they start side hustles. You know, for two of mine, many retirements from my husband, we bought a house and renovated it. We ended up with two rentals. So the very practical math, he took six months off. It enabled us to buy an extra rental property. He wasn't earning a ton of money at that time. He probably would have earned 15,$20 ,000 for that six months. That rental property has appreciated by about 300 ,000. Oh my goodness. massively accelerated our path to FI. So it's not always linear. The math isn't always as simple as we think about it at first glance. Yeah.

32:21So right, not only the appreciation there, but then an income stream from the rental property forever. I mean, talk about an amazing return on investment, if you will, and quote unquote, that wasn't how you conceptualized his mini retirement, obviously. But if you want to just look nuts and bolts, that's an astonishing thing. And your point two minutes ago about, okay, when you leave and then you come back from any retirement and yeah, if you're getting a job at a new place, in all likelihood, you're going to get a significant raise. And it's such a bizarre, bizarre way that the world works that most people who are loyal to their employer and stick around, they get their two to 4 % raises every single year, which are these piddly little things.

33:03And we find again and again and again, the way to get those massive jumps are not to get a promotion at your current job, it's sadly to leave and to go to another place where you get those 10, 20 plus percent increases. So the fact that you are actually making this overtly happen as part of your mini retirement is kind of a cool strategy that I suspect most people would never even contemplate, but that's a pretty good side benefit, right? Yeah. That's amazing. So, okay, I cannot let it go by because people are going to be kicking me of the client that you had resigned and ask her raise on the same day.

33:37So we have to hear that story, even if it's apropos of nothing. So it's a really simple philosophy. And whenever I help people with negotiations, this is one of the core concepts is fairness. That is our word that we focus on. So my clients, what I would encourage anyone, the responsibility is on you to do your homework, to do the research. Don't wait around for your employer to see how much you're contributing and what the value of that is. They spend two hours, four hours, eight hours, somewhere in there putting that together. So she came and said, Hey, I want to leave. I'm willing. And part of the negotiation in like, I do a lot of exit negotiations.

34:18Like I'm going to leave, but I'm going to negotiate this on the way out the door. In this exit negotiation, I'm willing to stick around for four months. I'm willing to help you out through this really busy season of our work and make this a really smooth transition, in return, I would just like to be fairly compensated for the remainder of my time, which I believe is about a 20 % increase based on this data that I have provided for you right here. And in these exit negotiations, people think I don't have that much leverage when I'm leaving, but the reality is you're coming to the table and saying, I'm willing to do all of these things for you.

34:54I'm willing to do these six specific things for you. In return, would you be willing to do a couple things for me? And they could say no, but when we balance it on that idea of fairness, I would just like to be fairly compensated for the remainder of my time. It sounds weird to resign and ask for a large raise, but of course, of course they said yes. You don't want to lose a really critical employee during the busy time of year. It's hard to argue with just fair compensation. Right. Basic fairness. And there's some level of reciprocity in there also in that, in this case, right, the employee who you're coaching is not just walking out.

35:35They're not just saying, here's my two weeks or less. I'm out. I'm willing to stick around for four months and help facilitate this. Right. And it's interesting how you mentioned the word fair. And I want people to really dial in on that because everybody wants to be seen as fair. It's right. That's barely compensated. It's part of this. There's a lot of these little things in the human operating system that just like they trigger. And it's funny because I mentioned reciprocity and where that's most significantly featured is in Robert Cialdini's book Influence. And he has another one in there where he talks about, and I'm not going to get too in deep, but the human operating system is when you say the word because you ask and then you say because, and then it can almost be like a nonsensical thing afterwards.

36:20They've done all these psychological research studies on them. And it's like the likelihood of someone saying yes, when you just say, because in essence, even if the reason is completely nonsensical, it increases it dramatically. And again, this is a financial independence podcast. I'm not going to get into the, I'm way out of my league with the social psychology, obviously, but that human OS, and there is something about fairness, right? People don't want to be seen as unfair. So that's a really, really cool one, Julie. Yeah. It's really tough when you're saying, I'll do these six things for you, for them to be like, yes, I would love for you to do these six things, but I don't want to give you anything that you would like.

37:00So can you just do all of these favors for me and I give you nothing? Can we make that happen? Because people, you're right, there's a fairness side and they know they're being unfair and that feels really uncomfortable for most people. Yeah. So Jillian, negotiation-wise, are there other things that we should think about, talk about on mini-retirement negotiation? Where do we go from that? So another aspect that a lot of people take for granted, there's a big misconception, and that is my employer doesn't have this program. My employer doesn't allow people to take mini-retirements. It's not something they do.

37:39It would never be an option. so my only option is to leave. And they might not have a program. They might not have allowed other people to do this before, but there's a way to kind of set yourself up for a high success rate. I constantly have people that tell me, oh, there's absolutely no way. There's no way this could happen. And then they're like, you wouldn't believe the conversation I just had. This is crazy. And I'm like, well, it's not that crazy, but I'm glad you're happy. But there's an element that I took some HR classes in college and a huge theme in HR is this idea of the cost. The cost to interview, the cost to hire, the cost to train, the cost dollar-wise, the cost time-wise.

38:24It's so much easier to keep a good employee than to start that entire process. I was actually, I was at a campfire and someone, you know, kind of raised their hand and was like, yeah, I mean, I get this for like hourly employees or like low level employees. Totally makes sense. You know, I'm a CFO. There's no way my company is going to give me a month off. It's just, it's never going to happen. Like I'm too important and I'm too critical for the mission, which is a sentiment that I hear a lot. You have no idea how essential I am in my company. You could never lose me. And so I frame it a different way.

39:01So in this role, how long is it going to take them to interview someone to replace you? He's like, oh, that's a long process. Yeah, that's like six months. I'm like, yeah. How long does it take to train someone to get up to speed to where you're performing now? It's like, oh, that's a long process, like six months, a year maybe. Yeah. And then there's risk that they won't be as good as you and they might have to start this entire your process over. So we're in it for at least a year of low productivity in your role. Don't you think it might be easier for them just to give you a month off and they can skip all of that and you just come back and keep doing your job?

39:42Do they want two years of pain or one month of somewhat discomfort? Yes. And when you have, I talk a lot about like the power of leaving and not in a like, give me what I want, or I'm going to leave because you suck way. But you have to understand it shifts the dynamic. Because if you come to HR and you say, hey, I want you to solve this problem, or you can just say no, the answer is no. We always go with the easiest and the cheapest solution. And if an option is just no, we're going to go with that because that saves us a whole bunch of hassle. But when you alter the equation by saying, or else it's going to be a real bummer, but I guess I'm going to have to separate from the company.

40:26Now you've put a lot of effort and a lot of time and a lot of cost on that option. So if you can bring a simpler, easier alternative, a cheaper alternative to the table, more often than not, they'll lean towards whatever's easier and cheaper, which might just be giving you a couple months off. Yeah. I mean, it certainly makes sense. And it's funny. So many of these concepts, they seem self-evident after you explain them so beautifully, Jillian, but they're not self-evident on the front side of this because you don't, you just think you go back to, like you said, they don't have a program like this.

41:01They've never allowed this before anybody else. They've always said, no, they could never do it. You could come up with this litany of reasons why it won't happen. Or you can realize you have power. And like you said, this is not an antagonistic, oh, I'm going to lord over you with my power here, because at the end of the day, it's a company and you are replaceable. Let's be entirely clear. But everybody's going to do what's in their best interest. And if for the company, it's going to take six months to find a replacement, plus maybe a year of low productivity or more, or in this hypothetical, a month off or two months off.

41:36Okay, I think we all know what their best interest is, but it may need to be explained to them in that manner. Also, right? Like open communication. We talked about fairness. If you treat this as a potential win-win or at least not a lose one side, clearly losing, then there might be an easier way to get to yes on this. I would imagine. Yeah. It takes preparation and it takes the right mindset. Like I always tell clients like the work responsibilities on you, you're going to have to use a lot of empathy of like, what are the challenges? What are the problems that they're instantly going to be like, and how do we deal with this?

42:13And then you need to think about solutions and bring those solutions to the table. The process is going to have to be creative and collaborative. You're not dumping a problem in their lap and saying, you better fix this. And you're going to have to be patient. It's going to take a number of meetings, a number of conversations. But if you come to it with this attitude of like, I would love to figure this out. I can foresee some of these challenges you're going to have. I've got some ideas for solutions, but I would love to dialogue about this to where they know you're not just dumping a problem on them.

42:44You really are trying to figure this out and you have to know what compromises you're willing to make. Because sometimes there is that one weird thing. For my one client who took the mini retirement, there was an end of the month task that had to be done and to hire a temp and to hire, it was a sticking point. and she was like, you know what? If I can get the whole summer off with my kids, I can come in for six hours at the end of the month, one day a month. Like I can do that. Like that's not gonna derail any of my plans. You know, if you have a Friday meeting that happens on four, there's absolutely no way that they can, the company can survive without you being in that meeting.

43:25Maybe you're like, you know what? I can handle a one hour meeting once a week. If that's what it takes to make this work, that's a concession that won't derail the intention of my mini retirement. Right. And it doesn't completely invalidate the concept of your mini retirement. It's not like a sacrosanct. It has to be 100 % no work in essence. Be reasonable, right? Work with them. Because at the end of the day, in the vast majority of these mini retirements, you are going to go back to the company that you were working with. That's kind of the point here. We talked obviously about the potential to go to another company and potentially earn more money.

43:59But for most people, most people are reasonably happy or satisfied. Like they're in their job, et cetera. They've negotiated this. And that might be a broad brush, obviously, that most people are happy or satisfied in their jobs. But let's suspend this belief for a second. And they're going to go back to that job. So the last thing on earth you want to be is antagonistic, right? So, OK, if it means a little concession, then OK, so be it. And that's actually, it's actually a strong theme I see in my work. And it's kind of a stumbling block for people taking me in retirements is that they love their company.

44:32They love their coworkers. They love the type of work they're doing. They see a future at this company. They're well compensated and they might even classify as kind of a dream job. And so the idea of losing that is a huge loss, but there's also these other parts of their life that need some attention, that need some time, that need some nurturing that are also really important to them. And so how do we not sacrifice all of the good stuff we have going professionally, but honor these other areas of our life that there's seasons of life with expiration dates. There's things that if you don't do it now, it's going to pass you by.

45:14you know I this idea of like a once in a lifetime opportunity I get this a lot with like entrepreneurial clients they take a mini retirement then they're like ah there's this once in a lifetime opportunity that just showed up like how do I say no and I say well once in a lifetime opportunities actually come along quite often but your kids being 10 and 14 right now that is truly going to happen once in your lifetime and once it's gone they will never be 10 and 14 again. So if you want to lean into the season, you might need to find a way to put a pause and kind of prune down this other area of life.

45:50Jillian, the last thing I was curious about was, all right, you are thinking about this mini retirement. You are maybe negotiating it. We talked clearly about some of the pitfalls and issues that might arise when you're on the mini retirement, let's say. But are there a couple of tools, tips, tactics, et cetera, like things you should think about for how to actually plan it? Like maybe like nuts and bolts type things that people could just think about in terms of actually planning the mini retirement. You know, the first big thing, and we've kind of touched on it, is what is the intention of this mini retirement?

46:26And with the idea of retiring often, this isn't a one and done. You don't have to fit every purpose in life, every passion in life, every value that matters to you in this one mini retirement, because hopefully you retire often. And this is one of five of 10 of 20 different mini retirements. So they can each have their own flavor, but figuring out what's the intention for this one. What do I need the most right now? Is there something urgent or is it just something important? Is there something that there might be an expiration date on? You feel that season of your life starting to pass you by.

47:09Maybe that's time with your parents. You're like, if I don't travel and do hiking with them now, I don't know if their knees are going to do in 10 years. Or for me, we did a 10-week trip with our kiddos in a pop-up camper. We did 10 national parks a number of years ago. And I remember being on that trip and just feeling like, oh, this isn't a season that's going to last forever. My kids were maybe three to 11. In 10 years, the five of us are not going to be at a pop-up camper in national parks for 10 weeks. We will have missed it. And so we do it now or we say, yeah, that's never going to happen.

47:45Or sometimes there's just like we change. I took an amazing trip when I was in my mid-20s. We did, me and a friend cross-country road trip for a month in a car, slept on people's couches. We camped. There was one morning we were in Yellowstone and we woke up and I was like, I'm going to go to the bathroom. And I unzip the tent and I look out and I zip it back up. And my friend goes, I thought you were going to go to the bathroom. And I unzip it for her. And there's like a thousand bison knees because we are the only tent in this campsite and hundreds of bison are just meandering past us and there's snow everywhere.

48:21And it was like, such an incredible experience. And I'm never sleeping on the frozen ground again. That season of my life is over. I'm done. I don't sleep on any ground, actually. I'm like 100 % in camp mattress now. And so sometimes there's just things in our life that if we don't do it now, will we be interested in that in 10 years? Will we feel any pull towards that idea? So So picking that intention, and you can have two or three intentions, but don't try 20 intentions and don't wing it and go in with zero intentions. Nice. Yeah, I love that. And the seasons of life. I think you've introduced that term to us many, many times, and I use it repeatedly.

49:04It's a really important one to think about those seasons of life. And you never know when they're going to pass you by. Sometimes you do know, like you said, when you're overtly saying, hey, my kiddos are these ages. 10 years from now, there's a high likelihood this is not happening. And that's really important. Like you said, sleeping on mattresses, or I think about like, I did a backpacking trip through Europe, fairly short one with my brother, and we would sleep in hostels in those dorm style rooms. There's no way on earth I would do that now. I can't even imagine it. But at that time, that was what you did.

49:36And it was great. And it was normal. But that season has passed. And it is what it is. It's not good, bad, or indifferent. It's just, okay, this is just the reality of my life now. So different seasons of life. I love that. Yeah. And I encourage people like lean into that season. I, I've been interviewing people for the retire often podcast and one of them, a mutual friend, Chad Carson, coach Carson, he's done three of them. And it was like, the first one was like a budget one. Cause they, you know, we're still in that building phase. And then it was like a mid price one. And then a few years later now it's like a little bit more of a luxurious one.

50:12There's a mini retirement for every budget and it doesn't have to look one way. You can start with the cheaper options. And then as you grow in your financial independence, as that financial freedom increases, save the luxury Paris getaway five-star hotels when you're 60 and 70 and you're rolling in cash. You can do the backpacking in youth hostels in your 20s and slowly upgrade throughout the years. Yep. Wholeheartedly agree. Jillian, this has been amazing. Thank you as always for coming on. I love the conversation. I know you have a book in the works in the beginning stages. So nobody gets your hopes up right now, certainly, but on this very topic.

50:53And I personally can't wait to see that come to reality. So thank you for coming on. And where can people find you nowadays? What's the best way to get in touch? Yeah. So we're starting a brand new podcast, retire often that'll go with a book. So if you want retirement stories, many retirement stories, that'll be out in September. And it'll just be stories about people's many retirements, what they did, what worked, what didn't work, what kind of that transformation was. And there'll be a website retire often, we can find all of that information. All right. Well, that's certainly easy enough to remember retire often, there will be a website and a podcast.

51:28So be sure to search for it. And yeah, Until next time, Jillian, thanks again.

52:00list right there and I would greatly appreciate it. It's the best way to get in touch with me. You can actually just hit reply to any of those emails and it comes directly to my inbox. So that's the way that I keep a pulse of the community and how we keep this the ultimate crowdsourced personal finance show. And finally, if you're looking to join an in real life community, we have Chooseify local groups in 300 plus cities all around the world. So head to chooseify.com slash local and you'll find a list of all of those cities in 20 plus countries, all across the world. And if you're just getting started with FI, or you have a family member or a friend who you think would be interested, two easy ways.

52:39Choose a FI episode 100 is kind of our welcome to the FI community. And even though it's a couple of years old at this point, it still stands up. And it's a really great just starting point to get an understanding of what is financial independence? What are we doing here? Why are we looking to live a more intentional life where we save money and use it as a springboard to live a better life. And then Choose a Vi created a Financial Independence 101 course that's entirely free. Just head to choosefi.com slash fi101. And again, thanks for listening.