A Sabbatical Will Change Your Life—and Finances

Rachel: 

When you look at data, you see these stories time and time again of people on their deathbeds or later in life being like, "I wish I did this." And yet you don't really see this massive shift of people responding to that data, that information that we have about how people wish to live their lives by changing their life while they still have the control to do so.

Katie Gatti Tassin: 

You know how sometimes it feels like the universe is trying to drop a truth bomb in your lap? Recently, it feels like I can't escape content about the power of the sabbatical. The idea of a sabbatical comes from the academic world. Traditionally, professors are granted a paid year of leave for every seven they work, and they typically use it for things like study or travel, which sounds lit, but I want you to imagine for a moment the lifestyle of someone who's either barely hanging on financially or trying to attain early retirement. Hell, maybe that's you. This exercise may not require much imagination.

You are constantly prioritizing work so you can earn more. You're spending less to avoid slowing yourself down. You're stealing doggy bags from the park to avoid having to buy more on Amazon. In other words, you are fully embracing the "hustle now so I can chill later" mentality. Financial independence is a hard path to pursue in moderation because it has a very distinct "rush to the finish line" vibe.

You might not intend to take things to extremes, but for high-achieving, goal-oriented people, the slope from "I'm going to make my own lunch more" to "I created an algorithm at work to identify which meetings are catered and then hacked my way onto the invite lists" is a slippery one, and one that I have traversed personally. In that context, the suggestion that taking substantial time off and spending some of your savings—I know, gasp—might actually be productive could feel preposterous. And that's why we're talking about why and how you should totally do it.

Welcome back to The Money with Katie Show, Rich Girls and Boys. I'm your host, Katie Gatti Tassin, and today we have a couple of guests. The first is Jen Fisher, the human sustainability leader at Deloitte. She recently published a TEDx Talk all about her experience navigating burnout and why Deloitte now offers sabbaticals to their employees.

Jen Fisher: 

I was Deloitte's first chief well-being officer. Now I am our human sustainability leader. So, continuing that commitment, but human sustainability, in terms of how we're defining it right now because it's still an evolving area, is this long-term view of well-being from an individual organization, climate, and societal lens, and how do those things all intersect with one another.

Katie Gatti Tassin: 

We'll come back to our conversation with Jen in a little bit, but in the meantime, the second guest is our very own Money with Katie Show listener rich girl, Rachel, who went against her uber-ambitious tendencies to take a break from her impressive finance career in her late 20s. Now Rachel and I, we have a lot in common. What we don't have in common is the fact that she actually did take a year off, and she lived to tell the tale. So, why would I, a personal finance hobbyist who is obsessed with financial independence and thrilled by the prospect of all of you becoming financially independent as soon as possible, flag the sabbatical as a potential power move?

Let's imagine you keep your nose to the grindstone for a couple of decades. You're plowing mercilessly forward toward your early retirement date. You're pushing off your downtime until later when things calm down, repeating the phrase, "I just need to get through this week and then I'll be fine," every single week for the next 20 years. And then you hand in your two weeks' notice; it is the best feeling...and then that's it.

Slam on the brakes, throw it in reverse. No more work, no more income. In fact, not only are you not adding more income to the pile that you have been tending like Scrooge McDuck reincarnate, you are actually going to start using some of that money. That's right, no more contributions.

Understandably, a lot of retirees, early and otherwise, really struggle with the shift, especially if they've just spent the last 15 or 20 years doing nothing but cultivating a fat net worth. So it begs the question: Should you rush to the finish line if you have nothing to do once you cross it? We'll unpack that question after a quick break.

So what happens if you pull the plug on the only thing that you do all day and then you discover that you actually don't have much else to fill your time? And not only that, but you have to start withdrawing from your precious brokerage accounts? The bottom line is that it can be disorienting. A couple of months ago, two figureheads in the real estate sector of the financial independence community, Mindy and Carl of BiggerPockets fame, went on Ramit Sethi's podcast to talk about how they were having a hard time spending their $4.3 million nest egg.

So for the number crunchers out there, that is an ultra-conservative 3% safe withdrawal rate of $130,000 per year, or more than $10,000 per month. Despite reaching their financial independence number several years before, they're in their 50s now, they were still doing more or less the exact same things they had been doing leading up to their big day. Mindy was still working full-time. The couple was still flipping houses. They were still doing all of the renovations themselves, and this is what they were telling themselves at the time.

Mindy: 

I feel security in the investments, but I don't want to touch them. They're for the future.

Ramit Sethi: 

Not to be too blunt, but when's the future?

Katie Gatti Tassin: 

Now, this is the exchange that occurs when Ramit presses Mindy and Carl on why they're so uncomfortable letting their foot off the gas, despite having more than enough to spend very safely. It goes to show that the money in the bank that we think is going to grant us permission to downshift often doesn't, if we are not psychologically prepared for that shift. But you might say, "You know what? It seems like they just really liked what they did. Why should they have to start using their assets if they don't want to quit working?" But as they tell Ramit in the interview, they did want to stop.

They didn't find enjoyment in flipping homes or working full-time anymore. They just didn't know how to start spending their money, because the idea of drawing down on that big pile instead of frugally adding more to it made them feel so uneasy. To get them to understand that the future is now, Ramit asked them how much money they're set to have if they just let that $4.3 million compound for the next 30 years, and the answer was roughly $33 million. He asks them, "So, what are you going to do with $33 million when you're 80 years old? You got some fun plans?" And it was really powerful.

The financial independence grind is a lifestyle in the same way that luxury is a lifestyle. If you have conditioned yourself to work as hard as possible and spend as little as possible for decades, the transition can be jarring. And in Mindy and Carl's case, they had been accumulating their $4.3 million nest egg for the past 30 years, and now they're miles beyond the finish line. They're unsure what to do next.

And Mindy and Carl are friends of mine. I think it was incredibly brave of them to talk openly about this on Ramit's show because these are conversations that often only happen behind closed doors, or not at all. Mindy and Carl might be retired or able to retire, but many of us are still a long way away. And in the meantime, how can we make sure we have something to retire to? Well, what better way than by practicing retirement? When I first heard the idea of a one-year sabbatical, I was like, "That is insane." Why would you slow your progress? I'm only five years from FI—I gotta keep my foot on the gas, baby, no brakes.

But the more I thought about it, the more I questioned, what's the rush? What difference does it really make if I take one of my retirement years now and then the rest in seven years from now? Because if I'm going to draw down a year of assets early, I'll need to work a little bit longer to build it back up. A sabbatical of any length gives you the time and the mental bandwidth to fully disconnect from your life as you know it and discover what exactly you would actually do with a ton of free time. Whether that takes a month or six or 12 is up to you and your comfort level.

Because here's the thing: I think we like to romanticize what we would do if we didn't have to work. I'd live in Southeast Asia. I'd learn another language. I'd become a great cook. I would backpack across Europe. I'd sleep until noon. But the reality, I think, is that you find out just how much you really want those things if you give yourself a seemingly endless expanse of unpunctuated free time to experience them. We all have the post-work aspirations, but when we live inside those safe, small, nine to five bubbles, we really shield ourselves from walking the walk. The job can be an excuse to avoid those pursuits just as much as it is a legitimate barrier.

I can't backpack across Europe for a month. I have a job, Karen. So, what if you didn't have a job? You're free. Now what? It's scary, but it's scary we all need to face sooner rather than later if we think early retirement is a goal that's worth working hard for. It's just a test drive, right?

So let's talk about a few indications that this might be a solid move for you. The first is that you're gaining momentum with a side project or a career shift that feels promising, but a lack of time and energy are major barriers to pursuing it fully.

The second is that you've made a lot of financial progress already, but you still have a reasonably long time to go before you'll be fully financially independent, and the journey is beginning to feel unbearably long.

The third is that you're feeling stagnant or chronically burnt out in your career path despite having made a concerted effort to get re-engaged with your work. No matter what you do on the weekends or how many short vacations you take, you just cannot seem to shake this feeling that the path that you're walking down is not the one you want to be on, but the next step isn't clear.

And let's talk about that last one really quickly, because those who may be feeling stagnant, burnt out or drawn to a change that they might not have fully envisioned yet is a really interesting case study for sabbatical. Burnout is career kryptonite. As I shared before, our first guest, Jen Fisher, intimately dealt with burnout and I wanted her to share more about that experience.

Jen Fisher: 

I basically prided myself on getting to the gym for an hour a day no matter what was going on; that meant that I was working or doing whatever it is that I was doing in my life for another 18, 19, 20 hours a day. And I was one of those people that said, "I'm good on three or four hours of sleep." I had this mentality that I'll sleep when I die, not really knowing and realizing that I was going to die a lot sooner. I thought it was sustainable. I thought that I had it all together until I didn't. I had a lot of anxiety. My emotions were all over the place.

I had no ability to control my reactions in any way, shape, or form to anything that was said or done. I had no ability to rationalize or view things in a bigger picture, state of the world type of thing, or state of my life.

Katie Gatti Tassin: 

Now this reads like textbook burnout. But the interesting part of what Jen shared is that she didn't perceive this as burnout. She perceived it as failure, which fueled her fear of not being able to step away.

Jen Fisher: We live in a world that constantly is telling us that we need to do more, whether it is the wearables that we wear on our wrists that tell us that we need to stand or that we need to walk more steps; we don't get rewarded for doing less. That's the world that we live in. And so I didn't know what I was going through. I knew that there was something wrong with me, but I looked around and I was like, "Wow, everybody else seems to have it together." So I processed it as I wasn't good enough. I wasn't smart enough. I didn't belong here. And so to me, that meant failure. A lot of it is self-permission. The world puts the pressure on it, but a lot of it is our own self-permission too.

I would thrive on things that people would say, like "Jen responds to email in 10 seconds flat." Or "I think Jen sleeps with her phone." We would laugh and giggle about that, but secretly that was true. I would be on my phone at 2:00am responding to emails. Nobody else was on email. It was me. And so it was the pressure that I was putting on myself to get everything done in some unreasonable amount of time that nobody had communicated to me. Nobody was giving me those deadlines. I was putting them on myself.

Katie Gatti Tassin: And the final piece of this stage in her life, which Jen touches upon so beautifully, was redefining what success in life actually looked like.

Jen Fisher: I had this view of like, well, if I just work harder than everyone else, then I will be successful. And I also looked outside of myself for a definition of success, and I think what I realized after I burned out was like, "Wow, I actually never defined it for myself." And I think part of the reason for my burnout was that I was chasing this definition of success that wasn't my own definition of success. And so I was always chasing something that I was never going to catch because it wasn't mine to catch.

Katie Gatti Tassin: Eventually Jen shares she had to step away from the job, as her burnout had taken an overwhelming physical and mental toll.

Jen Fisher: I just got to the point where I physically and mentally couldn't engage in life or work in any meaningful way. I couldn't get to the gym. I couldn't focus on my work. I couldn't be present in my relationship. I just couldn't. And so I had to take a leave of absence from work and I had to step back and really focus on myself, mental health and physical health perspective, and I had to seek out professional help. And if you ask me what I wish I'd done differently, I wish I would've sought out help, whatever that means to you, much earlier in the process. Or I wish I would've listened to people when they told me, "Hey, I think there might be something going on with you."

Katie Gatti Tassin: I asked Jen to tell me more about how her definition of success shifted after her experience, and how she began to deprogram decades of belief around what it meant to be good.

Jen Fisher: It was therapy. It was a lot of reevaluation and self-awareness around my own behaviors in particular that led to burnout, my own behaviors and my own beliefs as you've mentioned, right? Because a lot of it is our own value set or our own beliefs about what success looks like. And so I had to do a full reevaluation of what are those behaviors and beliefs that are actually harming me that are getting in the way of me being healthy?

I also have a personal mission of what I want my life to be, and it's really around being a role model for people like my family, friends, loved ones, colleagues, that you can be successful in your career and live a well and healthy lifestyle. It requires some trade-offs, but it can be done and it can be done in a way that is useful and helpful and meaningful.

Katie Gatti Tassin: So she brought that mission not only into her personal life, but her professional one. Now as the human sustainability leader at Deloitte, she's focused on long-term wellness, not just one-off sabbaticals, since taking a break and going right back to the same environment that caused you to burnout isn't going to be effective. She shared more with me about Deloitte's true purpose behind sabbaticals and what they're doing to address burnout as well.

Jen Fisher: The history of a sabbatical is like in academia, people take sabbaticals to do research and to write books or to be innovative, to give themselves that space in that place to shut out the day-to-day life, but to do that and to create meaning and value and impact in their work or in the world. I think that it's important to understand that that is the intent of a sabbatical. I know that in many cases, it's being used now because people are feeling stressed out or overwhelmed or burnt out.

To me, what that points to is that we need to take a big step back here and say, "Okay, what is it about the cultures that we're working in that are creating such high levels of stress and burnout that people feel like they need a sabbatical just to get away from it?" Because what happens is, okay, Katie, you take a one-month sabbatical. You come back to the exact same environment that you were in that got you burnt out in the first place, and you haven't really solved anything other than you took a month off and suddenly you feel a lot better. But how quickly are you going to get back to a place of burnout?

And so I think sabbaticals are great, but I think what we need to be looking at is, what's the risk of not fixing the systemic issues that are creating the need for people to feel like they need to take a sabbatical because they're burnt out, and actually create a system of work that is sustainable, so that when people think about taking a sabbatical or an organization is able to offer a sabbatical, it's actually a positive and not a negative? I don't want to be always in a place where work is a detractor from our well-being. Work can and should be an enhancer to our well-being, and I believe that we absolutely can get there.

Katie Gatti Tassin: We'll get right back to it after a quick break. But how do you actually walk away from work for a period of months or a year without sacrificing your long-term goals, if you don't have the luxury of a paid sabbatical from your current employer or endless amounts of money? I was doing some digging and found a whole cottage industry of sabbatical coaches, people who make a living from teaching other people how to take meaningful time off. One tidbit I picked up on is that there's a common throughline of fear for those who are attracted to this idea but are afraid to enact it. It's a similar but different fear that Jen illuminated: What if I can't find work again when I'm ready to reenter the workforce?

One such coach, Jillian Johnsrud, suggested sending out an email at the beginning of your sabbatical to your entire professional network and letting them know your intentions that you are taking a sabbatical for a certain amount of time, but you intend to return to the workforce and that you'd really appreciate it if they could just let you know if they hear of any interesting opportunities in your field over the next few months.

She said the types of opportunities that arise for her coaching clients are plentiful because every other American you know is going to be really uncomfortable with the idea of you not working. According to Johnsrud, she was like, "Trust me, your network will want you to find another job because it's going to make them feel weird as hell that you are not employed." I suppose that's a bigger issue we should explore in the US that we'll devote a different episode to later this year.

But in the meantime, this type of break is a more drastic between-jobs approach to sabbatical. And as I reflected more on this concept, I realized that's probably the most realistic way to pull this off. Asking your current employer for six months of unpaid leave because you're looking to decompress might not go over very well—though, feel free to give it a shot. Business owners face the same type of dilemma.

It's terrifying to put the brakes on something, especially when it has a lot of momentum, and step away for any period of time, let alone months on end. But after more internet stalking of Johnsrud's work, I found more often than not, the people she worked with who walked away for a year often ended up with better, higher-paying opportunities after the fact, a reality that's especially true for those who have been with the same company for a long time. In this way, a sabbatical can actually be seen as a pretty strategic career move.

I asked her if we could set up a recorded call so I could talk to her about some of the advice that she would give someone like me, and here's a clip from that quasi-coaching session, before which she sent me actual homework to do.

I don't know how to downshift at work. I don't know how to achieve a more sustainable pace. I feel like the only solution is just stopping everything entirely. Do you work with people like that a lot? What do you tell clients of yours that just feel like they're so spread thin that there's no room for anything else, but they have no idea how to even taper back?

Jillian Johnsrud: So I think what I would dive into first, because I did notice in the homework that you sent over, there was a lot of like, "Here's how much I want to work. Here's how much I want my workweek to look like." But it seems like you're working about three times as much as you want to, and you don't have to necessarily go nuclear, but sometimes it can help to think that way. So in your business, I would ask, what are the drivers of income is the first one, like to be real honest about that. And then, we would look at what are the drivers of marketing that are moving people through that customer journey.

What are the things that you're getting the most ROI from, looking at that 80/20 of what's the 20% that is actually producing 80% of the results? And there are phases that entrepreneurs go through, and it sounds like you're just coming out of what a lot of people describe as the spaghetti phase where you've thrown a whole bunch of things against the wall to see what sticks. And in doing that, that's an important part of starting a business is you gotta try a lot of different things. You gotta do a lot of different things and you have to see what moves the needle, but then after you know what moves the needle, then we need to stop doing all the things, because doing all the things isn't a long-term plan.

Katie: I think for me, I'm realizing that I actually haven't spent that much time sitting back and looking at the big picture of working on the business versus working in it, and I think I'm always just in it. So would your suggestion then be the things that are not really seeming to drive much ROI in the way of revenue or marketing, like just drop it, or what would you counsel next from that phase?

Jillian Johnsrud: So from this realization, the next thing I would suggest is you need a CEO retreat. You need three or four days in a hotel by yourself or with one or two teammates, and you need to dig through all of this. And it's the same thing I recommend if people are going to do a mini-retirement, or in their marriage, or whenever we're doing life planning and business planning is actually two sides of the same coin, which is why I have people start with a lot of life planning, because what are we optimizing for?

So have a little life/business planning, CEO retreat. I recommend two to four days, no work obligations, and it's the same thing in people's marriage. I always tell people there's a lot of conversations you can't have unloading the dishwasher. There's a bunch of answers you will not get to in the first 10 minutes. The answers that you get to after three or four or 12 hours are different than the answers that you get to after 10 minutes, and those are the answers we need to work with.

Katie Gatti Tassin: I think it is revealing, some things particularly, that when you're like "two to four day CEO retreat, no work obligations," I'm like, "When do I have two to four days?" I'm like, "That in itself is a bad sign." That in itself is probably an indication of how sorely this is needed. I want to have an artsy hobby that doesn't have a path to monetization and there's no pressure on it to be "successful." It's just going to be something I do for fun. But I was saddened that when I was thinking about actually doing those things; it made me feel more overwhelmed and exhausted at the prospect of like, "Oh, well, great, now I need to go figure out how I'm going to take piano lessons." It just felt like more work.

Should you just start doing them and then let the other things fall into place? Am I just beyond help? What does that tell you as a coach that that was my response?

Jillian Johnsrud: This is, you're burned out. The plate is full. It's very full. And it's full to that point where it doesn't add joy, the fullness. It creates fear and anxiety because if you get sick, if someone goes on vacation, if something happens in your life, you're going to drop it. You're holding too many plates. I would not add a whole bunch of stuff to that and think that it will magically make the situation better. I don't think that's the cure at this point.

Katie Gatti Tassin: Can you cancel my Guitar Center appointment?

Jillian Johnsrud: So after your CEO retreat, after you look at, here's the profit drivers, here's the things in marketing that really are moving the needle the most, I like to have people start with this idea of if you only had 10 hours.

Katie Gatti Tassin: Interesting.

Jillian Johnsrud: Knowing what moves the needle, marketing-wise, what brings customers in, knowing what creates profit in your business, if you only had 10 hours, what are the things you absolutely have to do in those 10 hours? What parts of your business you're like, "If I have 10 hours, that ain't happening." Sometimes we have to start with a very small container versus, I have 60 hours and I need to whittle that down to 40. It can be easier to say, if we only had a tiny bit, what is the most essential?

Katie Gatti Tassin: But what if you do have a sense for what you would do differently? What if you're in the aforementioned camp that has a burgeoning side project or business? Could the sabbatical also be for you? When you're working full-time and working part-time on a passion project, it can feel like the exact wrong time to downshift because you need the income from your primary source of employment to keep the lights on so you can burn the midnight oil, right? I've written in the past about how originally Money with Katie was a hobby that I figured would entertain me in early retirement, not make any money.

I had a goal to retire by my late 30s and I knew I needed something to fill my time after I exited stage left from building marketing briefs and checking email throughout meetings with 17 other people who were also checking their email. The idea of taking any time off felt totally ludicrous, so I didn't. I built Money with Katie over the course of 18 months on nights and weekends before it became something that actually had legs.

I figured the slog of working 80 hours a week between my various jobs and special side projects was the path that I needed to take, that it would be irresponsible to take a couple of months to reassess what it was I actually wanted to do. But how much more quickly would I have realized that Money with Katie was viable full-time if I had given myself a three-month grace period between employers just to test the waters? My expenses were incredibly low at that point in my life. They were less than $2,500 per month at the absolute highest, and I had more than enough in savings to support such a jump. Something that took 18 months may have happened in a quarter of the time with my full attention and focus. At the very least, I would've realized beyond a doubt that I needed to make a change. And what did I get in exchange for those months that I stayed at work? I would estimate somewhere in the range of $25,000, give or take, which with the benefit of hindsight I see was a pretty insignificant sum of money compared to the realizations and potential larger picture that that time and space could have unlocked.

It's also worth mentioning that Money with Katie was very much born out of a sabbatical-adjacent experience, being forced inside thanks to a pandemic, and those first few quiet weeks where Microsoft Teams had not yet infiltrated every square inch of my consciousness, with my full fitness class schedule canceled and my full-time job in a brief liminal space as the leaders in our department scrambled to figure out how we were going to do user experience work from home. I had the idea one boring Wednesday afternoon to see if the URL for moneywithkatie.com was taken, and it wasn't. And here we are.

I keep that memory close whenever I find myself falling back into that trap of the "should." I should be working a certain way. I can't take time off because something might fall through the cracks. It would be wrong to suggest we try doing less so we can refocus on what matters more. And if you'll recall, this is pretty similar to how Jen told us she was feeling. So this might be an entrepreneurial twist on the idea, but if part of the reason a sabbatical appeals to you is because you have another path that looks promising, it's possible you wouldn't even need to draw down on any savings as long as your other venture can cover your cost of living expenses.

And of course it's still similar in that it involves walking away from traditional work and exploring only doing what you plan to do in early retirement. You might also be in a position where you're in slow and steady mode, but you're just discouraged by how long the path in front of you looks. And at some point, the rubber needs to meet the road, and we have to talk about two things, money and planning.

I'll be honest, I don't think this is something that anyone could do right away regardless of their financial or professional situation. I think this is something that for most of us, it's going to require a lot of premeditated strategizing in the form of, number one, how you're going to pay your bills while you take time off, and number two, how you're going to exit and eventually reenter.

So let's talk about number one first. You gotta take a look at your cash savings or any other sources of income, whether that comes from a side hustle, a partner, or something else, because this is where shit gets real for most of us. The financial component does have a few layers because if you're anything like me, you don't want to completely derail your progress in this time. So you gottahink about supporting your needs over the time you'll be going without income or with reduced income, if you're taking the enjoyable side hustly approach.

And we have to think about calculating the opportunity costs of the investments you would have been making during that time had you stayed the course, like contributions to your 401(k) or your other accounts. And this will help grant a fuller picture of the financial ramifications of this decision. Though as I noted, I could have never anticipated how much my life would change financially from having a couple of weeks of quiet time and solitude. It's impossible to account for every single outcome, and many of them may actually be a lot better than you're even anticipating.

The other piece, as we alluded to, is the logistics of exiting and reentering the workforce. So if you're beginning to feel like you're reaching the end of one chapter and yearning for another one, like you know maybe your company is facing layoffs or if you were going to begin looking for another job anyway, this path might be rather obvious.

But if you're a business owner who's looking for some extended time off, this period might mean finding areas of the business that can be automated or downshifted or delegated or even paused outright until you choose to return. But regardless, pinpointing the when and how of your departure and sharing the news with your professional network once it's finalized with the ask that they will send you interesting opportunities along the way is the first step that takes this from a nice idea to an executable plan.

For example, if you are planning to take six months off and you know that's going to cost $30,000 of cash savings to achieve and you're going to forgo roughly $45,000 in gross compensation during that period, of which you would've saved and invested $15,000 in your 401(k) or other investments, your total net cost to take this time would be the $30,000 in savings that you'll need to use, assuming it would've just sat in cash anyway and assuming no other sources of income. And then the $15,000 of investible income, which you can assume would've grown at a rate of roughly 7% per year between now and your financial independence date. In other words, if you're currently 15 years away from financial independence based on your current trajectory, that $15,000 of not-invested income is worth about $41,000 to you 15 years from now.

Now you can look at your overall timeline. I like to use the financial independence tab in the Money with Katie Wealth Planner just to make this easy and you can see, how big of a difference does $41,000 make to this overall timeline? Is that two years worth of compounding that I'm giving up to take six months off right now, or is it delaying my retirement by two months? My suspicion is that most of you will find it's going to be a lot more negligible than you're probably expecting it to be, but how much financial progress is enough to do this "guiltlessly?" Because anecdotally speaking, sabbaticals seem to be a popular choice for those who have already attained something known as coast FI/RE, or the point at which they know they have enough invested already that if they get average market returns between now and retirement, they're going to have enough to live on.

For example, someone who's 30 years old with $300,000 invested can plan to reach age 65 with roughly $3.2 million in today's purchasing power, even if they don't continue to add to their total. Realistically, I think anyone who has already reached that coast number for compounding where time is going to do the majority of the heavy lifting is probably in a place financially where this is a relatively low-risk decision.

But I remember a TikTok I saw a while back about a gal who did a mini-retirement every fourth year of work. So she would work for three years, save one-third of her income each year, and then by the end of each year three, she would deploy the entirety of those savings to support a work-free year four. While I like the creativity and I applaud her point about spreading retirement out throughout her life, I think there's an obvious issue. Eventually, you're going to reach a point in your life where you physically or mentally cannot work anymore. For most people who work beyond traditional retirement age, this occurs somewhere in one's 70s or even 80s. And at that point in your life, you're going to need some savings to live on, especially if you require extra care beyond just Social Security income. So deploying your life savings every four years and then starting from scratch all over again in perpetuity works well...until it doesn't. While it might not be an immediate decision, that's not to say everyone couldn't plan for this type of pit stop.

If you knew that you were going to be on a six-month or yearlong vacation, how would you approach your life differently now? Would you feel comfortable working more or finding temporary higher-paying work or turning down expensive outings for the time being? Because realistically, as long as you know how much your life costs, you already have the keys to the freedom castle.

My lifestyle has expanded considerably in recent years, choices that we made with intent, I might add, now that I'm doing full-time work that I'm really happy with and many of our other financial goals were met, but if both my husband and I wanted to take a three-month break, we would need to have about $30,000 saved to support our expenses during that time. And who knows what I would discover in that time? Who knows what work would present itself on the other side? Sometimes a busy schedule is the enemy of clarity, and once you have that clarity, what might you find? Well, I think that's the scary part and the part that I'm probably subconsciously avoiding, but ideas about the value of leisure time are ancient, literally. Aristotle, who was rocking this planet circa 384 BC, believed leisure time was the most valuable time that humans have because it is intrinsically valuable. Whereas things like your occupation or wealth accumulation, they're only extrinsically valuable. They're valuable in that they're means to other ends.

Jack Maden writes for Philosophy Break, "Work, of course, is a financial necessity and for the overworked and underpaid, emphasizing leisure may be regarded as hopelessly privileged." But as Edith Hall notes in her book, Aristotle's Way, "Aristotle believes it is only in our leisure time that the full human potential can be realized." And sometimes reaching your full potential is a terrifying process. Usually, it means detaching from things that are inherently holding you back and stepping into the unknown, which is exactly why I wanted to talk to Rachel about what prompted her to step into the unknown only a few years into a prosperous finance career. Rachel, thank you for being willing to sit down in the hot seat with us today. I would love to start with the basics first, if you're willing to tell us a little bit of background about who you are and how you would describe your relationship with your work.

Rachel: Absolutely. Well, thanks so much for having me. A bit about me. My name's Rachel. I'm 30. I live in Austin with my dog and my husband. I grew up pretty middle class in Louisiana and had a normal aspiration level for my life, in terms of I wanted to study hard in grade school so that I could get a scholarship and maybe get into a decent college, wanted to study hard in college so I could get a somewhat lucrative career that I could use to support a pretty traditional American life. I wanted to buy a house, raise kids, maybe take a couple nice vacations and be able to retire, which nowadays feels like a bit more of a higher-class aspiration with how hard those basic things are becoming. But that was really what I wanted out of life, and so I was craving a lot of financial stability.

I went to school at UT where I studied finance in pursuit of that stability. Really loved it, loved the subject. And then, I started my career in investment management in Austin where I was working with financial advisors at a large asset manager. Loved my job, loved the people I worked with, and really loved getting exposure to people that honestly were just a lot more intelligent than me, and also people that just had a lot more money than me, to be frank. And seeing how they approached things like work and life and money and financial planning was super formative to who I am as a person today.

Katie Gatti Tassin: Can you say more about that? What did you pick up on from them? Was there anything that surprised you about their approach that diverged from your middle class upbringing and the things that you witnessed?

Rachel: Absolutely. It would range from the small things to the big things, right? For example, working with a lot of my colleagues, the way that they think about credit cards, for example, was very different than the way I was raised to think about credit cards, like the Dave Ramsey mantra of "all debt is evil" and run away. Whereas I saw these people using debt and credit as a great lever for them to travel for free, for example, and really maximize credit card points, all the way through to the investments that they chose, how they think about that, the vacations that they took, the philanthropy that they engaged in.

So getting exposure to that, especially at age like 20, 21, was super valuable when people may not really experience that, again, depending on their upbringing, until perhaps a bit later in their career or if they're really seeking out that information through podcasts like this and other sources.

Katie Gatti Tassin: Right. So, it sounds like you were a pretty ambitious kid. You always had your eyes set on the future. You are driving toward this career that you think is going to give you the stability that you're so interested in. You're going along. You're having these conversations with these smart, wealthy people. You're doing well at work, it sounds like. What then prompted you to consider a one-year break in your late 20s? Because to me, that feels like a bit of a counterintuitive plot point for everything that you've set up so far.

Rachel: You are absolutely right. I did not grow up...I was certainly what no one would describe as a free spirit or as someone who was counterculture. I wanted to be normal. For me, I think any major life decision, especially one that's slightly counterculture to the traditional way we do things in America, it was an amalgamation of things that got me there. I think one of the things was just the fact that I love travel personally, and as I mentioned, middle class, I didn't travel a lot growing up.

When I got my first financial independence, that was when I started traveling internationally for the first time, fell in love with it, love seeing how other people just approach life and how other cultures function. And so I very quickly went from being someone who was not well traveled at all to being someone who was hyper-fixated on taking every day of PTO, making those crazy Excel spreadsheet itineraries, really leveraging credit card points and things like that. So that definitely became a part of my personality.

I would say a second reason was related to my work, and it's not in the way that a lot of people think. I think a lot of people assume that if you're leaving your work when you're 28, which is the age that I was, they assume that you're super burnt out, that you hate what you do. You want to set the corporate world on fire and just leave it all burning. And certainly, you'll see a lot of people on social media that feel that way, but that wasn't really the reason why my work influenced the decision to leave. I was in a place, thankfully, where I had all of my needs covered. I was paying rent, eventually paying a mortgage. I had a decent car. Those needs were met. I was doing all the financial things that I thought I was supposed to do: maxing out my 401(k), HSA, IRA, all of those things. And then I felt like I had my life laid out in front of me. Everything I had worked for was there, and yet I still felt like I wasn't really hitting the mark of what I wanted my life to be. I was working with financial advisors, like I said, and so these people were doing financial plans.

And eventually, when you're working so deeply with money for so long, using money as a tool to help people live their life, you start to think about, what is the role of money, which I know is a topic that you talk about on this podcast a lot. I hadn't really considered that beyond building this life that I wanted, the stability and the house and those types of things. I hadn't really considered, how can I use money as a tool to really live out my best life? I think that's what brought me to just reconsidering how I can use it to not only save for the future, but also live my best life now, which I think brings me to point number three.

So the third reason why I took this leap is really related to the pandemic and my experience that I had at that time. A lot of people, my world was turned upside down. I started thinking a lot more critically about my life path and my own mortality, some dark stuff. And I saw these really sad stories. I'm sure you saw, everyone saw these people who did all the right things. They worked their whole lives. They saved their money diligently, all in the pursuit of being able to live their best life in retirement, which usually included some travel, and they never got to see it because of this unpredictable nature of life. And so all of those things, when I made that connection of those things, I had no choice but to do this.

Katie Gatti Tassin: Were you scared to do it?

Rachel: Perhaps I was naive. I wasn't very scared. I think the scary parts of taking a year off were the most exciting for me. The reason for that, I went to high school in Austin. I went to UT Austin, I built my career in Austin. I was extremely comfortable with my life in Austin. And I think a lot of times if people are trying to jump outside their comfort zone, they move to a new city or they go study in a new city. I just hadn't done that, and my husband and I had just never found a city that we were like, "Yes, we'll definitely move there."

So, for us, I think this was us basically being like, "This is us getting out of our comfort zone," and we're excited to do that in a way that's just a little bit different than the way I think a lot of people do.

Katie Gatti Tassin: Well, you already mentioned that you were a homeowner by this point. You were maxing out all your different tax-advantaged investment accounts. So, good for you. You're painting this picture and I think it's an accurate one and one that resonates of someone that has made the right choices. They are checking all of the responsible boxes. Then to put that on pause, so to speak, because you're, I would assume not contributing to a 401(k) anymore. If you are taking a year off, you are putting a pause to that.

I gotta ask, talk to me about the financial side of this choice and how you thought through the amount of money that you needed to make this happen or what that process was like for you mentally as you are sitting back and assessing the landscape to determine whether or not it's "safe" for you to do this.

Rachel: That's probably the one I get the most. And you're right, I felt like it was funny to be doing all the right things and then do something that is definitely not viewed as the right thing to do financially, especially at that stage in our lives. There's two sides of the equation, but there's always going to be a saving side and an income side. And so I'll try and break down the way that we approached it from both angles. So on the savings side, I just bought a house with my husband, so we've drained a lot of our liquid savings in that process. Then it became the question of, what are we saving for? What is our next big goal?

For a lot of people, the house is the goal. Once you get it, it's like okay, then you have kids, and that's really expensive. So we gotta pay for that. We weren't ready for that. So we were like, "Okay, let's just put all of our energy into saving for this gap year." That's where we made that mental switch, I should say. When it came to how much we were saving, everyone's going to be different because we're not necessarily budget hostel people, but we're also definitely not five-star resorts every day.

Katie Gatti Tassin: Same.

Rachel: Yeah, yeah. We're in a happy medium. So for us, we just took a look at our average spending in Austin at home and said, "Okay, let's use that as a rough guide for our monthly travel expenses." As a result, using that as our rough guideline, we saved about $60,000 between the two of us. So that's the number we landed on for a year of travel. And on top of that, I think a lot of people consider selling personal belongings ahead of trips like this to bolster those savings. I did end up selling my car at the last minute because it's like, "Hey, I'm not using my car. I'm going to be gone. I don't want to pay insurance premiums on that." And this was, you gotta remember, this is mid-2022.

Katie Gatti Tassin: So you had an appreciating asset on your hands.

Rachel: I absolutely did. That was, I think, before Carvana stock had just really gone haywire. So that added a little more than $20,000 to our savings as well, which was a nice little cushion. And I always recommend if somebody's thinking about this purely from a savings angle, after you come up with the amount that you think you need, definitely add, I would say 20% to 25% on top of that. Just because travel is unpredictable. There's always these weird expenses that can pop up, but then also when you come back, you don't want to feel so stressed, you need to make a paycheck in the next three weeks, otherwise you're broke.

Katie Gatti Tassin: Totally.

Rachel: So giving yourself a little bit of cushion is always good.

Katie Gatti Tassin: And was that $60,000 inclusive of the mortgage payments that you were making, or was that in addition to a separate pot of money, I'll say, that was sustaining your expenses at home? Because I know that oftentimes when people will do this, they're typically renters. So they'll allow a lease to end, so they're not then having to maintain the cost of the shelter that they have in their home city. But how did you guys approach that?

Rachel: That parlays us into the income side, because we did not factor in mortgage to that. In fact, what we did to make up the fact that we were going to be spending money on a mortgage while we were traveling was we put our house on Airbnb, which is something we had never done before. Very millennial of me to dive into the Airbnb hosting game.

Katie Gatti Tassin: Your sharing economy moment.

Rachel: Yes. And that's something that really can, if you're fortunate enough to have some asset that you can leverage an income stream off of, that can make this decision in some ways more complicated, but in some ways a lot easier. For us, our goal, we didn't know what to expect, so we thought, "Hey, it'd be awesome if we could make up 70% of our mortgage. That would be a win through Airbnb income." And the great thing is I could do almost everything remotely. I could hire housekeeping. I could connect with guests. All of that I could do while traveling. The I would say 10% of the work that I couldn't do, thankfully I had my sister in town and she could step in and do that management for me.

Katie Gatti Tassin: I feel like those are the things at the margins where when you hear the advice to put your house on Airbnb, you're like, "But what about X, Y, Z? I'm in Copenhagen and someone has a leaky toilet. What am I supposed to do?" So thank you for noting the realistic side of having someone in the city. And logistically speaking, with the firm that you left, I understand you were happy with that job. You did your work. How did you leave things with them? Was it the intention to get hired back at that same firm, or were you thinking, "Okay, I'm going to close this chapter and then start a new one when I come back?" How did you approach the mechanics of your exit?

Rachel: I try and talk about this a lot because I think it's really important to, if someone's considering doing this, leave in a way that is not burning any bridges or firmly closing the door behind you. I would absolutely recommend someone going on a trip like this with an open mind, which is what I did both personally and professionally. I wanted my ideas of work and life to be challenged. That is part of the point of travel, in my opinion. So I didn't leave with the idea of being like I will definitely come back, because who knows? Maybe after a year away, I realized maybe this work isn't really my true passion. But at the same time, I didn't want to leave saying, "I hate this. I'm out," and then come back and be like, "Actually, that was a really good gig." Like I said, I actually quite loved my job and I loved the people I worked with, but this was just a side passion of mine that I wanted to pursue. The good thing, I think, about leaving a job to travel is that almost nobody is upset at you.

Katie Gatti Tassin: They get it.

Rachel: Yeah, they get it. If anything, they're envious. They're like, "Yeah, I wish I had done that." Or at least that's a lot of feedback that I got, especially from older colleagues with kids. So that really made me feel good about the decision and gave me a little bit more confidence. And also, if you're working at the right place and you have good manager and good HR, they're not going to shame you out of that decision. Everyone was super supportive, so they just made leaving a lot easier. And I maintained communication pretty openly with my former colleagues while I was traveling and since I've come back as well.

I'm not going to say that they're going to keep a job for me. I would never assume that out of any corporation. But if there is an opportunity for me to come back and I want it and they want it and it makes sense, I wanted that option to be on the table. So that's how I approached it.

There's also, of course, a lot of nuance of when do you tell them and the actual mechanics of how do you sit down and do it, which I think is a little bit more specific to your role and your relationship with your team. But ultimately, I think we left on really good and amicable terms.

Katie Gatti Tassin: And what are you doing now?

Rachel: This, I think, digs into some of the unexpected challenges, I would say, from the experience. I mentioned I wasn't really scared to leave. I wasn't scared to go. I was excited for the challenge of traveling. What surprised me is that the travel part wasn't nearly as challenging as I thought it would be, but where it did start to feel a little bit more uncomfortable was coming back, because I had achieved what I wanted. I had changed as a person through this process; my interests had changed. My perspective on certain lifestyle choices and things had changed.

But then, I came back to Austin and this was in late May of this year, and I was trying to fit this new version of me, or slightly new version of me, right back into her old routine, into her old life. And it was a slightly dissociative feeling, and I don't think people talk about that a lot, people who do these things. So I want to be super transparent about that. It might feel a little odd at first. And that was my experience. I called it a travel hangover.

So the last few months, in fact, instead of diving right back into a routine, my husband and I have been traveling a lot. We were gone almost all of August traveling because it was like, to quote Jay Powell, like I couldn't find a soft landing, if you will. So we were bouncing up and down and around before; we're just now settling back in. In that process, it was a lot more of soul-searching than I thought I would need to do about my next career. It wasn't super obvious to me.

Now, it's good timing; in the last couple of weeks, I certainly got a lot more clarity on my purpose and how can I fit this new version of myself and my old skills and the things that I love about finance and financial planning and lifestyle and fit that all together. And now, I'm actually looking more towards the advisor side and helping people get the most out of their money and their money decisions so that they can live their own version of their best life now or whenever makes sense to them.

So, super-energized about it. I'm in the beginning process of CFP and all of these things. My trajectory is headed there next.

Katie Gatti Tassin: Interesting. Okay. Well, I was going to ask just for the other ambitious girlies in the audience, which means I'm asking for myself, how it impacted your career, but it sounds like it gave you a lot more to think about than you maybe were anticipating.

Rachel: It did. It's no secret that Americans have a very specific relationship with work that a lot of people in other countries look at with some confusion and they don't really understand it. And of course, we have got that a lot from people we met all over the world. And I think that does make you wonder a little bit. When you're walking around places like Copenhagen, which every listicle out there is like, it's the happiest place on earth. You do feel it, you see it, and you don't see this stressed-out nation of people working in cubicles until the dark hours every night. And I'm sure that exists, of course. And I think when you travel, you probably only see the best of things. So I'm cognizant of that, but it did highlight this disconnect that I think Americans have, especially related to Europeans and the way that we approach work. And in terms of it changing my perspective, this might not be what the ambitious girlies want to hear, but it did make me understand what aspects of my work are aligned with my lifestyle and what aspects are not, and help me set some more definitive boundaries about how much of myself am I willing to give to work and how much am I willing to just save for life.

And so a lot of that has to do with flexibility. That's a huge thing for me now. I think it's really hard for me to consider going back into an office five days a week with no flexibility. That's also related to motherhood. I don't have kids, but I saw how people raised kids and how women with careers raised kids in other countries. And a lot of times they do have flexibility to make all of those pieces work. And it feels a lot more effortless, I think, than we tend to have it here in America.

Those things really help me solidify the fact that you can still be ambitious and I can still pursue work that I love, but I want to pursue that work that I love on my own terms and fit it into a lifestyle that feels authentic to me, whereas building a lifestyle around the work that I love, if that makes sense.

Katie Gatti Tassin: Do you feel as though you ever would've come to that realization had you not done this?

Rachel: I would like to think that I would, but the reality is I probably wouldn't. My background was in very data-driven investments, so I think all the decisions I try and make are less from the heart, more from data. When you look at data, you see these stories time and time again of people on their deathbeds or later in life being like, "I wish I did this." And yet you don't really see this massive shift of people responding to that data, that information that we have about how people wish to live their lives by changing their life while they still have the control to do so. And I think that goes back to the pandemic, as well.

You heard a lot more of those stories in that very somber period of our history. So I really did try to internalize that and help that shift my decision-making earlier in life instead of making that turn into regret later in life. And who knows, maybe I would've come upon that more organically. But I do think taking step away from your routine is going to force you to confront those things in a way that you just can't really do when you have all the natural distractions of your day-to-day.

Katie Gatti Tassin: Rachel, thank you so much for joining us. This was illuminating for me personally and I'm sure for our audience as well. A sabbatical might not be in my future anytime soon, but I think my conversations with Jen and Rachel have thoroughly convinced me that it's something that needs to be on the horizon at some point for the sake of both my personal and professional lives.

That's all for this week, and I'll see you next week, same time, same place, because I'm not taking a break on The Money with Katie Show. Our show is a production of Morning Brew and is produced by Henah Velez and me, Katie Gatti Tassin, with our audio engineering and sound design from Nick Torres. Devin Emery is our chief content officer, and additional fact-checking comes from Kate Brandt.