Before You Retire, a Wise Use of Vacation Days!

by Jeff C. Johnson

Elderly couple outside of house

If you are like many retirees, you have some vacation days accumulated, and you’ve been thinking you can use these days to retire a few weeks early with pay. Some employers will even “buy back” unused vacation days with cash that can come in handy on the cusp of retirement.

There is, however, another way to use these vacation days that could be even more valuable to you.

Take a mini-retirement at home a year or two before you plan to retire. Find out what it’s like to live at home under retired conditions. A few days or even a week is not long enough.

Here’s what I have recommended to many clients in the past:  

First, you should plan to stay at home—no extra travel, no special stuff. This gives you an opportunity to practice your retirement and to evaluate if you are really ready to quit working. Don’t stay at a hotel and go out to dinner every night. Do laundry, make your own food, clean the house, watch television, read a book … whatever you think you would be doing in your retirement years. 

One man, who I’ll call Larry, was set to retire but called me after three weeks at home to announce that he was ready to work another three years. Rather than retire at 62, he opted to wait until 65. His reasons included:

  • His wife had not yet retired, and his friends were all still working. He had few outside hobbies or passions. Larry was bored!
  • Larry felt he would like to have the extra cash flow that an additional three years of working would allow him to earn in investment income. He also realized he would be eligible for Medicare at 65 and would not have to pay the high cost of health insurance for the intervening three years.
  • Because he had few planned activities, Larry ended up being the unpaid sitter for his grandchildren, which he enjoyed but did not see as a reason for early retirement.

Still, for others, the trial run confirms what they imagined their retirement to be—a vacation at home for life. Either way, a practice retirement is a wise use of vacation days.

What will you do all day? Before leaving the workforce (or before your mini-retirement), develop a “model retirement weekly schedule,” the topic of my recent post.