How to plan a career break to pursue an adventure of a lifetime

Abdallah Moosa | 02 November 2022

Abdallah Moosa is an actuary and a planner at Fiscal Private Client Services. He has worked in financial services since 2012 and has a passion for investments and the world of finance.

Lockdown, work from home, and work from anywhere - these phrases have changed the way many of us view work, and now may be the perfect time to plan for an adventure of a lifetime.

More and more young people are unsubscribing from the “golden watch career”, where you work until retirement age, and are instead subscribing to the FIRE movement. The acronym describes a lifestyle called “financial independence, retire early” and is for people who have their sights set on the goal of reaching financial independence so that paid work becomes optional, way before retirement age. Sounds idyllic but is it possible?

To reach the stage where paid work is optional means maximising your savings. You can achieve this by either aggressively cutting your expenses or increasing your income. Mostly it is a combination of both.

It is a steadfast commitment to a frugal lifestyle where you prioritise what is most important to you, and this often leads to a less materialistic way of living.

A shift in focus

This lifestyle involves shifting your focus from accumulating possessions to ploughing any spare cash into aggressively paying off any debt and then saving.

It also includes choosing the right assets in which to invest. This is where people really need the guidance of an adviser who holds the Certified Financial Planner accreditation, so that they can benefit from advice in all the right areas. Read more: How can I find a good financial adviser?

The idea behind accumulating assets is that these assets will provide you with sufficient passive income to live a modest lifestyle, thereby allowing you to be time “rich”. This may sound like normal retirement, but the idea is to get there way before age 60. Exactly when you get there will depend on quite a few parameters. Read more: How much do I need to save for retirement?

Get help strategizing

With the help of a seasoned adviser, you can strategize the best way to achieve financial freedom, or even a hybrid scenario where you can have sufficient assets to take multiple career breaks, to pursue many of life’s adventures.

We should all be planning for our financial goals. And what better time to start than in spring, the season of new beginnings?

Live for today, plan for tomorrow

Here are four easy steps to help you make plans for the future you want:

Step 1: Scrutinise your debt

Have a strategy when it comes to paying it off. Paying off a loan on your primary place of residence sooner will leave you paying a lot less interest than you otherwise would have, therefore saving you money. Read more: What can I do if I have a debt problem?

Your home loan can be seen as an investment that offers guaranteed returns with practically zero risk. If you have an “open access” home loan, where you can pay in funds and still have access to it, your home loan will likely offer you the best return on your cash while still giving you full access.

This makes it the ideal vehicle to park surplus cash, which can still be used in an emergency. Read more: How do I set up an emergency fund?

Step 2: Analyse your spending habits

This is key as it often helps identify what trade-offs you are willing to make in order to invest that money elsewhere.

Step 3: Consider the tax efficiency of your investments

When you are aiming for “retirement” before the age of 55, remember that access to your retirement funds is generally restricted until you reach the age of 55.

Step 4: Examine your options

Choosing the savings vehicle that is right for you is imperative. For example, a tax-free savings account is considered a good investment vehicle, but it comes with its own lifetime contribution limit. Read more: What do I need to know about investing in a tax-free savings account?

If you need assistance to run the numbers and work out which savings option is best for you, your needs and your personal aspirations, speak to a qualified financial adviser. Do it today, so that the adventure can begin tomorrow.