My partner Austin and I are taking a mini-retirement in 2021. This year, we’ve been converting a 2010 Sprinter cargo van into a custom tiny house on wheels. When we’re done building, we plan to hit the road for about 12 months to travel to all of the states and national parks in the lower 48 United States.
We’ll be living that Instagram #vanlife, and yes, I’ll be sharing photos and updates on our new van-focused Instagram page @lifepothesis and alternative living blog Lifepothesis.com.
Why Now?
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We decided now was the time to take do this build and journey, because all of our international travel plans have been put on hold indefinitely due to Coronavirus. We’ve also always wanted to live in a tiny house, and originally planned to build a more permanent tiny house on wheels this year. However, with international travel no longer an option, we figured we could still live in a tiny house and travel domestically with a campervan.
Austin and I have each traveled solo to several places around the US, but usually it was for work and so we didn’t have the time we wanted to enjoy these locations. Most areas we visited were cities, and we want the opportunity to see the beautiful natural landscapes as well. We also are looking forward to traveling together, which is something that always makes our travel experiences even better.
This year was a good time to take a career break for both of us. I left my job in January to start my own business, which is location independent. During our mini-retirement, I plan to take at least a few months off from business activities to really relax and take a break, which I haven’t done for longer than a few weeks since I started working at the age of 14. Austin will be switching to contract work, which will give him the flexibility to work, or not work, whenever he wants.
CoastFI
We reached CoastFI in February 2020, right before the coronavirus related stock market volatility happened. CoastFI means that we’ve invested enough money that it will grow to meet our Financial Independence number at a standard retirement age, which for us is 59.5. We chose that age because that is when we would be legally able to access our tax-deferred retirement funds.
This means we now only need to cover our cost of living with active income between now, at age 27, and when we plan to utilize our retirement savings at 59.5. For the next 32 years, we only have to earn as much as we spend, and our spending is quite low.
Even during full time travel, which will increase our costs a bit due to fuel costs and activities, we estimate our budget to be around $2,300 monthly for two people living in a van on the road. Since we have low expenses and we don’t need to make extra money to invest for retirement, we can afford to take time off and live off our savings.
We can also start to work part-time, seasonal, or contract positions that only pay a couple hundred dollars a week. This gives us so much more flexibility with what kind of work we can do, how much we have to work, and how much time we can take off each year. Additionally, if we can create passive income to generate our living expenses, we can essentially retire early! If we earn more than we need for living expenses, we can continue to contribute to our retirement funds, and move our retirement date closer.
How to Calculate Your CoastFI Number
You need to know your FI number to calculate your CoastFI number. To calculate our FI number, we estimated our annual expenses in retirement, which we assumed to be significantly higher than our expenses now. Then we multiplied that number by 25, so we can use the 4% safe withdrawal rate to take money from our investments for our living expenses. Our FI number is approximately $1.1 million.
To figure out our progress towards our CoastFI number, we did a calculation to see how much our current investments would grow (at an inflation adjusted rate of 7%) in the time between our current age of 27 and 59.5, which is approximately 32 years. Using this calculation, we found that we needed to have approximately $122,000 to $125,000 invested to reach CoastFI. We reached that number in early 2020.
The 3 P’s of Our Mini-Retirement
There are 3 P’s to taking a mini-retirement: purpose, plan, and prepare.
You have to decide on the purpose of your mini-retirement, plan how you will afford it financially, and prepare for travel and time off. Here’s a case study of my own personal mini-retirement planning to give you a real-world example of how to make it work. I dive deeper into the 3 P’s in this post: A Step By Step Guide To Planning a Mini-Retirement.
Purpose: Retirement Activities
Having a purpose behind your time off instead of just using it as an escape from work will make it more memorable and fulfilling. Try something new or test out your ideal lifestyle. Some ideas for what to do during a mini-retirement include travel, volunteer, learn something, go back to school, and spend time with loved ones.
Case Study
During our mini-retirement, we will be doing a little bit of each of these things. We are traveling domestically in the United States by van, which is a wonderful opportunity to see our friends and family who live far and wide. I’ll be traveling with my partner, so we will be spending a lot of quality time together as well. I plan to work on my photography skills, a passion I haven’t seriously developed since high school. We also have some ideas of how we want to volunteer our time along the way.
Knowing what you’ll be doing in mini retirement helps you plan the other logistics including how much money you need to save and what travel preparations you need to make.
Plan: Financial Planning
How are you are going to fund your mini-retirement? It’s common to save money to cover your expenses for the period of time you expect to travel. Another option is to develop passive income that can cover your expenses while you travel.
Case Study
When we decided to take a mini-retirement, we knew it was a great opportunity for us to downsize and become more minimal with our possessions. We don’t own a home, but we both own cars. So we decided we would sell my partner’s car, which still has quite a bit of value, so that we didn’t have an extra insurance payment for something we weren’t using. Then we could use the cash from that sale to fund our travel.
We decided to keep my car, which is 16 years old and worth no more than scrap value, and will probably de-register and store it to save money on the insurance costs. Because it’s not worth much and would cost more to replace it at the end of our trip than to store it during our trip, we figured this was the smartest financial decision.
We also decided to sell many items that we don’t use often or can’t use on our trip. We estimate that we can earn approximately $1,000 by selling things in online marketplaces like OfferUp, Craigslist, and Ebay.
That’s just the icing on the cake of the money we’ve saved for this trip. Originally, we were saving to build a tiny house this year, and once we decided that we wanted to do a van conversion instead, we just used the tiny house savings fund to buy and convert the van. Since the van build will be cheaper than the tiny house, we plan to use the rest of the savings for our living expenses while we travel.
At a monthly budget of approximately $2,300 per month, we have more than 12 months of travel expenses in savings. This does not include our emergency funds. On top of that, we plan to make some money along the way through occasional contract or gig work and passive income from my blogs.
Prepare: Travel Considerations
Time to start planning your travel. Long term travel will look a little different than a vacation, so make sure you plan accordingly. Some travel considerations you need to prepare for includes insurance, language, mail forwarding, cell phone/wifi, currency, itinerary, packing, doing a test run, and mentally preparing.
Case Study
Our major travel consideration was building out the campervan that we planned to travel in. This takes care of all of the logistics around accommodations and transportation. Then, we planned a loose itinerary around the lower 48 United States, with the goal to visit all of the states and all of the National Parks.
Before we leave, we’ll be doing what’s called a shakedown trip, where we camp somewhere near home and test out all of our systems to make sure we’re ready to go. We’re also planning to pack the bare minimum of supplies and gear and buy what we need along the way. This trip is actually an exercise in minimalism for us, and we have sold a lot of our belongings beforehand to fund our trip and lighten our mental load. Any items we leave behind won’t be used for a year, which means we probably don’t need them at all.
Since we’ll be staying state-side, we don’t need to worry about learning a language or getting a new currency. Our cell phone plans will also work all over the states, so we are planning to stick with what we have, get free wifi from cafes and restaurants, and upgrade to a wireless hotspot if needed. We are still working through logistics around healthcare and mail.
Conclusion
Taking a year off to travel is totally possible with the right planning. We’re so excited to start our mini-retirement and see what the beautiful United States has to offer when we travel in our self-built campervan!
Your Turn
Do you want to take a mini-retirement? Comment below!
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