Taking a career break
Career breaks and sabbaticals are increasingly popular, and it’s easy to see why. Having a career break allows you to recharge and reassess, pursue a new business idea or lifelong ambition, or travel the world without having to wait until retirement.
However, extensive time away from the rat race does have its drawback. Not only do you have to cope with an earnings gap, but your long-term career prospects may also take a hit. Thirdly (and most often overlooked) an earnings gap can also mean a reduction in your pensions (both state pension and private/workplace pensions).
If you’re considering taking a break, it’s important to weigh up these costs and risks against the undoubted benefits of spreading your wings. Here are some tips for planning your getaway.
- Why and when might I take a career break?
- What should I consider before taking a break or sabbatical?
- How long can a sabbatical be?
- Financial preparations for a career break
- Career breaks and your pensions
- Can I work during a career break?
- What are the main advantages of taking a career break?
The first thing to think about is why you want to do this. Are you taking a break to find yourself, achieve something you can’t accomplish while working full-time, have new experiences, develop your skills with a view to changing your career, travel, or something else? Some career breaks may be thrust upon you by circumstances, but that doesn’t mean you can turn them to your advantage.
Taking a breather is most popular among professionals in their early-to-mid thirties – roughly the same time that many people settle down to have families. This may be because it’s harder to make the leap when you have dependants to support, though it may still be possible to juggle family commitments with a career break.
The most common reasons for taking an extended break are:
- Adventure – solo or group travelling, volunteer programmes etc.
- Starting a business – going freelance or establishing your own company
- Career change – trying a different career path, work experience etc.
- Redundancy – following a recent redundancy with substantial pay-off
- To care for a family member – supporting loved ones, end-of-life care etc.
- To look after children – save on childcare costs, spend quality time with them, help support family etc.
Consider your own reasons for having a career break, and list the things you hope to achieve by it. Now you can start to consider the risks and drawbacks.
If you’re in a job you enjoy, or one with a lot of advantages, talk to your employer first of all to see if you can negotiate a period of unpaid or even paid leave. Some employers do grant occasional sabbaticals to key members of staff, so if yours is a senior role it’s worth asking – especially if you plan to develop your skills during the break.
If your main reason for wanting a break is job dissatisfaction, think it over carefully and don’t make hasty decisions. Give yourself at least three months to weigh up your options, and during this time seek advice from those around you. Again, speak to your HR department to see if you can find alternative solutions to leaving.
In all cases, draw up a game plan for how you will spend your break and what you aim to do when it’s over. Will you be going back to the same line of work, or hoping to break into a new one? What are the main challenges in each case, and how will you rise to them? Now might be a good time to assemble some of the references and job application materials you might need, so you have them ready.
Most importantly, consider how your finances will cope with a career break.
The typical length of a paid sabbatical is 6 months. However, the actual length will depend on what you are able to negotiate with your employer. You may be able to negotiate a longer sabbatical if some of it is unpaid, but your employer does not have to agree. The most important thing when arranging a sabbatical is to get your agreement in writing. You don't want to come back to find that you have no job anymore.
You shouldn’t really consider a career break unless your finances are robust. Ideally you should be debt-free, and if you have a mortgage you must be certain that you have to the means to keep up repayments. If you’ll be away from home during your break, then one way to do this might be to sub-let your home. You’ll need to let your mortgage provider know.
Save as much as you can in the run-up to your break and pay off any debt. If you have any investments, talk to your adviser about possibly moving some of them into cash if you’ll need more accessible funds.
Work out your likely living costs for the duration of your break and see if your savings will cover them. If not, calculate the shortfall and plan how you will overcome it (e.g. freelance / temporary work, cost cutting). Finally, ask yourself whether you are really comfortable spending your savings in this way. Talk to a financial adviser if you’re not sure.
One easy-to-miss financial impact of a career break is the effect it can have on your pensions. A pause in your earnings also means a gap in your pension contributions, such as to your workplace pension, and also a loss of National Insurance contributions which may reduce your state pension entitlement. Both can significantly reduce the level of your income in retirement.
To offset this effect, talk to your adviser about making additional pension contributions either now or when you return to work. You may also be able to make voluntary National Insurance contributions to regain more of your state pension entitlement.
If you need additional income during your career break (or if you just like to keep busy) you can of course do any other work you’re able to. This is true even if you’re on a sabbatical and still technically employed. All you need to remember is that any extra income you earn will be in addition to any sabbatical income, so make sure you pay the right amount of tax on it.
If your reason for taking a break is to start your own business, then our guide to starting a business should help.
A career break can improve your long-term prospects if you use it wisely. Time off can present new opportunities, which may lead to future career prospects, enriching life-changing experiences and meaningful friendships too. Or it may simply be that with fewer work stresses you can spend more time with family, concentrate on your mental and physical wellbeing and pursue new interests. Planned properly, a career break can ‘re-boot’ your life and put it back on the right track.
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