More people may consider taking a break at some point in their career as work and retirement patterns change, but it pays to plan ahead, according to an insurance and wealth provider.<\/p>\n
Previous research for Canada Life, among more than 3,200 adults in February, indicates that nearly half (49%) believe it likely that, with increasing longevity, they will have to adjust their plans for work and retirement by taking a sabbatical or career break.<\/p>\n
A quarter (26%) have already taken some type of extended leave.<\/p>\n
John Chew, a technical specialist in pensions, tax, trusts and estate planning at Canada Life, said: \u201cTaking a career break or sabbatical can be a fantastic investment in your wellbeing or career development \u2013 but it pays to plan.\u201d<\/p>\n
Here are some tips from Mr Chew for people to be mindful of their finances while planning a career break:<\/p>\n
\u2013 Have a clear plan<\/p>\n
Mr Chew said: \u201cBefore checking your workplace policies on sabbaticals or career breaks, speaking with your manager, or HR representative, it is important to get clear on why you want to take time away from work in the first place.<\/p>\n
\u201cAs our life expectancies increase, so too may the desire to have time away from work to pause, retrain or pivot. But the decision to take a career break or sabbatical shouldn\u2019t be made on a whim. While they can provide you with both long and short-term benefits, they need to be carefully planned and thought through in advance.<\/p>\n
\u201cFor some this may be a necessity \u2013 to support or care for family for example.<\/p>\n
\u201cFor others it may be that a total change of scenery through travel is what is needed to help their mental wellbeing. Some may be looking to use time to re-evaluate their careers and go back to education, for example.\u201d<\/p>\n
He added: \u201cDecide what you want from your time \u2013 whether that\u2019s travel, volunteering, upskilling, or simply rest. Having a plan makes your return feel like a step forward, not a reset.\u201d<\/p>\n
\u2013 Build a pot of money<\/p>\n
Mr Chew said: \u201cYour income may pause while off, but your bills may not.\u201d<\/p>\n
He suggested starting saving six to 12 months in advance as a minimum, although individual circumstances will vary.<\/p>\n
Mr Chew said people should calculate the essential costs that will need to be paid, such as a mortgage or rent, utilities, food and insurance.<\/p>\n
Then they can set up an additional separate fund that can be used for expenses that will be needed on top, for example, for travelling or education, he suggested.<\/p>\n
Mr Chew added: \u201cIt\u2019s a good idea to add in a buffer for surprises too; breaks often come with costs you may not have anticipated from the start.\u201d<\/p>\n
Story Continues <\/p>\n
\u2013 Tell relevant organisations early<\/p>\n
Mr Chew said: \u201cBy notifying them early and submitting the necessary paperwork, you can avoid unnecessary costs and administrative headaches during your time away.\u201d<\/p>\n
\u2013 Protect your entitlements<\/p>\n
Mr Chew said: \u201cFirstly, regardless of whether you are employed by a company, or work for yourself, you will hopefully be contributing to a pension scheme.<\/p>\n
\u201cWith workplace pensions, employers are required to pay a minimum contribution into a workplace pension scheme if you meet the eligibility criteria, but this usually stops during periods of unpaid leave.<\/p>\n
\u201cIf you can, keep up your own contributions to whatever scheme you have in place, workplace or self-invested. Compound growth makes even small amounts worthwhile.\u201d<\/p>\n
He also said some people may consider paying voluntary national insurance (NI) contributions, which could help towards their state pension, to avoid any gaps.<\/p>\n
\u2013 Stay on top of tax rules<\/p>\n
Mr Chew said: \u201cIf you earn less than usual in the year of your sabbatical or career break, you may end up overpaying in tax, especially if you take your break partway through a tax year, so it\u2019s sensible to contact HMRC (HM Revenue and Customs) to check your PAYE (pay as you earn) code or claim a rebate at year-end.\u201d<\/p>\n
He added: \u201cIf you plan to take on work while abroad, you\u2019ll need to confirm if your employer is comfortable with this and be aware that it may trigger local tax obligations in the country where you\u2019re working.\u201d<\/p>\n
\u2013 Confirm your return and benefits in writing<\/p>\n
Mr Chew added: \u201cBefore taking time away from work, it\u2019s a good idea to agree your return date or phased return in writing with your employer.<\/p>\n
\u201cYou should also clarify how your break affects benefits like holiday accrual, private healthcare and bonuses. Written agreements can give you both peace of mind and offer some protection if policies change while you\u2019re away.<\/p>\n
\u201cIf you pay for workplace benefits yourself, it may be tempting to cancel these policies while you are off to save extra money. However, it\u2019s worth remembering that you pay for these benefits for a reason, and this won\u2019t necessarily change while you take time from work.\u201d<\/p>\n
\u2013 Stay professionally connected<\/p>\n
Mr Chew said: \u201cIt\u2019s possible to avoid turning a sabbatical or career break into a \u2018career gap\u2019.<\/p>\n
\u201cIf you can, staying visible and connected can help with the eventual return to work. Things like updating your LinkedIn, attending an occasional webinar, or maintaining informal contact with colleagues may be useful.<\/p>\n
\u201cLeaving on a good note by documenting your processes or helping with handovers before you go, can also help with the transition back to work. Have a conversation with your employer about how and when you may want to keep in touch too.\u201d<\/p>\n
People\u2019s individual situations will vary and some people may have other considerations or want to consider taking financial advice about their own circumstances.<\/p>\n","protected":false},"excerpt":{"rendered":"More people may consider taking a break at some point in their career as work and retirement patterns…\n","protected":false},"author":2,"featured_media":178293,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[64,63,99,115167,92400,115169,92305,186,115166,115168,184,185,115170],"class_list":{"0":"post-178292","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-personal-finance","8":"tag-au","9":"tag-australia","10":"tag-business","11":"tag-canada-life","12":"tag-career-break","13":"tag-career-breaks","14":"tag-career-development","15":"tag-finance","16":"tag-john-chew","17":"tag-mr-chew","18":"tag-personal-finance","19":"tag-personalfinance","20":"tag-taking-a-break"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/178292","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=178292"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/178292\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/178293"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=178292"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=178292"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=178292"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}