If you’re considering taking time off, it’s important to have a plan in place — especially as taking time off work can potentially derail your future earning potential. Here’s what you need to consider before taking an early or mid-career break.
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If it seems like everyone is quitting their jobs these days, it’s because they probably are. The Great Resignation is here. A recent survey found 55% of people in the workforce say they’re looking for a new job in the next 12 months.
The Wall Street Journal recently reported on young professionals who are quitting their jobs with no back-up plan, citing burnout and stress. Many who are taking an early career break plan to reassess their careers or pursue new interests. If you’re considering taking time off, no matter the reason, it’s important to have a plan in place — especially as taking time off work can potentially detail your future earning potential. Here’s what you need to consider before taking an early or mid-career break.
Deciding if you should take a career break isn’t so explicit. Maybe you need more time to take care of your family, or to pursue a new business venture. Maybe you’re unhappy in your current role and want more meaningful work. Or maybe you’re simply burned out and need time off.
“It’s really subjective in how you know if it’s time for you to press pause,” says Vicki Salemi, career expert at Monster.
A career break may only last for a few months or years, depending on your plans and how long you can afford to take off.
Even if you have money saved to quit your job, there are plenty of new and unexpected costs to consider. For example, you’ll most likely have to dip into your savings, which can hurt your ability to stay afloat if an emergency occurs. Unfortunately, you won’t qualify for unemployment insurance if you quit your job, so make sure you have the savings to cover your expenses, says Michelle Petrowski, certified financial planner and founder of Being in Abundance.
Your current employer likely helps pay for many of your benefits, including your health care. Once you leave your job, many of those benefits will lapse. There are some options for getting your own health coverage, including special enrollment through the federal or state exchanges, short-term health care plans, or COBRA, which lets employees keep their old health insurance after they leave their job. However, these options will cost you more without your employer chipping in.
Other financial repercussions could include a hit to your investments and retirement savings, especially if you’re unable to keep up with contributions during your break. Retirement savings rely on compound interest to grow exponentially over a long period of time. Even a year of skipped contributions can make a major dent in your nest egg, says Petrowski.
There are also career costs to consider. Breaks may halt your earnings potential, and stunt salary growth in what may be your peak earning years, especially for women, says Petrowski. Depending on your industry it may be more challenging to re-enter the workforce, and you may have to take a pay cut.
“Finding a job can sometimes be difficult, and leaving the workforce for a break, especially if not positioned correctly with a future employer, can create barriers or challenges and even result in lower salaries as compared to peers,” she says. “Never mind the lost career development opportunities.”
It’s natural to be nervous to take a career break without knowing whether your career will be there when you come back. However, “we don’t see the job market slowing down right now,” says Salemi. “Employers have become more flexible and are looking for you 10 times more than you are looking for them. Will you miss the boat if you’re not looking for a job right now? No.”
Evaluate your current financial situation
While it’s OK to not be entirely sure what your next move is, you should have some sort of plan before you say, “I quit.”
Salemi recommends taking stock of your current financial situation and what you can possibly afford to do. For example, a family with a mortgage and two children may have less financial flexibility than a single young adult. She recommends reaching out to a financial professional to better understand your options.
“What are you financially responsible for right now? Those responsibilities aren't going to go away whether you have a job or not,” she says. “Think about what your financial comfort level is and where you’re willing to cut back.”
Even if you’re immediately switching to a new role, you’ll want to have some money saved to cover your expenses while you’re not working. Try and save more than you think you need to anticipate unforeseen costs.
Complete this quitting checklist
Before you officially leave your current job, there are a few more items to check off to make sure you’re financially prepared.
Take full advantage of your company’s current benefits before you walk away — schedule medical appointments and dental visits, and use up your company’s mental health benefits and vacation days. Set up some time with a human resources representative so you understand the full ramifications of your exit.
Make sure you have a plan to fill any insurance gaps when you leave, including health insurance, life insurance, and disability insurance.
If you have an employer retirement plan, you can roll it over into an individual retirement account, which may come with lower fees and more investing flexibility
Have an eventual re-entry plan
Even if you aren’t entirely sure what your future career will look like, there are some factors you can still prepare for. Make sure your resume is up to date and that you maintain your network. A career break is a great time to brush up on old skills or learn about a new industry, says Salemi.
If you’re considering switching industries, Salemi recommends taking a look at the growth of your preferred industry, and the educational requirements needed to make the switch.
You’ll also want to prepare for the inevitable resume gap question when you restart your job search. Career breaks are common, says Salemi, employers will likely understand if you’re upfront about why you decided to take a break — though it helps to show them that you used the time productively.
But most importantly, enjoy your much-needed break.
“Enjoy your down time and have fun,” says Salemi. “Take some time to smell the roses. Life is fragile and precious and this is a great time to really think about what you want to be doing.”
Image: 10,000 Hours / Getty Images
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