There are many reasons adults choose to step off the career treadmill. For some, it’s to care for children or other loved ones, such as elderly parents. Others decide to take a step back in order to pursue higher education or training that will position them for new or expanded opportunities in the future. Some simply come to the conclusion that that they need a break in order to pursue other interests or recover from career burnout.
Whatever the case may be, if you plan to downshift your career – even temporarily – it’s wise to plan ahead. Here are some tips to keep in mind before you turn in your resignation letter.
Define your time away. Consider what your leave will ideally look like. Determine how long you plan to be on break, with start and end dates, keeping in mind that you may need to stay flexible in case it takes time to land a job once you’re ready to get back in the game. Define to what you hope to accomplish and what resources you may need. Your answers to these questions will help you estimate the monetary impact of your change in employment.
Create a budget. Review your sources of income and projected expenses to ensure you will be able to make ends meet without your usual paycheck. Make sure you have sufficient savings or other income, such as investments or a partner that you can rely upon to meet your monthly obligations. If you plan to be out of work for 6 months, budget for 9 months to prepare for unforeseen changes to your timeline. Additionally, avoid funding a planned career break with emergency funds, which should be reserved for unexpected events such as a medical emergency.
Stay covered. You may be entitled to continued health insurance coverage if you take an approved leave from your employer. On the other hand, if you plan to voluntarily quit your job, your employer-sponsored coverage will end. Understand your cost sharing and the enrollment window for gap coverage. COBRA insurance offered through the federal government will be higher since your employer is no longer obligated to subsidize them. Consider other options such as coverage through a spouse or a more affordable short- and long-term medical coverage through the health insurance marketplace.
Keep saving. Ideally you will continue to maintain progress toward long-term goals such as college or retirement during your time away from work. The consistency of saving will be beneficial in the long run, even if you must lower your monthly contributions due to reduced income.
Weigh career repercussions. Consider how leave will affect your career trajectory. A work hiatus may reduce future earnings, impacting Social Security, retirement benefits and long-term financial goals. It’s quite possible your exact job will not be waiting for you when you return. If you qualify for leave under employment law, your employer can place you in a “similar job” after your leave expires. An employer has leeway under the law to fill your chair with someone else if they can show that keeping the job open would cause the company financial harm.
Create a re-entry plan. Presuming you intend to return to your current workplace, your employer will want to know your anticipated date of return. If you plan to seek new employment, stay in touch with your professional network, keep an eye on the job market and be proactive in applying for openings. If, in the back of your mind, you’re not certain you’ll return, give some thought to what you would do next, and how you will manage financially.
Seek guidance. A financial professional can help you study the financial impact of stepping away from your career. Armed with insight from a financial advisor, you can feel confident about this next chapter of your life.Together, we can work to keep you on-track towards your financial goals.
Request a consultation with us to learn more.
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