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Do you like the idea of taking a break from your career at some point? You may like the idea of mini-retirements, as described by Tim Ferriss in the *Four hour work week? Those wanting to have a family need to plan a career break for childcare. You may want to take a mid-career sabbatical to study or learn.
You may like all of the above ideas. A career break is a great way to beat burn out, after all.
What Type of Career Break(s) Will You Take?
Mum and/or dad may want extended time off from the workplace to focus completely on the hardest job of all-parenting. The upheaval in your life on becoming a parent cannot be understated. This (contrary to what I thought before having my first!) is not really a break. But allowing yourself the financial freedom to take the time off you feel you need will take off the pressure at a time you may well be surviving on 4 hours sleep.
You may think you will return to work quickly, but keeping your options open with the ability to take extended leave is a good idea. With parenting comes enormous unpredictability. One of the earliest posts to this sites was on preparing ahead of time if you are planning to have kids. It covers details of parental leave within the Australian Healthcare system and government financial support.
The traditional concept of retirement is to work hard for 40 years or so before taking a brief retirement at the age of 65 before dying a few years later!
We are thankfully living longer.
Depending on your genetics, lifestyle and wealth can expect a significantly longer retirement than your grandparents. But nothing is guaranteed, and premature deaths of family, friends and colleagues often bring up feelings of not wanting to leave anything too late.
Retirees also may not have the energy, enthusiasm and fitness to take part in all the activities they would like.
The idea of mini-retirements is to live life in intervals.
Periods of working are interspersed with periods of rest, exploration and reflection. This can be an awesome way of life. Many casual nurses live this lifestyle, working intermittently to fund long trips overseas. A few docs choose this way of life too. Imagine working for 6 months to fund the rest of the year bumming around Bali. I met a young doctor living this reality. It sounds pretty good!
Sabbatical or Fellowship
This is a change from work, with a specific objective.
The traditional “sabbatical” occurs every 7 years. You could job swap with a colleague, take on postgraduate study full-time or immerse yourself in learning a new work-related skill.
Sabbaticals don’t create a gap in the resume to explain but aren’t a real break either. It may even add interest to your resume.
A change can be (almost) as good as a holiday, and if the thought of having the time to focus on learning without having to work sounds like a luxury, this could be ideal for you.
Considerations When Planning a Career Break
1. Money is the Number 1 Barrier to Taking a Career Break
Money can easily become that annoying thing that stops you from doing awesome things.
Thinking about it the other way, money can be the tool that empowers you to do all the awesome things!
Do you want the flexibility to take as much parental leave as you need, have a mini-retirement when you are suffering from burnout or challenge yourself with that fellowship or postgraduate study? Planning ahead, and getting financially ahead of schedule is how to obtain the flexibility to make these choices when opportunities arise.
If having the choice to take career breaks if and when you want appeals, advanced planning is essential. Ideally, if you have plenty of notice you will have made a financial plan, automated your investing and got ahead of schedule.
– Plan your Budget for Your Career Break
When you have decided you want to take a career break, it’s time to work out a budget. How much is it going to cost?
Are there any ways you can make this financially easier? Can you take paid leave from work? Perhaps you could rent out your primary residence to help cash flow the experience? Or sell a car?
How far in advance are you planning? How much would you need to save each pay to fund the planned career break?
– Do You Have Passive Income Streams?
If you have planned far enough in advance, you may have been able to create passive (or semi-passive) income streams that will help support you financially during your career break.
Real estate, passive ETF investing and online businesses are some of the ways people create these passive income streams. Realistically, these create years to produce significant income streams.
If you are planning 5+ years in advance, it may be possible to build a passive income stream.
– Do You Want to Perform Some Paid Work?
A few hours part-time that can be fitted around the primary reason for your leave may help ease the financial burden and give you a change of scene.
For doctors, teaching work at the local university, guideline development or assisting with college exams are options. Performing short term locum jobs can be more challenging, but maybe enough to maintain skills during a long career break without being committed to a regular job and are generally well paid. This could also be used to satisfy specialty college and AHPRA recency of practice rules for those taking over 12-month leave.
– Don’t Forget About Super
Unfortunately, taking a career break results in reduced super. The younger you are when you take that career break, the more substantial the deficit due to missed compounding interest opportunity. Career breaks for maternity leave are a big contributor to the female superannuation deficit.
This is not a reason to avoid taking a career break, but it should be taken into account and extra cash contributed to your super to at least partially compensate.
The good news is, you can now “catch up” with super contributions. If you contribute less than the super concessional cap ($27,500 from July 1, 2021) in 2021-2022, you can contribute the extra over the next 5 years. Without being penalized with extra tax
If you have contributed less than the concessional cap this year, you can contribute over the cap as long as you have contributed $137,500 ($27,500 x 5) in 5 years.
This is really helpful for those able to make up the income, but is only valid for those with a superannuation balance under $500,000. It makes sense to keep a couple’s super balances around equal so that perks like this are less likely to be lost.
The higher income earner should also check out the tax benefits of contributing post-tax income to their spouse’s super account through the spouse contribution and low-income co-contribution. Check out these spouse super hacks here.
2. Coming Back to Work
The transition back to work, and how to make this easier, should be considered before the leave is taken.
Smaller career gaps may be organised with a planned return to work at your original employer (utilising long service leave or parental leave for example).
Longer career gaps often mean missing out on having a guaranteed job to return to and involve challenges with de-skilling.
In the medical world, taking more than 12 months out of the workforce often means having to meet AHPRA and the specialty college’s back to work criteria.
Plenty of people take career breaks of several years, utilise return to work programmes. But if you are considering taking just over a year, it may be a lot easier to make it under 12 months. Or consider short-term contracts to maintain skills and satisfy recency of practice rules.
For those who have given up their job in order to have a career break, or for those with a gap of more than a year, some forward planning will help you find a job and transition back into the workplace as smoothly as possible.
– Maintain a Network
If you will be looking for a new position, you should make sure you maintain your network when you go away. Update your Linkedin page, let your contacts know what you’re up to and attend a conference during your career break.
When it’s time to look for a new job, you are more likely to hear about opportunities, and be thought of when a post becomes vacant.
– Maintain Your Skills
Depending on the length of your break, and the skills required for your type of work you may need to put effort into maintaining the skills you have developed.
Consider attending a course to update yourself, or taking on some short-term freelance/locum work to maintain skills and earn some cash.
– Update Your Curriculum Vitae
Don’t leave an unexplained employment gap on your CV.
If your break was short and so not obvious on your CV, it probably doesn’t need to be pointed out.
Parental leave, taking time off for health or family reasons, postgraduate education and travel all explain an employment gap and may even be interesting enough to be a topic of conversation at your interview.
Unexplained gaps raise questions and suspicion as to what happened. Right or wrong, it’s best not to leave any unanswered questions on your CV.
– On Leaving Your Current Position
Your top priority when leaving your employment for a career break is to leave with good relationships intact, plenty of notice and sufficient handover.
3. When to Take a Career Break
There is no perfect time to take a career break.
But when is the best time for a career break?
A later career break also means you have already got a reasonable start on superannuation. Due to the nature of compounding, a career break earlier is more financially damaging than later (all else being equal). But if salary increases significantly over the years, the difference in financial consequences of taking a career gap early and late lessen.
Having children obviously has certain biological limitations, and these probably need to come above career or income optimization. If having is kids is important, don’t put it off too long.
If you want to take a career break to travel or study, pre-kids is a lot easier. But travelling with kids is also a lot of fun, although hard work. There are many financial demands on a household in the years before they start a family and taking time off paid employment may not be possible.
The timing of your career break(s) is such a personal decision. Weigh up all factors, but don’t let money stop you from taking a career break to enjoy new experiences, develop more skills and take time to reflect. Plan ahead and minimize the financial consequences.
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Aussie Doc Freedom is not a financial adviser and does need offer any advice. Information on this website is purely a description of my experiences and learning. Please check with your independent financial adviser or accountant before making any changes.