How To Prepare Financially for a Career Break — for Travel, Study or Family

Many of us get our first job and then never stop working — out of a need to earn money. However, there are often times when taking a break is either a must or a want — whether to travel the world, pursue an advanced degree or care for family. And as America’s work culture shifts in 2025, more professionals are considering these intentional pauses as essential for wellbeing rather than career-killers.

Contents

Creating Your Financial Runway The Healthcare Puzzle Don’t Let Retirement Take a Break Too Tackle Debt Before You Go Plan Your Return Before You Leave Protect Your Credit Score

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Sabbaticals aren’t just personally transformative — they can be professionally advantageous, too. You can return with greater leadership capacity and confidence in your decision-making abilities.

Of course, if you’re considering a career break, you have to face the realities when it comes to your paycheck — or lack thereof. Below is how to financially prepare for a career break in 2025 — and how to protect your future while you’re away.

Also here is how to launch a business during your sabbatical.

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Creating Your Financial Runway

The foundation of any successful career break is having enough money saved to cover your time away. Financial advisors typically suggest having six to 12 months of essential expenses before walking away from a steady paycheck.

Start by calculating your monthly expenses during the break — and remember these may look different from your current spending. Then multiply by the number of months, add 20% for unexpected costs and start making automatic transfers to a high-yield savings account.

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The Healthcare Puzzle

If there’s one thing that derails career break plans faster than anything else, it’s healthcare costs. Since most Americans get insurance through employers, leaving a job means finding new coverage during a time when you’ll have reduced income.

According to its website, Cobra coverage lets you keep your current insurance for up to 18 months, but you’ll pay both your portion and your employer’s portion of the premium — often a large increase.

Look into joining a spouse’s insurance plan if possible or purchasing coverage through the Health Insurance Marketplace. Some professional associations offer group health plans worth investigating. And don’t forget to price out the cost of travel medical insurance if your break involves international adventures.

Don’t Let Retirement Take a Break Too

Before your break, try maxing out retirement contributions in your final working months. If you’re married and your spouse is still working, consider a spousal IRA that allows contributions even when you don’t have earned income. And whatever you do, resist the temptation to cash out existing retirement accounts to fund your break — the taxes and penalties will devastate your long-term financial health.

When you return to work, plan to increase your retirement contributions beyond pre-break levels. Even a 1% to 2% increase can help make up ground over time.

Tackle Debt Before You Go

Starting a career break with substantial high-interest debt is like trying to run a marathon with weights strapped to your ankles. Focus on eliminating credit cards and personal loans with interest rates above 7% before your departure date. If you can’t eliminate all debt, explore income-driven repayment plans for federal student loans or consider refinancing options for private loans.

Plan Your Return Before You Leave

Planning your return to work is just as important as planning your departure. Set aside money for living expenses upon your return — and also try to think of what you need to transition back into a job.

Do you have professional certifications or courses to refresh skills that might become outdated during your break? Are there any interview expenses or relocation costs you need to consider? How are you going to keep up with your networking and connections while you’re on break? Making a thorough list before you leave will make your return much easier.

Protect Your Credit Score

Your credit score might be the last thing on your mind while you’re studying abroad or caring for a newborn, but maintaining good credit will be important when you return to work. Set up automatic minimum payments on all credit accounts before leaving your job. Keep at least one credit card active with small regular purchases and monitor your credit report for errors.

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