Ready for a Career Break? A Sabbatical Makes Sense to These Financial Pros

I used to be in academia and planned to become a tenured professor at some point. One of the benefits of an academic career is that you can usually take an extended paid break after six years of service. This extended break would usually be for six months at full pay or a year at half pay.

This sort of career break is intended to allow faculty members to take a breather from teaching and other service requirements to concentrate on, e.g., writing a book, carrying out research at another institution, etc.

While these so-called sabbaticals aren’t intended primarily to allow a professor to “double dip” and increase their income by getting paid by another institution while there, it’s usually allowed as a side benefit.

Nice, right?

Then life happened, and I decided to leave academia. Interestingly, these days, sabbaticals aren’t limited to academia, though these are usually much shorter.

What Is a Sabbatical or Sabbatical Leave?

The Cambridge Business English Dictionary defines “sabbatical” as “a period during which an employee can take time away from work to study or travel.”

Workable defines “sabbatical leave” as “a break from work, allowing employees to pursue interests such as traveling, writing, research, or volunteering. During this period, employees remain part of their organization but are exempt from regular duties. Common in educational institutions, sabbaticals can also be found in corporations.”

Sabbaticals may offer a career break as short as a month or two, or as long as a year or two.

Gusto, a human resources services company, conducted a study of the employees of their 300,000 small and mid-size customer companies. In that study, they broadened the definition of sabbaticals to mean anyone taking over 120 hours (i.e., three full-time weeks) paid leave in two months.

With this expansive definition, they found the following (as of January 2024):

• Across all ages, 6.7% of employees were on sabbatical, more than double the 2019 rate.
• 8% of Gen-Z workers (ages 22-26) were on sabbatical, nearly 5× their 2019 rate.
• For younger Millennials (ages 27-34), the number was 7.6%.
• Just 5.2% of Gen-X workers (ages 45-59) were on sabbatical.
• Women were slightly more likely than men to take a sabbatical (7.2% vs. 6.3%).

Shifting from employees to employers, the Society for Human Resource Management (SHRM) published a report, “2023 Employee Benefits Survey” that found over 400 US employers provide paid or unpaid sabbatical programs (though I’d contend that extended leave isn’t a true sabbatical if it’s unpaid).

However, outside of academic and pastoral employers, only 7% offer sabbaticals, and 8% offer extended unpaid leave.

SHRM also noted that employers who want to retain good employees find several benefits effective, such as pensions, stock options vesting over time, and work flexibility, including sabbaticals.

If your employer is among those offering paid or unpaid sabbatical leave, should you take a career break?

I asked three experts for their opinions on this and related questions.

Introducing the Pro-Sabbatical Financial Professionals

First up is Riki Cooke, CFP®, Founder and Financial Planner at 2Point0 Financial. Next, we have Andy Moran, Founder and Financial Planner at Ad Astra Financial Planning. Last but not least, we have Cady North, CFP®, CEO and Financial Advisor at North Financial Advisors.

First question: Who should take a sabbatical, and why should they do so?

Surveys show that just over half of people who took a career break said they’re better at their jobs when they return. Hiring managers agree with them, with a similar slight majority saying people can take a career break and restart their careers anytime afterward.

More than two in three people who took a break from their career felt the break gave them a broader perspective that helped them figure out what they wanted from life. A similar majority also felt the break helped improve their well-being.

Given all that, unsurprisingly, our three pros agree it’s an excellent idea to take such a break.

Cooke says, “I think everyone should consider a sabbatical. Obviously, they have to be able to afford it financially, but there are tons of great benefits to stepping away from work and reevaluating priorities. Right before major life events (changing jobs, relocating, attempting to start a family, etc.) is a perfect time to take a sabbatical.”

However, you have to check your employer’s rules. Some require you to come back to work for at least another year after you finish your sabbatical. Fail to do that, and they’ll claw back your sabbatical pay.

Cooke continues, “In 2019, feeling burnt out from work, I took a sabbatical to consider what was next for me. Being away from the stressors of work gave me the time to move slowly and reevaluate what was most important to me.

“I think many folks, especially millennials, feel burnt out, and doing ‘9 to 5 until 65’ feels very burdensome to them. The idea of traditional retirement is ripe for change. Stepping away from work to enjoy time off while you’re still young can be a powerful way to strike the long-term work/life balance so many look for.”

Moran agrees, “More people should have the opportunity to take a sabbatical. Some companies offer them as a benefit, and I continue to advocate for more companies to do the same!

“Many tech companies have generous paternity or maternity leave, and while I think that’s a great thing, I think workers should have more opportunities like this, especially since the US doesn’t have a strong culture of normalizing career breaks outside of this one context.

“If you feel burned out or stuck in your job, especially if you’re slaving away to achieve financial independence, it’s a strong sign you could benefit from a break. If you love your day-to-day job, more power to you! But if you dread coming to work on Monday, it may be a sign…”

North adds, “Anyone who’d like the time and space for a reset or shake-up should take a work break. Sabbaticals can give us tremendous energy to launch something new, adjust priorities, or re-discover things we loved before.

“We need sabbaticals because the very nature of work is changing. People used to work for the same organization for 35 or 40 years and then retire. That time is long gone. According to 2022 data from the Bureau of Labor Statistics, it’s now common to have as many as nine jobs by age 35!

“These days, we seek meaning in our work. We want to see positive outcomes from our labor and yearn to explore other types of work or industries that interest us. For instance, by going from corporate warrior to nonprofit helper, or switching industries from tech to clean energy, we can reinvent ourselves multiple times. Longer life expectancies make this even more likely, and sabbaticals can help us choose the right next steps.”

Sabbaticals offer some great advantages, but if your employer offers only the unpaid kind…

Why do people take career breaks even without getting sabbatical leave?

Would you take a multi-month break from work if it was unpaid leave?

Surprisingly, many do.

Moran relates, “Many folks I serve in tech pursue financial independence and potentially early retirement. That used to be me. If you enjoy your current path, that’s great. But many people don’t enjoy it and make themselves miserable pursuing a goal they think will make them happy.

“A sabbatical can be a fantastic opportunity to recharge and ‘try on’ or play with the idea of early retirement or work optionality without committing to it.

“A sabbatical can also be a wonderful opportunity to ‘cross things off your bucket list’ while you can. If you have young children, for instance, they won’t always want to spend time with you. Think about what you could do together now before they turn into moody teenagers! I remember my dad going on a sabbatical and taking us on a family road trip. Those are some of my fondest family memories.

“More generally, many people feel burnt out and need a break. A sabbatical is a great opportunity to prioritize self-care, focus on personal well-being, and create a healthier work-life balance.

“Others crave adventure during their time off, yearning for new experiences, wanting to travel to distant lands and immersing themselves in different cultures. Spending your sabbatical like that will broaden your horizons and create lasting memories. It’s a great opportunity to step out of your comfort zone, try new things, and embrace the thrill of the unknown.

“For some, a sabbatical is an ideal time to embark on a project or launch a business. Whether it’s pursuing your passion, honing new skills, or venturing into the world of entrepreneurship, such a break can be a stepping stone to a fulfilling and purpose-driven career.”

North agrees, “People take sabbaticals largely to recover from work burnout, to reset and focus on self-improvement or spend deeper time with family. They may also want to experience new things like travel, writing projects, or volunteering. Work breaks don’t need to follow a prescribed road map or footprint. There’s more art than science to it—the primary outcome should be to interrupt the patterns of your everyday life and learn more about who you are when you’re not working.”

Cooke chimes in, “In my experience, folks take a sabbatical, even if it’s unpaid because they feel burnt out and need a break from the pressures of work. Another reason could be that the idea of waiting until 65 to enjoy the benefits of retirement seems ridiculous.”

If you’re considering an unpaid sabbatical…

How can you determine whether you can afford a career break, and if you can’t yet, how can you get to that point?

Taking an unpaid year off can have a huge impact on your finances.

I wanted to hear how you can figure out if you can afford it, and if you can’t yet, how you can build towards it.

North answers, “You don’t have to be ‘rich’ to be able to afford a work break, though it does take an intentional savings plan and prioritization. If you can’t afford it yet, just like with any other major undertaking, start setting money aside for it.

“Almost any ‘new’ money can jumpstart your savings for a self-paid sabbatical: a tax refund, a bonus, a gift, an inheritance, or income from a side hustle.

While it’s true that making at least a six-figure salary makes such saving much easier, most people can save something, even if it’s just 5% of take-home pay. At any pay level (and more so at lower pay where taxes take a smaller bite), saving 5% a year for five years gives you enough to take a three-month sabbatical.

“My book, ‘The Art of the Sabbatical,’ dives into how to cover costs like healthcare and how you can make sure your long-term savings goals, including retirement, are still intact after taking a self-paid work break.”

Cooke suggests, “If you’re considering a sabbatical, I encourage you to open a separate savings account and call it ‘Sabbatical Fund.’ This helps you earmark funds specifically for your sabbatical goal. This should be in addition to, rather than instead of, your other savings goals. A sabbatical has obvious short-term costs that you need to determine, but you can’t let it derail your long-term goals like retirement.”

Moran elaborates, “As with most things in financial planning, you have to start by getting clear on your wants and goals for your time off. This will help you determine the best plan of action to realize them.

“A simple metric to consider when deciding how long a break you can take is how many months of your current expenses you could cover from savings. Twelve months’ worth of expenses is a common target, though individual situations and risk tolerances will vary. The further you reduce your expenses now, the more aggressively you can save towards your break and the longer your savings will stretch once you start drawing from them.

“Don’t forget to take into account that your expenses during your sabbatical may be far higher or lower than your current expenses, depending on what you plan to do during your break.

“While preparing for your journey, it’s crucial to strike a balance between your short-term and long-term savings goals. Interrupting your savings to take time off work will decrease the funds you have available for your future. Like everything else in life, there is a delicate balancing act involved.”

One thing that helps is that when you spend from savings rather than income, you don’t have to worry about taxes. If you make, e.g., $90k a year and pay $30k in taxes, you don’t need $7500 per month of unpaid sabbatical. $5000 is enough because your $2500 tax bill goes away.

Once you’ve decided to take a sabbatical and have a plan in place to be able to afford it, the next question is…

How should you prepare for a sabbatical?

Is there a playbook here, or is it something you have to play by ear?

North says, “Sometimes, you have time to prepare for a sabbatical, other times it’ll be unplanned. Most folks find it hard to truly imagine how the work break will feel until they’re in it. People I’ve coached needed at least six to eight weeks to ‘settle in’ to the work break, unwind, and decompress from work life.

“I tell them, be prepared—when you start talking about your sabbatical, you may get puzzled looks or even unsupportive comments. You may also pick up on others’ worries or fears. These reactions reflect how work norms are still evolving. You’re planning to do something pioneering by taking extended time off. Not everyone will get it. You may find that it takes courage to share these plans with friends and family.”

Cooke adds, “Determining the cost of your sabbatical will help you figure out how long you can afford to take off, but I remind folks that it’ll take them time to decompress from the work life they’re used to. So, if possible, I encourage them to take more time than they may have initially considered.”

Moran offers some more concrete advice, “Your preparation will depend on what you want to achieve in your sabbatical. If you plan to do a lot of traveling, for instance, you’d be wise to secure travel medical insurance to minimize the risk of catastrophic loss. If you have pets, make a plan for them, whether you take them with you or have someone else care for them while you’re gone. If you plan a road trip around the country in a sprinter van, start by trying it out for a shorter period to figure out what you need, not what some YouTube influencer told you you’ll need.

“Everyone should have a plan for how they’ll address ordinary healthcare needs and how they’ll mitigate the costs of potential emergency medical care. You may remain eligible for your employer’s healthcare plan, although you’ll likely have to pay your full premiums. Depending on your state and personal situation, Medicaid, which provides healthcare coverage based on need, can be an option for your sabbatical. There are numerous other options as well, like private health insurance, indemnity plans, direct primary care, and Healthshare Ministries. Which is most appropriate for you will depend on your situation and overall strategy. Your best strategy may be a blend of several overlapping coverages.”

Once you’ve started your sabbatical, you may well need to manage your budget differently than when you’re working. I asked our pros for their thoughts…

How should people manage their budget while on a career break?

Cooke thinks your regular practices should serve you well during your sabbatical, too, “In general, your sabbatical budget works the same as a traditional budget: determine how much you can spend, track your expenses, and align your spending with your values and priorities.”

Moran believes the change in circumstances may require different budget management techniques, “A crucial aspect of successfully taking time away from employment is establishing financial systems to support your journey and safeguard your financial well-being. To this end, allocating your savings into different accounts intended for specific purposes may be helpful.

“Establishing a ‘freedom fund’ specifically for replacing your income while not working is essential. This fund will provide the resources you need to sustain yourself during your period of exploration and personal growth. The goal here should be to replace your post-tax income for the time you plan to take off.

“In addition to your freedom fund, it’s vital to prepare for any unexpected emergencies that may arise. You may want to set up an ‘emergency fund’ in a separate account. Three months of post-tax income is a solid rule of thumb here. Having these funds in a separate account gives you a safety net to fall back on, letting you handle unforeseen expenses without compromising your overall financial stability.

“Depending on how much you plan to travel, and how expensive that travel may be, ‘travel expenses’ may need to be distinct from your ‘ordinary expenses.’ Consider establishing a separate fund dedicated to such travel-specific expenses. Likewise, if you wish to indulge in an expensive hobby, you may wish to establish accounts specific to those activities to keep you on track.

“If you can’t return to your previous job, setting up a ‘transition fund’ can be a smart move to ease reentry into reality after your time away. Such a fund can provide a financial cushion to cover your expenses as you transition back to the workforce. This will give you the time and flexibility to make thoughtful decisions without feeling rushed or pressured.

“Of course, as I said before, your expenses during this time off may be massively higher or lower than your current expenses. If you’ve experienced lifestyle creep over the years, time away can help you reset your hedonic baseline… or, if you’re not careful, it could massively blow it out of the water.

“If you’ve been living an unconscious life or feel underwater, this could be your opportunity to shake off the old shackles and craft a new life, starting today.”

North’s suggestion is simpler, but no less powerful, “You can create an artificial ‘paycheck’ by setting up an automatic monthly transfer from your savings into your checking. This can help you stick to a budget. Some people find that their expenses when not working are much lower than when they are working (no commuting, less eating out, etc.). Others may have special one-time expenses (a trip, a class, a project). I recommend you think about these one-time expenses separately from your monthly ‘run rate’ of normal living expenses so it’s easier to keep track.”

Once your sabbatical approaches its end, you need to prepare for work. You’ll also need to plan how to effectively transition back…

How should people prepare for their return to work, and what should they do once they’re back at work to get back up to speed quickly?

North shares, “Hiring timelines for employers can last 60 days or more, depending on your industry and role. After having the transformative experience of a sabbatical, you won’t want to put yourself in the position of having to ‘settle’ for the first job that comes along. That’s why it’s a good idea to plan to cover your living expenses during this ‘transition time’ while you’re job hunting.

“Based on my experience working with clients, finding another job can often take a while, possibly up to six months. It’s common to struggle with how to describe your time off, or whether to mention it at all. My research shows that you shouldn’t let this fear limit your plans. Several people I interviewed in various industries and companies said that you may not get a single question about why you took time off. But if you do, there are plenty of ways to make yourself a more desirable candidate. You can make the point that a new employer would get you at your most refreshed state, along with the depth of experience and expertise (that you haven’t lost while on break), so own it!”

Cooke adds, “I encourage folks to build in some transition time, especially if your sabbatical includes travel. Just as you needed time to decompress from work, you’ll need time to get back into a more traditional routine. Take the transition time to build out a routine that looks similar to your expected work routine.”

Whether it’s convincing a prospective new employer that you’d be a great catch, or proving it once you’ve been hired…

How can people returning to work take advantage of their unique experience and perspective gained from their sabbatical?

Moran says, “Re-integrating into normal life after an extended time away from work can be transformative, but sometimes a challenging process. Your journey, whether it involved self-discovery, adventure, or pursuing personal projects, likely had a profound impact on you. Here are some key points to consider during your reintegration.

“Embrace change. Recognize that your sabbatical may have changed you. Your perspectives, priorities, and aspirations may have shifted. Embrace these changes and see them as opportunities for personal growth and development.

“Embrace the impact. Your journey may have ‘ruined’ you but in the best possible way. It can open your eyes to new possibilities, expand your horizons, and enrich your life. Allow this newfound perspective to guide your decisions and shape your future.

“Explore new possibilities. Your time away from work likely sparked new ideas and passions. Be open to exploring these possibilities and consider how you can incorporate them into your reintegrated life. It could mean starting a new venture, pursuing a different career path, or embracing a side project that aligns with your newfound vision.

“Start with the next step. Instead of feeling overwhelmed by the prospect of reintegration, focus on your next step. Break down your vision into actionable goals and prioritize them. By taking small, manageable steps, you’ll gradually build momentum and progress towards your desired future.

“Work backward to make it happen. Begin by visualizing your ideal life and work backward to identify the steps needed to make it a reality. Create a plan and set realistic timelines, but be adaptable along the way. By staying focused on your vision, you can make intentional choices that align with your goals.

“Remember that re-integration is a process, and it may take time to fully adjust to the demands and routines of everyday life. Be patient with yourself, seek support from friends and family, and stay true to the growth and transformation you experienced during your time away. With perseverance and a clear vision, you can navigate the reintegration process and create a fulfilling life that aligns with your newfound aspirations.”

North adds, “When preparing to reenter the workforce, it’s important to process and get perspective on what you learned during your time off. Focus on getting clear about what you want when you return to full-time work. Get specific on your ideal work environment, type of collaboration, team, working conditions and norms (like schedules and days off), location, industry, productivity expectations, etc. The perfect salary or title won’t make up for a mismatch in these important areas. Prepare with stories related to your experience and interest in your ideal work environment. Some of these stories and experiences could be from your time off or previous work experience. Talking about your sabbatical may even spark a great conversation when building or expanding new relationships in your network.”

Is a Career Break Right for You?

According to a LinkedIn study, nearly half of hiring managers believe that candidates who took a work break constitute an underappreciated pool of potential new hires.

Adding a career break to your profile may be just the differentiator that makes these hiring managers take notice. Highlight how your new experience can be beneficial to your next employer, providing context to how you’re better prepared now for your next step.

And the other hiring managers – the ones who see a career break as a problem? Would you really want to work for them anyway?

Disclaimer: This article is intended for informational purposes only, and should not be considered financial advice. You should consult a financial professional before making any major financial decisions.