Taking a career break
Back
Read time: 6 mins
Work

Taking a career break

Are you or your partner thinking about a career break? There can be challenges and financial impacts to consider, but also many benefits to enjoy.

Taking a career break can be an exciting chapter in your life. It's a great opportunity to rest, reflect on your achievements and set some new goals for the future. Before you take that well-earned break, there are a few things to consider (and do) to minimise your stress and maximise your fulfilment.

What is a career break?

A career break is a planned amount of time you take off work (usually for more than three months) to pursue other goals and interests before returning to your job or finding a new one.

And it's more common than you may think. According to an article published on the Australian HR Institute website (May 2019), 64% of female and 29% of male workers in Australia and NZ say they have taken a career break.

Why do people take career breaks?

There are many good reasons for doing this. Some people might want to focus on improving their physical or mental health, others may want to have a child, care for a relative, travel, do some projects around the house or just want to spend more time with family. 

Based on the 2019 article, for women, the main reason is to have children (41%), followed by travel (14%). Men cite travel (25%) and study/retraining (21%) as their main reasons for taking time off.

However, since the Covid-19 pandemic hit the world, our reasons for taking a career break have changed. Due to state and international border closures, much fewer people are taking a break to travel. On the other hand, the closure of schools and childcare centres (for face-to-face contact) has meant that many more parents have taken a break to care for and help educate their children full time. 

Whatever the reason, taking a career break can broaden your horizons and make you a happier person in the long term.

Can I afford to take a career break?

This is an important question that you need to ask. If you take a year off for example, you’d still need to purchase food, pay the bills and service whatever debts you have. If your partner is still working, you may be able to cover the essentials, but you may also need to cut back on the luxuries. 

If you are relying on your savings to see you through, be sure to use a Budget planner to make sure you have enough to last the entire career break. And leave a bit extra to cover unexpected bills and the extra time it may take to find a new job.

The benefits of taking a career break

While we all need an income to survive, money is not the most important thing in life. If you have an elderly or sick parent, becoming their carer may be a very rewarding experience. For those with young children, those first few years are precious, and you can never get them back. 

And if you’ve been doing the same job for a long time, a break may give you time to clear your head and think about a different career. Travel or other hobbies can help take your mind off work and create space to consider new possibilities.

If you are retraining during your break, you may be able to re-enter the workforce with more options, better conditions and a higher salary. And if you have an illness or injury, the break may give you the time to recover and heal, so you can re-enter the workforce fully fit and without pain.

The challenges of taking a career break

Apart from the obvious loss of income, there are other negative aspects of taking a career break. The main one is re-entering the workforce. According to the article on the Australian HR Institute website, 69% of women and 66% of men found it challenging. 

Their greatest fear was responding to an interview question about the relevancy of their skills following their time off. Many people also fear that they’ll have to return to a role that is lesser than the one they left, or that their previous work experience will be given less recognition.

The size of these challenges depends on the length of your career break, the industry you work in and your reason for having a break. Some employers may see your recent break as a positive because you are well rested and ready to invest yourself in a new job. Others may see it as a sign that you’re unsure about your career choice.

If you had a break to have children, that’s easy to explain. However, if you are experiencing mental health issues, you might be reluctant to share this in a job interview. While you don’t need to divulge all the details, it is usually best to be honest with your potential employer - but choose your words carefully.

What happens to my super?

When you leave your job to take a career break, your contribution to super from your employer will cease, which will impact your retirement savings. Here are five tips to consider so that your super keeps working for you.

1. Track down your lost super

If you’ve ever changed jobs, you might have inactive or lost super accounts out there. The good news is they’re easy and free to find. Simply visit our Find your super page and confirm a few details. You’ll get an instant result showing all your super accounts. In March 2021, there was $13.8 billion in lost and unclaimed super. Could any of it be yours?

2. Combine your super

If you do have multiple super accounts, it’s easy to combine some, or all of them into your LUCRF Super account. Simply complete our Rollover your super form online, or use our Find your super page.

By combining your super accounts, you could save on paying multiple fees, it will be easier to keep track of your super balance and you may avoid duplicate insurance policies.

3. Salary sacrifice

While you are working, before or after your career break, you can ask your employer to pay an extra part of your wages into your super account. This is very flexible as you can choose how much extra you contribute, change the amount or stop at any time. To set up this arrangement, complete a Payroll Deduction form and hand it to your payroll office at work.

You could also pay less tax, as salary into your super gets taxed at 15%, while the salary you take home gets taxed at your usual income tax rate, which can be as high as 47%. For more information visit our salary sacrifice page.

4. Seek government assistance

If you earn less than $56,112 per year and make a personal contribution into your super, the government may also contribute up to $500 depending on your income and the amount you contribute.

Learn how government co-contributions work, including rules, limits and risks.

5. Think about spousal contributions

If your partner continues to work during your career break, there are ways to contribute to your retirement savings. One way is to grow your super balance with after tax contributions from your spouse. This may also benefit your spouse.

If your assessable income, total reportable fringe benefit amounts and reportable employer super contributions were less than $40,000 over the financial year, your spouse may be eligible for a tax rebate of up to $540 by making a contribution to your super.

Another way for your spouse to contribute to your super is called contribution splitting. This is where your partner transfers some of their before-tax super into your account. To do this complete the Contribution splitting form.

Next step

If you're not sure about what to do next, speak to a LUCRF Super financial adviser. They will explain the options available to you, such as the various contributions strategies. Our superannuation advice service is at no extra cost to members.

A financial adviser can also help you to review your investment strategy before you take your career break. This won’t change the contribution amount going into your account, but it may increase your account balance by delivering greater returns. To set up a meeting simply request a call-back today.

Resources

Make a contribution (payroll deduction)
Superannuation
Forms
Make a contribution (personal)
Superannuation
Forms
Super Member Guide (PDS)
Superannuation
Guides
Super Member Guide additional information
Superannuation
Guides

Your browser is out of date

Please update your browser to view this website properly

Update my browser now