Whether it’s due to starting a family, taking a break from work, recovering from injury or illness or retraining for a new profession, around half of women have taken a career break at some point in their lives, compared to just one in five men. That’s why planning for life events early and making small, regular top-ups before and after career breaks is important to help keep clients on track for their desired retirement, says Susan Hope, Retirement Expert at Scottish Widows.
Pay inequality and career breaks mean women are more likely to reach retirement with less, so why planning ahead for time out of work is so important for women’s long‑term financial security.Here are 5 tips to give clients when financial planning for a career break.
1. Build a dedicated career break savings buffer
Too many women don’t plan financially before taking a career break, so before your break, aim to save at least three to six months of essential expenses in a separate, easy-access account. This ‘safety net’ can help you handle both everyday costs and unexpected bills, without needing to dip into your pension or long-term savings.
2. Maximise all pension and employer benefits
Speak to your HR department and/or manager about how your workplace scheme supports pension contributions during leave. Many employers continue contributions based on your full salary while you’re on maternity or parental leave, so keeping your own payments going, even at a reduced rate, can help protect your long-term pension pot.
3. Plan your career break as a team
Women are still far more likely to step away from work for family, but balancing time off and pension saving between partners, for example using shared parental leave, can have a huge impact on closing the gender pension gap. Consider asking your spouse to make ‘third-party’ contributions to your pension during your break to keep your savings growing.
4. Keep your pension on track, even with small contributions
Scottish Widows’ Women and Retirement Report finds a five year break at age 35 can leave women almost £70,000 worse off in retirement. But continuing to pay even small sums into a personal, workplace, or self-invested pension during your break helps maintain vital savings momentum and the benefits of compounding investment growth.
5. Review, update, and adapt your financial plan
Life does change during a career break – so should your financial plan. Use your time out to audit your household budget, track your spending, and identify any lost National Insurance contributions. When returning to work, review your outgoings, consider part-time work or re-skilling opportunities, and seek financial advice if you need help making up for missed savings or setting new goals.
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