If you’re considering taking a sabbatical, the time off should be well within reach with a solid savings plan and understanding of what you hope to get out of the break, advisors share.
Cady North, Founder and CEO of North Financial Advisors, said that individuals don’t need to supplement their entire income — just what they would spend over the duration of the sabbatical.
“You really just need to cover your expenses on sabbatical. You would also tend to pay less taxes for that year as you have a lot less income coming in,” she said.
North authored The Art of the Sabbatical, which was published earlier this year.
“I tend to look at it as saving a percentage of your take-home pay. If you save 10% of your income, you could fund a six-month sabbatical every five years,” she said.
Paid Sabbaticals May Have Limitations
For individuals expecting to use company leave to take a sabbatical, North noted that paid sabbaticals tend to be weeks long, rather than months long — so workers should have a clear plan for what they hope to get out of their break and how long they will need.
A survey by the Employee Benefit Research Institute and Greenwald Research found that 15% of workers were offered paid sabbaticals by their employer. The survey polled 1,505 full-time and part-time workers in the U.S. between ages 21 and 64.
“From my experience, it takes between six weeks to two months to recover from burnout and start to decompress from work life,” North said.
Research reveals the steep costs of poor mental health in the workplace. A Gallup poll in 2022 found that unplanned time off or missed work days related to employees’ mental health cost the U.S. economy $47.6 billion annually in lost productivity.
“Many of my clients are taking between six months and a year off,” North said. “Also, most clients that I work with end up taking off three months longer than they initially planned (for a sabbatical). Part of it is because of the transition back to work — making the transition back thoughtfully and making an intentional decision with your next role.”
Talk to Your Employer, Regardless of Their Policy
Sandra Cho, founder and president of Pointwealth Capital Management, has seen the benefits of sabbaticals for clients. She also believes that more people could take advantage of the time off, but they are anxious about approaching their employer.
“I think people don’t take enough sabbaticals, and it’s because they are afraid of having that conversation with their employer,” Cho said.
“It can be an absolutely wonderful thing for the employer as well. It’s something that can only happen with a conversation,” Cho added, noting that sometimes individuals may reach other agreements, such as remote work, that can meet their desired needs.
“Now, with VPNs and the technology we have with Zoom, WebEx, and other software systems, it is doable. Employers are even more open to workarounds to keep a good employee.”
Consider Past Expenses and Spending Habits
In order to save for a sabbatical, Cho recommends that clients get an accurate picture of their spending.
She believes the best way to do this is to download all checking account transactions from the trailing 12 months, then sort to focus on just expenses.
“Look at only what you spend and then divide that by 12. To me, I find that to be the most accurate way” to determine what your monthly spending is, Cho said.
She encourages anyone considering a sabbatical to first “identify why you are taking a sabbatical, so you can get the most out of it.”
After assessing their needs, some individuals find they actually crave more work flexibility, such as working reduced hours each week — and a full-fledged sabbatical isn’t necessary. Other clients have been able to get their desired break by taking a consolidated vacation, rather than taking shorter two- or three-day vacations throughout the year, according to Cho.
“[The key is] knowing ahead of time, so you’re not giving up what you know you need. No one benefits…if you don’t get what you need from a sabbatical.”
Returning to Work From Sabbatical
Advisors also recommend that sabbaticals — whether for travel, rest and recuperation, or other pursuits — include some allotted time for the transition back to work.
Lisa Yang, a financial advisor at Symbio Financial Partners, said that individuals should think about their sabbatical in two phases: one phase, where you fulfill the purpose of your sabbatical and the second, where you "[make] sure your house is in order, such as transitioning back to the workforce.”
“Think about building in time to look for your next job, so you can comfortably return to work,” Yang said of those who may not be planning or able to return to a job.
During a sabbatical, individuals should still try to contribute to their 401(k). The timing of the sabbatical can also be planned to maximize their contributions, Yang noted.
“You could start your sabbatical mid-year [or later] and come back the following year. That way [the sabbatical] is across two calendar years to maximize retirement contributions. For example, if I were to start a sabbatical on Nov. 1, I could contribute the max to my 401(k) account for most of 2024. And if I were to come back to work in August of the next year, I could still contribute to my 401(k)” much of that year as well, Yang explained.
Younger Generations May Be More Interested in Taking a Sabbatical
She has seen that her younger clients, those who are millennials and Gen Z, are more often exploring whether they should take a sabbatical.
Some of her clients are calling the break a “mini-retirement,” and most have taken around six to nine months off for a sabbatical.
“I’ve had a client who works for one of the ‘Big 7’ [tech companies] and they were just burned out. Their gross income and their RSUs [or restricted stock units] just can’t make up for their physical and mental well being,” Yang said. She works with a lot of clients in the tech industry, which saw major layoffs in recent years.
“Getting laid off is really stressful. I think after a few cycles of that, people just viewed life a little differently,” Yang added.
Cady North said that individuals who wish to find a new job following a sabbatical need to get very specific and intentional about their next work opportunity.
“The key thing to remember is you didn’t lose any of your expertise, or focus, or drive while on sabbatical. You’ve got to develop your story — what you’re going to say in your job interview. Know how much or little you’ll discuss about your sabbatical and how,” North said.
A number of her clients who took sabbaticals were surprised to find that their sabbatical story, when delivered right, actually helped them get the job.
“I think of one instance of a client who spent six months traveling in South America. In a job interview, they said they spent months traveling and spending time with family, and they left it at that and were confident, and the interviewer really liked that,” North shared.
“It really boils down to their confidence in the interview.”
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