Studies show that women are still more likely to take time off from the workforce to care for children or aging parents than men. As my colleagues and I often see, there can be significant implications for women’s careers and finances when they take time off.
Here are some factors and scenarios to consider that can help you stay on the right track toward meeting your financial and career goals long-term should you find yourself stepping away from work to focus on family—either by design or due to unforeseen circumstances.
Be resourceful. If you’re not earning income, you’re also not contributing to retirement funds, Social Security or other savings accounts. Ideally, you’ll have enough money set aside to cover expenses during the period you won’t be working and you’ll have padded your nest egg in advance to account for lost time in long-term savings.
Mind the gap. If you choose to step out of the workforce, either to care for children or aging parents, but intend to return, it is important to have a plan for how long you’d like to stay at home because a few years can easily turn into many more. I’ve seen women who intend to spend three years at home with their children and then go back to work, but then those three years turn into seven or 10 years or more. Develop a plan for how you’ll stay engaged with your professional vision, passion and purpose that allows for adjustment but not abandonment.
Befriend the budget. Some women discover that the cost of child care or elder care eats up a significant portion of their take-home salary. If you find yourself in that situation, after weighing the options, you may decide to stay at home with your kids or take on a part time role in your workplace to care for an aging parent, and live on your partner’s or spouse’s salary until you can return to work full time. A new financial situation at home may make the household budget tight without a lot of money for extras, but if it’s feasible, make contributions to your retirement and savings funds as an automatic part of your budget.
Expect to retrain. In our ever-changing modern world, yesterday’s best practices are tomorrow’s history lessons. I’ve sat with many women who have stepped out of the workforce, and when they attempt to re-enter it, find that they are behind on many levels. Having outdated skill sets doesn’t bode well in a marketplace teeming with college graduates and younger professionals. If you think you may step away from your career, it would be wise to include retraining costs in your savings plan or at least factor in spending time to re-acclimate before you fully jump back in.
Raising children and caring for aging parents is challenging, especially while working. The emotional, intellectual and financial payoffs of advanced planning for a break in your career will help pave the way for smoother re-entry later.
Lisa Taranto Schiffer
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