Planning for a Sabbatical or Career Break: Financial Strategies for Peace of Mind

Know Your "Why"—Then Build the Budget

Every sabbatical has a story. Maybe you’re itching to travel the world, care for a loved one, write a book, or just breathe for a while. Whatever your reason, get clear on it. Your "why" will guide everything from how much to save to what kind of insurance you’ll need.

Once you’ve got your vision, it’s time to crunch the numbers. Your spending during a career break won’t mirror your regular lifestyle. Some costs go down—like commuting or eating out. Others, like travel expenses or private health insurance, might go up.



So start there. Create a realistic month-by-month budget for your break. Include everything: housing, food, transportation, insurance, loan payments, subscriptions, hobbies, and even those comfort treats (yes, you’ll still want dessert). And don’t forget to adjust for inflation if your plans are a year or two away.

Create a Sabbatical Savings Plan

Think of your sabbatical fund like a safety raft. It needs to be strong enough to carry you through your break without dipping into credit cards or long-term savings.

At a minimum, your fund should cover:

• Your core living expenses for the entire time off
• An emergency cushion, ideally 3–6 months of expenses
• Extras, like travel, education, or a temporary relocation
• Insurance premiums, especially if you’re losing employer coverage



Set a timeline for hitting your savings goal. If you plan to take a break in 18 months, divide your total needed savings by 18—and start automating that amount into a separate account. Watching that number grow is not just motivating, it's empowering.

Rebalance Your Investments (Temporarily)

If you plan to dip into savings or taxable investment accounts while you’re away, it may be time to rethink your risk tolerance. Markets can swing wildly. The last thing you want is to be forced to sell stocks during a downturn.



Talk with your advisor about:

• Shifting to more stable assets, like short-term bonds or cash equivalents
• Lowering exposure to high-risk investments, at least temporarily
• Redirecting contributions from retirement to your sabbatical fund—just for now

One of our clients, Julia, reallocated a portion of her portfolio from equities to a high-yield savings account a year before her six-month break. That move gave her predictable access to funds and less worry about market dips.

Health and Other Insurance: Cover Your Bases

Insurance might not be the most exciting part of planning, but it’s essential. Without employer benefits, you’re on your own—so cover your bases:

• Health insurance through COBRA, a partner’s plan, ACA marketplace, or short-term policy
• Travel insurance, especially if you’re heading abroad
• Life and disability insurance if you have dependents or plan on adventurous activities



It’s easy to overlook these during the excitement of planning. But skipping coverage can turn a dream trip into a financial nightmare.

Find Small Ways to Earn While You’re Away

You might not want to work during your break, and that’s okay. But even light income can help reduce how much you need to save.

Think:

• Freelance writing
• Teaching a class
• Renting out your home or car
• Selling digital products or offering coaching



Even $500/month can add breathing room. One client used their photography hobby to earn side income while traveling—and it ended up paying for all their flights.

Do a Trial Run

Here’s a trick: test your sabbatical lifestyle before you take it. Spend 1–2 months living on your projected break budget while still working.

This helps you:

• Catch overlooked expenses
• Identify easy places to trim
• Get used to a simpler lifestyle



Plus, you’ll boost your savings with the leftover cash from the trial run. Win-win.

Keep Retirement on Track

If you’re off work, retirement savings might take a temporary backseat—but don’t abandon the plan.

Options to consider:

• Spousal IRA, if your partner is still working
• Freelance income contributions to a Traditional or Roth IRA
• SEP IRA, if you’re self-employed



What you want to avoid? Pulling from your 401(k) or IRA early. The taxes and penalties can set you back years.

Emotional Prep: It Matters

This isn’t just a financial shift—it’s a life one. Career breaks come with a swirl of emotions: freedom, joy, doubt, guilt. You might wonder if you’re falling behind or feel pressure to make the most of every minute.



Being financially prepared won’t erase those feelings, but it will give you the space to process them without panicking over money.

Give yourself grace. This break isn’t a detour—it’s an investment in your well-being.

Final Thoughts

A sabbatical or career break can be one of the most fulfilling chapters of your life. But to truly enjoy it, you need to prepare. With the right plan, the right savings strategy, and the right mindset, you can hit pause with confidence.

Aligned Wealth Advisors helps people just like you map out smart, sustainable financial strategies for extended time off. Curious how to get started? Let’s talk.

You don’t have to put your life on hold to take a break. You just need a plan that gives you freedom without the financial stress.

Andrea Ward, CPA

Andrea has worked in the finance industry for nearly all of her professional life. Taking over the family business she continues to combine her tax and investment knowledge to leverage the investment power of money while reducing gains taxes paid to the IRS. She lives in the Fort Worth, Texas area, (although is happy to work with virtual clients all over the United States!) Andrea loves to travel and dabble in home decorating.

Matt Ward

Matt began helping clients in the insurance industry. However, he struggled with big business’s emphasis on selling rather than helping, so he came to work with the family business focusing on investment advisory. In his free time, he shreds the gnar on his snowboard and jams on drums and guitar (but not at the same time).