By Vivienne Ong (DPFP)
Marketing Lead, MoneyOwl
The term micro-retirement has been trending lately, similar to an “adult gap year,” often attributed to stress. But this isn’t a new phenomenon – I know this as a sabbatical or simply, a career break. And many do this to reassess career plans, manage caregiving duties or simply take a break.
I myself tried to go on a career break back in 2021. After the stress of working in banking at the height of COVID, I quit my job without a new one lined up.
I say tried, because I was able to find a new job after 2 weeks.
It may have seemed like a risky move to many, but it wasn’t a spur-of-the-moment decision.
I planned carefully, ensuring my finances were in order. I didn’t have a mortgage to service, had a ‘timeline’ for my break with plans to learn new things in the event that I wasn’t able to find a job right away, and had set funds aside in liquid cash so that I didn’t have to dip into my investments or my emergency fund.
If you’re looking to take a career break, here are 6 things that helped me, that I hope will help you too.
1. Build a Career Pause Fund
Firstly, build up a sufficient career pause fund. The amount of savings should be slightly longer than your planned break.
For example, if you plan to take a break for a year, build a buffer for an extra 3 to 6 months, in case it takes longer than expected to re-enter the workforce.
The amount should be based on your estimated expenses, including housing loan repayments, utilities, food, insurance premiums, and other essential costs.
This should be separate from your emergency fund, which is for unexpected expenses like medical bills or urgent repairs.
2. Review Your Insurance Coverage
During your break, you may no longer have employer-provided insurance coverage.
But your health doesn’t take a break with you, so it’s important to maintain adequate health, life, and critical illness insurance in the event of an unexpected medical emergency.
Check that your career pause fund includes insurance premiums that need to be paid. Otherwise, evaluate whether premium waivers, policy loans, or flexible payment options are available, so that you can continue your health coverage during this period with ease.
3. Adjust Your Budget
Without a regular stream of income, it is important to adjust your budget during your career break.
Use MoneyOwl’s budget spreadsheet to track your expenses so you can prioritise essential expenses and cut back on discretionary spending. Track expenses diligently to avoid depleting your savings too quickly.
4. Continue Saving for Your Goals
A career break should not disrupt your long-term plans such as retirement.
Taking a career break can impact more than just your take-home pay – it also pauses your CPF contributions, which may affect your retirement savings.
To stay on track:
- Keep Contributing: Set aside some funds to continue your CPF contributions if possible.
- Get Support from your Spouse: If your spouse has Ordinary Account savings above the Basic Retirement Sum ($106,500), they can transfer the excess to your Special Account.
- Stay Invested: Avoid cashing out long-term investments. Instead, build a buffer of liquid savings for your break.
Planning ahead ensures your retirement goals remain within reach, even with a career pause.
5. Leverage Government Support Schemes
As a Singaporean, there are several government schemes that can help ease financial burdens during a career pause:
- Home Caregiving Grant: If you are taking a break for caregiving, check if you are eligible for the Home Caregiving Grant, which provides monthly payouts of up to $400 per month. Budget 2025 has just announced that the maximum monthly payout amount will be raised to $600 from April 2026.
- Financial Assistance for Everyday Needs: If you are caring for an elderly family member, there are multiple financial support options, including subsidies for devices such as wheelchairs and hospital beds, as well as potential long-term care payouts under ElderShield, CareShield Life, or MediSave Care.
- Making a Career Switch: If you are aged 40 years and above and are taking a break to explore a mid-career switch, you can tap on the $4,000 SkillsFuture credits under the SkillsFuture Level-Up Programme for over 7,000 courses.
From March 2025, eligible Singaporeans can apply for the SkillsFuture Mid-Career Training Allowance which pays up to $3,000 per month. This will be extended to selected part-time training from early 2026, with monthly payouts of $300.
6. Explore Alternative Income Streams
Even during a career break, you can continue earning some income to help ease the financial pressure. This could include freelancing, consulting, or part-time work with flexible hours.
These roles could be in areas you are familiar with, or you may explore new areas like tutoring, customer service, or administrative support. Beyond online job portals, proactively reach out to former colleagues, friends, family, and potential clients to explore opportunities.
Consider planning ahead for a seamless return to the workforce:
A career break doesn’t mean pressing pause on your professional growth. Stay connected by networking, upskilling with SkillsFuture credits, and keeping up with industry trends.
You can also look out for and join in career fairs organised by SkillsFuture or Workforce Singapore, to explore your next options.
MoneyOwl was recently a part of the My Career Health Matters Job and Skills Roadshow at Toa Payoh Hub, where we had meaningful conversations with attendees about navigating career transitions.
Our financial experts shared practical tips on managing finances and planning for retirement.
When you return to work, focus on rebuilding your finances – aim to replenish your funds, and reinstate any paused insurance premiums to maintain full coverage.
Take time to reassess your financial plan, adjusting your budget and investment goals accordingly.
A well-planned break can set you up for even greater opportunities. With the right preparation, you can step back into the workforce with confidence and financial stability.
Disclaimer:
While every reasonable care is taken to ensure the accuracy of information provided, no responsibility can be accepted for any loss or inconvenience caused by any error or omission. The information and opinions expressed herein are made in good faith and are based on sources believed to be reliable but no representation or warranty, express or implied, is made as to their accuracy, completeness or correctness. The author and publisher shall have no liability for any loss or expense whatsoever relating to investment decisions made by the reader.
Subscribe here for our free OwlHoots newsletter on financial planning insights and analysis.
Want to continue this discussion? Join our Telegram community here.
