How to prevent your retirement from derailing during a career break

A career break could be fantastic for your life plans. It may allow you to take time away from work to raise children, pursue education, travel the world, or follow other dreams. Yet, it could also harm your security in retirement, so a long-term plan might be important.

A May 2025 article published by Protection Reporter suggests career breaks could become more popular. In fact, around 39% of 18- to 24-year-olds plan to take extended leave at some point in their career. In contrast, just 15% of 45- to 54-year-olds plan to do the same.

While career breaks might not be the norm for older generations, there could be benefits to taking one. However, there are downsides to consider, including the effect it might have on your retirement.

A May 2025 report in PensionsAge noted that if everyone took an unpaid two-year career break, it would collectively lead to a £230.69 billion shortfall in pensions nationwide.

On an individual level, having less in your pension might limit your options when you’re ready to retire. It could mean you need to delay giving up work, or your income is lower than expected throughout retirement.

However, that doesn’t automatically mean you have to put plans for a career break on hold if you’ve been thinking about it. There may be effective ways to keep your retirement on track, such as these seven practical steps.

1. Set out what a career break means for you

Understanding the full effect of taking a career break often starts with setting out a clear plan – how long do you intend to take off work?

A six-month career break to explore South America would have a very different effect on your pension than taking five years out of work to look after young children. While your plans might change in the future, deciding exactly what your career break will look like is usually an essential first step to keeping your retirement on track.

You might also want to consider if your career break would lead to work and financial changes in the future. For example, could you face challenges re-entering the workplace at your current level if you took an extended period off? Or do you hope your career break will lead to a new path entirely?

2. Forecast how the value of your pension will change

While retirement might seem like a long way off, forecasting the value of your pension and the income it might provide could be useful.

Working with a financial adviser could help you understand how the decisions you make about your career now may affect your long-term financial security. You might find you’d still be in a position to retire comfortably even if you halt pension contributions, but you could also discover a shortfall.

By projecting the effect of a career break now, you can make an informed decision about what to do and potentially bridge gaps.

3. Assess how you’ll use other assets

When you’re taking a career break, consider how you’ll fund your expenses. In many cases, people will use assets, like savings and investments, to create an income. So, it may be important to consider how depleting these assets could affect your retirement and financial security.

4. Continue to make pension contributions

If your pension could face a shortfall due to a career break and you’re in a position to do so, you may want to continue making pension contributions.

While you might not receive employer contributions, your contributions might still benefit from tax relief and be invested with the aim of delivering long-term growth.

One thing to note is that if you’re no longer earning an income, the amount you can place into a pension while retaining tax relief could be significantly lower. In 2025/26, if you’re a non-taxpayer, up to £3,600 may be added to your pension without incurring a charge if you’re part of a relief at source pension scheme.

5. Increase your pension contributions when you return to work

Alternatively, when facing a potential pension shortfall, you might plan to make higher contributions when you return to work.

A financial plan could help you understand how much you might need to increase contributions by and whether they would fit into your day-to-day budget.

6. Check your State Pension forecast

If taking a career break means you won’t be making National Insurance (NI) contributions, it’s worth checking if it could affect your State Pension entitlement.

While the State Pension alone often isn’t enough to retire on, it provides a reliable income throughout your later years. Usually, you’ll need 35 years on your NI record to receive the full State Pension. You can use the State Pension forecast tool to check how many years you already have and calculate if a career break might mean you fall short.

If you could face a shortfall, you can normally pay voluntary contributions for the past six years to fill in the gaps.

In addition, you might be able to claim NI credits. For instance, you can do so if you’re taking a career break to care for a child and are registered for Child Benefit.

7. Keep your financial plan up to date

During your career break, your plans or financial circumstances might change. So, keeping your financial plan up to date to reflect your current situation could be essential. It might allow you to spot potential risks or opportunities.

If you’d like to understand if you could take a career break and keep your retirement on track, please get in touch.

Please note: This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.

The value of your investments (and any income from them) can go down as well as up, and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.