Is a Grey Gap Year in your future? 5 ways to afford a midlife year off
Key takeaways
- An adult gap year involves taking a break from work, at any stage of life, for pursuits such as travel, learning new skills or spending time with family.
- When planning financially for a gap year, estimate how much money you'll need and to save up in advance. Some people choose part-time work to supplement their savings during their time off.
- Securing health insurance coverage for your gap year ensures you can afford medication or doctor visits you may need.
The term “gap year” usually involves images of a fresh-faced high-school graduate who’s traveling the world before hunkering down in college. However, people at many stages of life may find themselves dreaming of extended time off work to travel or learn new skills.
In fact, one-third of people taking gap years are now over 30 years of age, The Broke Backpacker reports.
If you’ve been in the workforce for a while and are considering taking such an “adult gap year,” the thought of losing income during that time can feel overwhelming.
Ultimately, considering all the financial aspects and saving for them can help make your mid-career break a success.
What is an adult gap year?
An adult gap year could also be referred to as a planned sabbatical from work. Reasons you might want to take such a breather can include a desire to travel, learn new skills or spend time with your family.
Various terms exist for different types of gap years, depending on one’s age or circumstances:
- Adult gap year: Taking time off work in the midst of your career
- Gray gap year: Taking a sabbatical from work when you’re over the age of 50
- Family gap year: Taking a career break when you’re seeking extended family time, such as welcoming a new baby
“A gap year can be a great way to have a ‘reset’ on your life,” says Barbara Pietrangelo, CFP at Prudential Advisors. She says some people take gap years after receiving an inheritance or a job severance package, while others decide to take such a break when reaching milestone birthdays.
What to consider before you take an adult gap year
Figuring out how much money you’ll need during your gap year is likely to be top of mind, as well as determining how long you’ll need to save up. If you’re interested in taking such a breather, other questions you may be asking include:
- Healthcare: How you’ll obtain healthcare coverage while away from work
- Retirement savings: Ways your retirement nest egg will be impacted if you don’t contribute during your break
- Homeownership: How you’ll manage the upkeep of your home if you plan to travel
- Returning to work: Whether your employer will allow you to return, and what to do if otherwise
A gap year requires a good deal of advanced planning when it comes to practical and financial aspects. Here, we’ll go over five ways to help ensure you can afford an adult gap year.
1. Save in advance
Whether you plan to travel or stay at home, determine how much money you’ll need during your gap year. If you live at home, review your spending history over the past several months. Based on this, you can estimate the amount you’ll need for an entire year.
If you plan to travel, figuring out how much you’ll need can be trickier. Add up your anticipated costs of transportation, accommodations, entertainment and meals. Also remember that you’ll still be responsible for home-related expenses while you’re away, such as rent or mortgage, utilities and insurance.
“It is important to have the funds available for your basic budget, and extra, for things like vacations, pursuing new interests, and things that may come up,” Pietrangelo says.
It can help to keep your gap year savings separate from money set aside for other purposes. You can do this by opening a separate savings account or using an account that offers savings buckets. Also, consider setting up an automated transfer of each paycheck to your gap year fund.
2. Consider part-time work
If your gap year costs of living will be steep, consider taking on part-time work during that time to supplement your savings. This could be feasible if you have a skill or hobby that translates easily into a source of income. It may also make more sense for those not traveling during their gap year.
The convenience of working such a side job lies in the ability to choose your own hours and set your rates. Currently, side hustlers make an average of $891 per month outside their main source of income, Bankrate’s Side Hustles Survey found.
Examples of ways to make money during your adult gap year include writing, tutoring or house sitting.
3. Find health insurance
Giving up your employer-sponsored health insurance can mean you’ll have to pay out of pocket for any prescription drugs or doctor’s visits. Such expenses can be pricey, so consider finding insurance through a spouse’s employer plan or the U.S. government’s Health Insurance Marketplace.
Another way to find health insurance is through a private plan, which you can obtain by visiting an insurer’s website or calling an agent.
If you’re traveling, consider gap year travel insurance, which typically provides emergency medical coverage (along with coverage for events such as trip cancellation and lost baggage).
4. Stick to your gap-year budget
Whether you’re traveling or staying put during your adult gap year, watch your spending closely to help ensure your money doesn’t run out early. This can involve setting a daily or weekly spending limit. If you’re traveling, consider setting a spending limit per meal at restaurants.
“Have a general plan with lots of flexibility to make the most of [your gap year],” Prudential Advisors’ Pietrangelo says.
5. Consider a break that’s shorter than a year
Instead of taking a full year off work, you might prefer taking a break that’s shorter — and less costly. For instance, an employer might be more agreeable to a three-month break, while allowing you to return at a set date.
Unlike quitting your job for your gap year, knowing you have a job to come back to could provide peace of mind and less worry during your time off. A shorter break could also be significantly more affordable than a longer one.
Bottom line
An adult gap year can be better within your reach through some advanced preparation. This includes estimating how much money you’ll need and saving ahead of time. Key parts of planning for such a break also commonly include securing health insurance coverage and making any plans for travel. Watching your spending closely is also an important part of money management throughout your time off work.
