CAREER
What happens to my money if I take a career break?
A career break costs far more than the salary you miss during it. Almost nobody is told the second number.
THE SHORT ANSWER
The visible cost is the salary forgone. The larger cost is the compounding you lose on what you would have invested, the employer provident fund contribution that stops, the group health and life cover that ends with employment, and a re-entry salary that usually resets lower. Planning for a break means funding it before it starts, not during.
Two numbers, and only one gets discussed
A woman earning ₹10 lakh a year who takes a two-year break loses ₹20 lakh of income. That is the number everyone calculates.
The one nobody calculates is what the investments she would have made during those two years would have become. ₹15,000 a month invested for two years is ₹3.6 lakh of contribution, which at 12% over the following twenty-five years grows to roughly ₹60 lakh. The break did not cost two years of saving. It cost twenty-seven years of growth on two years of saving.
This is not an argument against career breaks. It is an argument for knowing what one costs before taking it, so the decision is a real one.
What stops when the salary stops
The employer provident fund contribution ends, which is usually 12% of basic pay that you were never taxed on. Group health insurance ends, and it ends on the last working day rather than gradually. Group term life cover ends the same way. Any employer NPS contribution ends. Vesting on stock options generally stops, and unvested options are usually forfeited.
The health cover is the one that causes real damage. Buying individual health insurance after a break means fresh waiting periods on pre-existing conditions, and it costs more at an older age.
The re-entry discount
Women returning after a break frequently re-enter below where they left. The formal workforce is absorbing more women than it used to, with 26.9 lakh net female subscribers added to EPFO during 2024-25 according to government figures, and roughly 1.56 crore women joining the formal workforce over seven years. Re-entry is more possible than it was. It is still rarely at the same level.
Planning one properly
Buy individual health insurance while you are still employed and still healthy, and keep it running alongside the group cover. Waiting periods then expire on your timeline rather than starting from zero when you need it.
Fund the break in advance, the way you would fund any other large planned expense. Aim for living costs for the length of the break plus six months for re-entry taking longer than expected.
Keep a small SIP running through the break, even at ₹1,000. The purpose is not the amount. It is that restarting a stopped habit is much harder than continuing a small one.
ONE MOVE THIS WEEK
Check today whether your health insurance is your employer's or your own. If it is only theirs, you are one resignation away from having none.
