One of the biggest economic impacts of the COVID-19 pandemic has been on women who have left the workforce in large numbers to take on the role of full-time caregiver in their family.
According to the Bureau of Labor Statistics, there are still 2.4 million fewer women in the workforce in October 2021 than there had been in February 2020.1 What’s more, a recent report by McKinsey & Company and LeanIn.Org showed that one in three women is thinking of “downshifting” her career or leaving the workforce altogether.2
If you or a family member is considering such a move, even if just temporarily, there are some important factors to think about. “The very first piece of advice is just to pause,” says Karlee Schultz, a senior vice president and managing director for U.S. Bank Private Wealth Management. “Think about it carefully. Educate yourself on the factors and impacts. Really assess what your options and resources are so that you can make a decision that's going to work for you, your family and your financial picture.”
Of course, this is a complex decision, and each family has their own needs to consider, from medical issues to financial needs. However, there are two considerations that apply to everyone.
- Future employment. What impact will this decision have on your or your family’s current and future career options?
- Financial impact. How will you make up for lost income, potential employment benefits (healthcare or insurance) or the missed opportunity for retirement savings?
It’s important to weigh the pros and cons and loop in loved ones or a financial professional.
Consider return to work and future employability
Consider the effects that you or your spouse leaving the workforce will have on the future prospect of returning to work. “Most employers actually hire back people who were laid off or terminated, before they hire the people who deliberately chose to step away from the workplace3,” Schultz says.
As a result, there may be a strong case for keeping a job but making adjustments. Discuss your options with your employer. “Can you take a different job? Can you have more flexibility? Can you take a part-time job or reduce your hours? There are many resources that employers have that people don't even know about or take the time to research,” she adds.
Make a careful assessment of your available options. If you or a loved one chooses to leave, what’s the plan for returning to work and when? Remember that Social Security draws on your highest 35 years of income, so taking a few years out may affect the amount you eventually receive.
And if you take this path, Schultz says it’s important to stay engaged in your industry or network to make your transition back smoother. “Stay informed in the industries that you’re interested in, then stay connected to people and meet with them regularly to keep abreast of what's going on,” she adds.
“My biggest recommendation is to breathe. Recognize you're not alone. There are resources. Take very deliberate and intentional steps to get your house in order.”
“You've got to remain relevant, and you've certainly got to stay educated. That will help you return to the workplace, when and if the time is right for you.”
Assess your financial options
It’s critically important to make an honest assessment of your family’s finances. Have a look at your monthly expenditures. What’s essential and what can be cut? Cancel nonessentials, from dining out to streaming services, if needed. Come up with a budget and be disciplined about it. Think of what costs you could reduce, stretch or avoid in the event you or a family member steps away from their career.
Without a job, you could be giving up benefits for yourself and your loved ones, and healthcare can be a large expense. Look into the financial support options, such as opportunities to temporarily pause or restructure debt. “There are also many community programs available that you’ll want to educate yourself on,” Schultz says, “whether that be childcare, adult care or finding financial assistance to help you with prescriptions or housing needs.”
Wherever you are in your financial journey, Schultz recommends talking to a financial professional. “There are lots of things that people can do to boost their financial picture,” she says, “but everybody is unique.” You may have a 401(k) plan that you can borrow against, but only do this as a last resort. Instead, she suggests managing a disciplined budget, moving assets around or even selling personal goods.
Whatever you decide to do, Schultz has some simple advice: Take the time to make an educated and informed decision. “My biggest recommendation is to breathe,” she adds. “Recognize you're not alone. There are resources. Take very deliberate and intentional steps to get your house in order before you make the decision.”
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