Retirement savings gap after a career break? Expert shares how to recover without taking big risks

Career breaks are becoming increasingly common, especially among women who step away from work for reasons such as marriage, childcare, maternity, elder care, or personal commitments. While these breaks may be necessary, they often create a gap in retirement savings and long-term wealth creation.

The challenge becomes even bigger because retirement planning relies heavily on the power of compounding, and a few years away from investing can impact the final corpus significantly. However, financial experts believe that a career break does not have to derail retirement goals permanently. With disciplined investing, portfolio reviews, and strategic cash-flow management, investors can gradually bridge the gap and get back on track.

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A similar query came from Sona, a viewer of The Money Show on ETNow who has a gap in her retirement savings because of her career break and wants to know how she can catch up? She has mentioned that if she has gone back to the job or not or she has any source of income, can there be a solution where current investments can be invested better so that she achieves her retirement goal.

According to Harshvardhan Roongta, CEO, CFP, Roongta Securities the first step is to accept the situation rather than stress over it. He noted that career breaks are particularly common among women and often result in a temporary setback in retirement planning. Whether the break is due to marriage, maternity, or other personal reasons, many women face a similar challenge.

“Please do not be too hard on yourself. You can only do as much as you can do. This is not something only you are going through; many women face similar situations,” he said.
He believes that acknowledging the setback without guilt helps investors focus on solutions rather than dwelling on lost time. One of the most effective ways to compensate for a gap in retirement savings is to increase investments for a limited period.Roongta suggested that investors create a catch-up plan by allocating a larger portion of their income towards investments over the next six months, one year, or even two years.

“Now you need to invest a little more than what you were doing earlier. Set a target for a temporary period and be a little more aggressive with your savings,” he said. Having a clear goal can also encourage individuals to cut unnecessary expenses and channel more money towards wealth creation.

Use bonuses and extra income wisely

Another strategy is to redirect any additional income towards retirement savings. Once an individual returns to work, there may be opportunities to earn bonuses, incentives, salary hikes, or other one-time cash inflows. Instead of spending this surplus, Roongta recommends using it to fill the retirement gap.

“There could be bonuses, performance-linked incentives or other surplus cash flows. Make sure you redirect those funds towards bridging the gap in your retirement savings,” he said.

Review your portfolio

Apart from increasing contributions, investors should also assess whether their existing investments are working efficiently. Roongta suggested reviewing the portfolio to identify investments that may not be delivering adequate returns or are unlikely to contribute meaningfully towards long-term wealth creation.

For example, some low-return investments may provide stability but may not be suitable for investors trying to make up for lost time.

“Look at your existing portfolio and see whether there are ways to make it work a little harder for you. It may be time to review whether some investments can be repositioned to improve return potential,” he said.

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Don’t take excessive risk

While seeking higher returns may seem like an easy solution, Roongta cautioned against taking risks that do not align with one’s financial profile. He stressed that investors should never chase returns blindly or invest in products they do not understand simply because they offer the possibility of higher gains.

“Do not take risks just because you want higher returns. That can be a disaster. Any additional risk should fit within your risk profile,” he said. Instead, investors should take a calibrated approach and evaluate whether the potential return justifies the additional risk being taken.

Roongta also recommends periodically reviewing the strategy after implementing changes. After a few months of higher investments and portfolio adjustments, investors can assess whether the revised approach is helping them move closer to their retirement goals. If the strategy is not working as expected, they can make further adjustments or revert to their original plan.

“The key is to maintain discipline and keep increasing investments whenever possible,” he said.

A career break may delay retirement planning, but it does not have to permanently derail financial independence. Experts suggest focusing on higher savings, making the most of additional income, reviewing existing investments, and maintaining realistic expectations. Most importantly, investors should avoid comparing themselves with others and remain committed to long-term financial discipline.

For those returning to work after a break, a well-thought-out catch-up strategy can go a long way in rebuilding retirement savings and securing their financial future.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

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