Career Shifts & Pauses: How They Shape UK Millennial Finances

Heidi Xiao
Sep 30
3 min read

Millennials are the “career change generation.” The average UK worker changes jobs every five years [Standout CV], and 28% of under-35s have already had more than five jobs [Glu Recruit]. Add in pauses for retraining, family, or travel, and even starting side hustles or companies, and it’s clear that non-linear careers are the norm.

The good news? With planning, these choices don’t have to weaken your finances. Here’s how different types of shifts impact your money.

1. Job Switching for Growth

Switching jobs is one of the simplest ways to boost income. UK data shows job switchers typically earn 5.2% more on average than those who stay put [Standout CV].

On a £40,000 salary, that’s an extra £2,000 per year.
Over five years, it adds up to £10,000 in additional earnings.
In fast-growing sectors like tech and finance, the premium can be even higher.

Tip: Switching roles every few years can be one of the fastest ways to accelerate your earnings — just make sure the moves also build long-term skills.

2. Taking a Career Break

Stepping away, whether for a sabbatical, travel, or burnout recovery, has clear costs.

A one-year break on a £40,000 salary could mean losing around £30,000 net income plus £3,200 in pension contributions.
If left uninvested, that pension gap could grow into £10,000+ over 30 years.
An emergency fund of 3–6 months’ expenses (roughly £12,000 for an average household) makes a big difference before pausing.

Tip: Budget for the “hidden costs”, like pension gaps, not just living expenses.

3. Retraining as an Investment

Nearly half of UK employees (49%) say they want a career change but don’t know which path to take [Personnel Today]. Retraining can unlock that next step.

A coding bootcamp costs £6,000–£8,000.
If it boosts salary from £35,000 to £45,000, that’s an extra £10,000 per year, paying back the cost in under 12 months.
ROI is even higher if the new career has stronger long-term salary growth.

Tip: Think of retraining as an investment. Model the payback period before committing.

4. Family Pauses and Pensions

Pauses for parenting or caregiving have lasting financial consequences.

A two-year break can leave a £6,000–£10,000 pension gap, depending on salary and employer match.
Career breaks for childcare contribute to around £39,000 less in pension savings for women [Railways Pensions].
The gender pension gap remains stark: women retire with 35% less private pension income than men [Royal London], around £7,600 less per year [TUC].

Tip: If possible, top up pensions or ISAs after returning to work to smooth out long-term gaps.

5. Freelancing and Entrepreneurship

Not all career shifts mean moving between employers. Many millennials are building income streams of their own:

Freelancing: Tutoring (£20–50/hr) or design work via platforms like Fiverr or Upwork can generate £500/month side income, even after 10–20% goes to expenses and taxes.
Starting a company: A small consultancy or limited company generating £50,000 profit per year can, over time, build substantial equity and wealth if reinvested wisely.
Tax considerations: Freelancers and directors can optimise take-home pay via Dividend Allowance, ISAs, and Self-Invested Personal Pensions (SIPPs).

Tip: Build a buffer fund and get clear on tax planning before going solo - the freedom can be financially powerful, but also unpredictable.

6. Planning Tools for Any Shift

Whatever path you’re considering, a few rules always apply:

Emergency fund: 3–6 months of expenses in cash savings.
Scenario planning: Run “what if” cases — e.g. six months longer without income, retraining payback over 2 years.
Pension awareness: Pauses compound over decades, so topping up matters.
Tax efficiency: Use ISAs, salary sacrifice, and allowable expenses to soften the impact of income gaps.

Bottom Line

Career shifts are no longer the exception, they’re the norm. Each pause or pivot has a cost today, but often a benefit tomorrow. By quantifying the impact in advance, you can take control of your career decisions and turn change into a wealth-building strategy.

At Moola, we’ll help you model out the numbers so you can step into your next chapter with confidence.