How to mind the gap year - at whatever age

As the economic slump continues to claim victims, many are being forced to take a career break, says Samantha Downes.

The departing Bank of England Governor, Sir Mervyn King, is just one of many older, high-profile public figures to take a gap year. But you don't have to wait till you are in your 60s (or even need 12 months to spare) to take some time out,

Sir Mervyn, who is about to leave his role as head of the central bank at the age of 65, is planning to take "six months or so as a break" with the rest of the year fulfilling an ambition of learning to dance as well as spending more time with his wife. "It will be a holiday," he told the host of Desert Island Discs, Kirsty Young, when speaking about his future plans this month.

Other well known "gappers" include Peter Voser, head of Royal Dutch Shell, and Paul Walsh of drinks-maker Diageo. Both were in their 50s when they took their career breaks.

Taking a gap mid-career is not the preserve of multi-millionaires; in fact the recession appears to have fuelled an increase in the number of those wanting to take time out.

Essential Travel, an online travel insurance and airport parking provider, said a survey it carried out appeared to show half of those embarking on a career break were doing so due to unhappiness in their job or redundancy.

And while in 2012 only 8 per cent of career gappers were over 36, in 2013 over half of gappers were in their mid-30s or older.

Essential Travel increased the age range of its backpacker insurance to 55, and has reduced premiums for older gappers by 15 per cent.

As well as being older, those taking a gap are less likely to take a whole year. According to life and pension provider LV=, travellers are abandoning the traditional gap year for what it dubbed a five-week "snap" year. LV= estimated that 2.75 million Brits were planning a snap year over the next 12 months to go overseas to volunteer, backpack or take a career break.

One in 10 of the gappers said they were planning to work during their break, while over a quarter were typical gappers, by choosing to visit cheaper destinations where the pound buys more, such as Thailand and India.

A third will be what LV= called "sofa surfing" with friends and family for part of their trip and one in 10 were abandoning flying for train and coach travel in order to save money.

Taking a gap in your 30s

Redundancy and general job dissatisfaction are fuelling the number of thirtysomethings taking a career break.

Beth Macer of comparison site Payingtoomuch.com said: "It's a good decade to take a break because you can benefit from lower insurance premiums than those paid by older gappers."

Ms Macer said a backpack-specific policy would cover travel to different countries within one trip.

"Most standard travel insurance policies don't cover any type of voluntary work or manual labour, whereas with the specialist backpacker or gap year cover, most policies include this. It's really important to make sure you read the small print on the policies through to ensure you will be covered for any work or activities you plan to undertake, as some policies may have exclusions around the type of manual labour you can do. For example, some will only cover bar work and fruit picking.

"Also, if you are travelling on a specific trip with an agency to do volunteer work, they may have some form of insurance in place which will cover you instead of your travel insurance for this particular claim."

Taking a gap in your 40s

By your fourth decade chances are you will have ongoing financial commitments which may make planning your trip more challenging.

Danny Cox, a financial adviser with Hargreaves Lansdown, said it is important to consider how a gap year might affect your longer-term planning such as the date you might pay off your mortgage or perhaps retire.

He said: "You need to allow for the contingency of not being able to get work after your gap year."

Gappers who have the means should consider putting a lump sum of £3,600 into their pension. "This would avoid you losing a year's worth of pension savings, if that suits your budget."

If you have a mortgage your lender will expect payments to be made during the gap year and provision should be taken for this.

Mr Cox said to ease cashflow you could switch from a repayment mortgage to an interest-only mortgage for 12 months.

"This could reduce the repayments on a typical £120,000, 25-year mortgage from £640 per month to £400 per month (assuming 4 per cent interest)."

Taking a gap in your 50s

This is when you can expect to pay more for your insurance.

Ms Macer said: "Worldwide insurance in your 30s and 40s can cost around £60-£80, in your 50s and older up to £135. The price doesn't differ for 30-40 year olds – it's when you get over 49 that the price difference comes in."

These costs obviously reflect the likelihood of ill health, said John O'Roarke, managing director of LV= travel insurance.

"On average, one in 10 travellers needs medical treatment after falling ill while on a long break, while almost a third experience other problems such as falling victim to scams, being mugged or robbed.

"These problems cost holidaymakers an average of £443 to address, although almost a third of travellers affected do not have adequate travel insurance in place."

Mr Cox said online banking was a must for gappers in their 50s and older. It made managing money easy while abroad. He said: "It's important to keep a healthy, accessible cash balance during your gap year, taking into account how you might get hold of cash if you were to go abroad.

"Online banking and using credit cards where the balance is automatically cleared every month helps here."

Money matters: Finance checks

Budget

Using a pre-paid card can help, but you are best off making sure you have a small amount of cash on you and using a credit card for other purchases. Purchases over £100 on a credit card are protected by law.

Bank online

You can keep an eye on things back home if you can manage your money using the internet. Debbie Suenson-Taylor found managing rental income easier and once a month would check in to make sure tenants – who were helping to fund the trip – were paying on time.

Insurance

You might want to review your other insurance policies while you are away and make sure your home contents and other policies such as life insurance are up to date.

Case studies: Savings and insurance are top priority

Debbie Suenson-Taylor, 52, went on a gap year with her husband, James. Inspired by the experience, she set up her own travel business, travelproducer.co.uk

"We travelled the world for 14 months and then lived in Spain for over a year before returning to the UK.

"We have five children at an age of getting married and leaving home. We had become empty nesters and decided to leave our jobs. We funded our trip through savings and covered our mortgage by letting out the house."

Her advice for other gappers is to think how you will fund your outgoings back at home before you leave. "It frees the mind, allows for spontaneity in your travels and gives you a basis on which to return. Being able to let out our house covered the big bill. We planned ahead by saving."

Marianne Bentouti, 46, from Brighton, travelled around Latin America with her four-year-old son after being made redundant.

"I had planned on retraining as a teacher, but because I lost my job in the December I missed the first round of applications.

"I used my redundancy payout to get our mortgage payments down and my savings to travel to Brazil and the Galapagos Islands. It was before my son started school, so it was an ideal time to take a gap. We were away for four months.

"My advice to people taking a gap year is to make sure they take out insurance. Our camera got stolen along with some cash. Luckily we got the money back." Her camera was worth £500 but cost £800 to replace in Peru. She got £250 back from the insurer.

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

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