What does a career break cost?
What a career break or sabbatical costs: the money it takes, the saving it stops, and how much later you reach your number.
Example figures: a reader aged 38 with a break of 6 months. Change the boxes below to work out yours.
What a break of 6 months costs
0.7freedom years
What it takes from your money ($30,000) plus the saving it stops ($12,000), over the $60,000 a year of the life you chose.
Covered. At its lowest point you would still hold $188,490, at or above the buffer you asked to keep ($15,000).
Without a break you reach your number of $1,500,000 at age 60 and 4 months. With it, age 61 and 6 months: 1 year 2 months later.
Where the delay comes from
On the day you would have reached your number without the break (age 60 and 4 months), your money is lower by:
- Spending during the break
- $30,000
- Saving the break stops
- $12,000
- Growth that money would have had
- $75,729
- Lower by
- $117,729
Left out on purpose: Social Security and pensions (the FIRE calculator adds them), tax, and any interest on a break paid for with debt. In the US, health cover during a break is a cost of its own: see health insurance before Medicare.
Keeps these settings as the start of your own plan, saved in this browser only. You see your figures, and anything it would change in a plan you already have, before they are added. What you have goes in as investments; split it under Your money. The break goes on your timeline as a cost, and the part of it your money covers is set aside for it, so the timeline says what this page says.
The link carries your figures after the #, so you can save or share it. Your figures are not sent to us.
How it is worked out
Month by month, in today's money. Each month your money takes that month's saving and then grows at the return above inflation you set. During the break the saving stops and your spending in it comes out of what you have, less any pay you keep. Your number is the yearly cost of the life you chose divided by the withdrawal rate (4% is the usual starting point, from US market history over 30-year retirements), and you reach it in the first month your money is at or above it.
In the example above, you reach your number at age 60 and 4 months without the break and at age 61 and 6 months with it. The rows under “Where the delay comes from” add up to exactly the difference between the two paths on the day you would have got there. A break repeated every few years is the same sum run once for each.
Questions people ask
- What does a career break cost?
- Three things, then a date. The money you spend during it, the saving it stops, and the growth that money would have had by the time you reach your number. In the example above, a break of 6 months on a $60,000-a-year life takes $30,000 from what you have and stops $12,000 of saving: 0.7 freedom years. You reach your number 1 year 2 months later.
- What is the price in freedom years?
- The break's cost divided by the yearly cost of the life you chose. A freedom year is one year of that life, so a price of 0.7 means the break costs about as much as 0.7 years of the life you chose. It lets you set a break against a car, a move or a wedding in one unit, without saying an amount. It sits beside "covered" or "short by", never instead of it.
- What does covered mean?
- At its lowest point during the break, the money you have is at or above the buffer you chose to keep. It is a check, not a verdict: whether to take the break is your decision. Short by is how far under that buffer the lowest point falls.
- What if the break needs debt?
- The page shows how far short it falls and gives no date. A break paid for by borrowing costs more than the interest-free figures here, and the page does not guess an interest rate. A later start, a shorter break or lower spending in it would bring it back inside what you have.
- Which money counts as what I have?
- Money you could spend during the break. Retirement accounts count toward your number on /freedom-years, but before 59½ you usually cannot take money out without a tax on top, so leave locked accounts out here unless you plan to use a route that opens them.
- What pay do I come back to?
- The page starts with the same saving after the break as before it, and claims nothing about pay on return. If you expect a cut or a rise, change the monthly saving after the break and the date moves with it.
- What about health insurance during a break?
- In the US it is a cost of its own, often a large one, and the page has no figure for it: put what you expect to pay into your spending during the break. The health insurance page covers the routes and the subsidy that depends on your income.
Sources: the 4% rate, W. P. Bengen, “Determining Withdrawal Rates Using Historical Data”, Journal of Financial Planning (1994); access to retirement accounts before 59½, Internal Revenue Code §72(t). The return above inflation, the buffer and the saving after the break are assumptions you can change, not forecasts.