How Much Does 1 Year Off Work Cost?


“Dude, how much did it cost you to take a year off work?”


Hanging in New Zealand!

This is the question I asked my cousin many years ago. My cousin is now 35, lives in New Zealand, and has taken 2 separate 12 month career breaks to travel the world, spend time with family, and just enjoy life.

He’s also a personal finance whiz, so it was a little strange when I heard his vague answer to my question. His reply was…

“Well I first thought a 1 year career break would potentially cost about $100k, but somehow it only ended up costing me around $25k, and my second sabbatical didn’t really cost me anything at all.”

Hmmm, interesting. I was expecting a much more specific dollar figure. If he could just tell me exactly how much money was needed, I could save up that amount and take a gap year myself! I asked him to clarify, and he quickly ended the conversation with this…

“Listen, Joel. If you’re trying to put an exact dollar value on a career break, you’ve already missed the entire point of the whole thing.”


Fast forward to 2019:

As of this writing, it’s been 14 months since I’ve been employed. My wife and I quit our jobs early last year with the goal of taking a 1-2 year break from work. (Neither my wife’s or my employer would allow “unpaid leave”) Technically, we are not “Financially Independent” yet, nor are we “Retired Early”. My wife and I have been living off our savings this past year.

The tables have turned. Now people are coming to me and asking how much my “gap year” has cost. Since I track all my finances religiously, I should be able to give a clear and crisp answer this question, right?

Unfortunately, my response to people is much like my cousins was to me… Vague and probably not helpful. It’s a tough question to answer because there are so many variables, and everyone’s position in life is different.

Let’s explore how most people can try to estimate what 1 year off work will cost…


#1) Annual Salary or Earning Potential Cost:

Glacier National Park!Since most people are heavily reliant on a steady paycheck, they immediately think the cost of taking 1 year off work will be equal to 1 year of their salary. So for someone earning $60k/year as an employee at their regular 9-5 job, taking a year away from work would “cost” them $60k.

There are a couple problems with calculating this way:

  • First, annual salaries are potential income, not guaranteed income. And if you think about it, most people’s true potential income is probably a lot higher than their current annual salary. For example, when my wife was a substitute teacher she made about $20k per year. But she holds an advanced degree in soil science and could easily be making $80k per year (or more) as an Agricultural Engineer or lab worker. So is her true “cost of not working” $20k, or is it actually $80k+?
  • Second, there may be future costs associated with rejoining the workforce at a lower salary after a year away, especially if you are considering making a career change. When I left my tech sales job, a recruiter told me to expect a ~$30k pay reduction per year to be hired back into the same position I already had. This is simply due to the 1 year gap in my resume. Should this potential “cost” be included in my calculations?


#2) Spending Cost of 1 Year:

Another way to estimate the cost of a gap year is to calculate how much spending you will do within that specific year. If someone spends $45k within the 1 year they are unemployed, technically their cost of living for that year is = to $45k.

But, it’s very difficult to estimate how much you’ll spend during a year off because:

  • First, there’s a massive lifestyle difference between working and not working. Traveling, pursuing hobbies, general amusement, or even volunteer work can add a lot of cost that is hard to anticipate. Health insurance also can be a HUGE expense depending on your age and location.
  • A career gap may be much cheaper than you initially think. Not working gives you a lot of time to be frugal and less wasteful with money. My wife and I spent about $20k less than I thought we would over the last year due to cooking at home, cheap travel, credit card hacking and smarter shopping.
  • Most people find creative ways of making money or working a small amount during gap years. Buying/selling stuff, taking part time gigs or continuing side hustles are common.


#3) Difference in Net Worth Over 1 Year:

1 year off workA recent awesome realization for me… I just calculated the difference in my net worth between the time I quit my job, and today. As it turns out, over the past 14 months, my total net worth has actually increased. It’s higher by exactly $11,951 than a year ago. It’s like a paid vacation!

Since we haven’t hit our FI number yet… You might be wondering how I have a higher net worth now than 12 months ago. Several factors contributed to this:

  • I partnered on a house flip project that made us ~$11k
  • I sold 2 underperforming rental properties and moved that equity into 2 wicked performing syndications
  • Our fourplex rentals stabilized mostly late last year.
  • My wife and I bought and sold some stuff around our house and from estate sales for small profits
  • Our stock market and retirement funds increased better than average through that time period
  • We received an unexpected small bonus check, and an unexpected tax refund check
  • My wife took ~15 days of temp work teaching students at her old school throughout the last year
  • We made a few bucks charging those annoying electric scooters in our neighborhood

While it might be true to say that this past year off cost my wife and I (-$12k), it’s definitely not something I can say every sabbatical year. In some ways we got lucky.

Market fluctuations and unpredictable events throughout the year make it almost impossible to predict your exact net worth in future years.


The True Cost? Or Should I Say the “Value”…

Ok, so if we can’t use any of the above methods to answer the question, how else can we determine how much a year away from work costs?

What if we switched the word “cost” with “value”? After all, that’s what we’re really trying to determine… the value of a year off work.

The reason I don’t like the word cost is because it’s associated with something being taken away from your life. Synonyms for the word cost are: price, fee, tariff, fare, toll, levy, charge, penalty, sacrifice. They all sound negative.

On the other hand, the word value is associated with something being added to your life. Synonyms for the word value are: merit, worth, usefulness, advantage, desirability, benefit, gain, profit, good, service, help. These all sound positive!

After 14 months away from work, I rarely think of what this past year of leave has cost me. It’s all about what value it’s brought to my life. Just like my wise cousin said, if we’re trying to put an exact dollar figure on taking 1 year off work, perhaps we’ve missed the whole damn point.


There Is No Right Answer:

From now on when someone asks me how much a year off work costs, I’ll tell them this:

“1 year of time away from work, cost me exactly 1 year of living my life.”


What about you? Have you taken long periods of unpaid leave? How much did it “cost” you? Does your employer offer to keep your job position open? What about extended or unpaid parental leave?

1 year off work


21 thoughts on “How Much Does 1 Year Off Work Cost?

  • As someone considering a year long sabbatical when I have my second child, this was really eye-opening to read. I might have to reassess some numbers. It might not be in the cards for us.

    Another thing for people to think about is if they can get back into a daycare situation if they are only taking one year off. High quality day care is extremely scarce in several areas of the country. I would hate for someone to leave thinking they can get back in and not have a direct conversation with their provider.

    • Great point about the daycare situation. Here in LA it’s common to be on a wait-list for many years before getting kids into good daycare programs.

      Rent could potentially be the same problem. If you ended your lease to travel for a year, you may come back and find it difficult or more expensive to get back into the same neighborhood.

      Good luck with your sabbatical!

    • As one who works in ECE, I really don’t think you’d have a problem here. Providers tend to place a lot of value on their enrolled families. If you left for a year, I would imagine that your provider would have no problem placing you at the top of their wait list (BTW, these are never hierarchal, it’s more like a pool. If you are a returning family, you are almost always bumped to the top!)

      The other hack, is to plan ahead, get on wait lists of other high quality programs. Once an acceptance offer is made, ask for a year deferment, keeping you at the top of the wait list for the following year.

      Obviously these aren’t 100% guarantees, but I do believe the odds are well in your favor if you want to take a year off and get back into a program.

      • Great insight and tips, Brad. It’s good to hear there’s no hierarchy and can be based on prior relationships.

  • Awesome post! I don’t know if I’ll ever hit FI, but lately we’ve been thinking of taking a year off to travel once we hit a certain amount in savings. What did y’all do for health insurance?

    • Funny you mention you may never hit FI. We too are becoming less and less concerned with the “FI” finish line, and more focussed on how we want to spend our time in life.

      Regarding healthcare, (As I’m writing this, I’m knocking on wood) we are currently not insured. Haven’t been for the past year and nothing too bad has happened. You could say that we are self-insured because our savings cushion has room for out of pocket med bills if needed. If we had kids, or were a little older, it’d be a different story.

  • Regarding the insurance- at least in the US- medicaid is based on income, not net worth. So for a lot of people that take a year off, it would be possible to get free health insurance.

    Plus if you’re not working, you don’t have to pay taxes – that’s a nice savings!

    Sometimes I feel like I’ll never hit FI. I love the idea of it, but making money is not as exciting to me as the other hobbies I get into. But I’m working more seriously on trying to turn the things I really love doing into a source of income.

    • The tax savings is definitely real. Ideally, if you take off from July to July, you can have some good tax savings across 2 partialwork years vs. taking off Jan to Dec and having no income for 1 financial year. POF wrote a post about this too.

    • I don’t want to be a downer, because I am sure your comment is in good faith, but US Health insurance is much more complicated than you’re making it sound for the unemployed.

      Medicaid has complex rules for eligibility and does consider assets in that calculation. Here’s a decent explanation:

      Please check before you take advice about medical coverage from blog comments.

      • I hope everybody knows to research their own situation rather than taking advice from blog comments.

        The article you linked to actually lines up with what I said.

        It does mention that “Your assets come into play when it comes to Long-Term Services and Supports (LTSS), the part of Medicaid that pays for long-term care in a nursing home.” Everything else is based on Modified Adjusted Gross Income. (MAGI Medicare.)

        I think for most people looking for health insurance coverage for a year off work long-term nursing care is not the concern.

  • Interesting read! I see money as a tool to help me live a life aligned to my Values. I left a terrific job, where I was making more money than ever before, to use my time towards my social enterprise, Her Future Moves.

    Yeah, it’s cost me $$ – but I’ve gained MORE LIFE than I could have imagined!

    That was a year ago – and now I’m thinking of returning to the workforce. However, I’m less concerned with the type of job I’ll be doing and more interested in the Mission and Values of the organisation.

    Living a great life comes down to LIVING a GREAT life. This looks different to everyone!

  • Sounds like a good answer to me… Looking forward to doing our own math here shortly to see how it compares.

  • There are definitely a ton of factors in this, but like you said – I think most people would end up needing less than they think. There’s always those side gigs you never anticipated with the extra time. I took 6 months off last year and didn’t burn nearly through as much as I thought I would – but that’s also the magic of having money invested!

  • Hi Joel,

    I find that it actually cost less on annual basis. This is applicable when I left the full-time employment since May 2019.


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