Career Break Finances Calculator

What the total actually adds up

The headline figure combines two different kinds of number, and it pays to know which is which before quoting it at anyone. At the defaults, a six-month break with 3,000 a month of living costs and a 60,000 salary comes to 49,500: 18,000 of living costs, 30,000 of salary not earned, and 1,500 of employer retirement contributions not made.

Only the 18,000 leaves the bank account. The 30,000 is income that never arrives, which is a real loss but not a payment. That is why the Savings After Break row reads 12,000 rather than a deficit: 30,000 of savings less the 18,000 actually spent. The two rows answer different questions and both are useful, as long as nobody subtracts the headline total from their savings and panics.

There is a subtlety in the 18,000 as well. Rent, food and insurance carry on whether or not anyone is working, so the break does not create that spending. What it changes is where the money comes from, savings instead of salary. As a strict economic cost of the decision, the forgone income of 31,500 is the cleaner figure. As a planning number, the 18,000 is what has to be sitting in an account before the break starts. The 49,500 stacks the two, which suits a question about what the whole thing involves and overstates a like-for-like comparison against staying in work.

A worked example

Six months off, 3,000 a month of expenses, 30,000 in savings, a 60,000 salary and a 3,000 employer match. Living costs over the break come to 18,000. Forgone salary is 30,000, half a year of a 60,000 salary. The forgone match is 1,500 on the same proration. Total 49,500, savings afterwards 12,000, which is four more months of expenses at the same rate and nothing left over for anything unexpected.

Breaks get taken for all sorts of reasons, and unpaid care is among them: for children, for older relatives, for a partner after an illness. The ILO counts that unpaid care work as part of the care economy alongside paid care jobs, which is a reminder that the salary line in this calculator is only the part of the cost that shows up in money.

What the calculator leaves out

The line the calculator is quietest about is health cover. Where cover is tied to a job, a break usually means paying a full premium instead of an employee share, and the difference can dwarf every other adjustment on this page. Where cover comes from a national system, the same break costs nothing on this line. Put whichever applies into the monthly expenses figure, because the calculator has no separate field for it.

Retirement growth on money not contributed is also outside the model, as are the costs of going back: clothes, commuting, sometimes a move. Tax cuts the other way, since a year with fewer months of income often ends up taxed more lightly than a full one, and in some systems that produces a refund.

Re-entry is the other gap. The calculator prices the months away and stops at the day the break ends, not the day the next salary lands, and those are rarely the same date. What happens after the return can matter more than the gap itself. An event study of Danish administrative records covering 1980 to 2013 finds that the arrival of children creates a gender gap in earnings of around 20% in the long run, split in roughly equal parts between participation, hours worked and wage rates. That is one particular kind of interruption rather than career breaks in general, but it shows how long the effects of one can run.

What commonly gets missed

• Not counting living costs at all, even though they are the only line in the total that actually leaves an account
• Forgetting the employer side beyond salary: retirement contributions, insurance, share vesting
• Treating the end of the break as the start of the next pay cheque
• Funding the gap on credit rather than from savings set aside for it
• Leaving out the possibility that the salary on return is lower than the one given up

For educational illustration only

This calculator prices the months away using the figures entered and nothing else. It assumes expenses hold steady, the salary given up is the salary that would have been paid, and nothing changes on either side of the break. The output is an estimate for planning a conversation, not a plan.