Archive for January 18, 2012

Step 4: Consider the Impact to Future Earnings

In my quest to stay home with my son I’ve discussed eliminating unnecessary expenses, adding up expenses and the cost of insurance. The next point of focus is the effect of my choice on future earnings and retirement.

If I step out of the workforce for a couple of years my future salary will likely suffer. If I left my job and returned to the exact same position a few years later my salary wouldn’t benefit from any raises or cost of living increases during the years that I don’t work.

I could argue that I didn’t receive a raise last year and that I wouldn’t have received one this year either, but I think it’s safe to assume most people do get a raise or cost of living adjustment each year and from what I’ve read most advisers suggest factoring in a 2 to 4% loss each year you remain out of the workforce.

Of course, we all know that I will not be returning to the exact same position, so the question becomes what would I earn after I return in a new job at a different company. There’s really no way to know the exact figure, but it is fair to say that I probably won’t make as much as I do now. I currently work in technology and unless I stay up to date in the latest and greatest software my salary is likely to plummet the longer I stay out of work.

The honest truth is that I don’t particularly love writing software. I liked the puzzle solving aspects and of course the big salary, but I think I’m too much of a people person to spend my entire day facing a computer. So the bigger question of leaving the working world is whether or not I would return to a software development job at all.

I don’t love software enough to learn about it and stay up to date on the latest and greatest technologies while I’m at home with my son. If I stay home I will probably take the opportunity to transition into an entirely different role when I return to the working world.

I could apply for positions as an analyst or project manager, (I have a bunch of certifications). While I wouldn’t be particularly in love with these jobs they do have salary ranges similar to my previous position and they involve a lot more human interaction. They also require less overtime and late hours.

I have a feeling that unless I find a job I absolutely adore my family time will remain my number one priority. In fact, I would be willing to take a lesser paying job in the future if it was closer to home and/or provided greater flexibility and decent benefits.

As you can see the question for me is larger than just leaving the workforce, A teacher may stay home and return to teaching a few years later, but if I leave I have a feeling I’m looking at a whole new career.

The question is how does that career impact my future goals and lifestyle? I’m not certain that’s something I can answer.

January 18, 2012 at 12:45 AM 4 comments


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