In the third installment of the eminent retirement posts, I want to address my thoughts around taking a leave of absence/sabbatical instead of retiring early. I have seriously considered requesting a one year absence as recently as a few weeks ago. My through process may be helpful to others faced with this same decision.
Why I considered a Leave of Absence:
Avoiding the uncomfortable explanation others: Having a job to come back to with a defined date is a heck of a lot easier to explain than early retirement or consultant. I would not have to worry about my in-laws being concerned we’re going to starve due to lack of money.
Health Insurance: A leave of absence would keep me in the pool of nice corporate health insurance for at least another year. I am familiar with this insurance and know the good and bad with what I have to do. It avoids additional change.
Deferred Compensation / Financial: Taking a leave of absence (if approved) would allow me to collect on a high five figure payout in early 2020 from restricted stock granted in 2016. More money is always better than less money. Another year paying into Social Security is helpful
Safety net if I decide Early Retirement isn’t for me: I can easily re-enter the industry, but it is unlikely I could reenter at the same level I’m at today. There’s also the question of would my employer have me back? Leaving mid-career will ultimately hurt some feelings.
Why didn’t I ultimately request a Leave of Absence:
They’re not easy to obtain: The company’s policy is vague and inconsistent when it comes to leave of absences. You can get twelve weeks of leave under the Family Medical Leave Act, but other forms of leave are oddly defined. They specifically stated in 2019’s handbook that a business unit manager can now approve a Personal Leave of Absence, but I couldn’t find where someone had accomplished this. I likely could have done the FMLA route, but then would have needed to extend it as unpaid. I specifically requested a personal leave two years ago and was declined.
Tipping off Leadership: If I asked for a Leave of Absence, it would have tipped off leadership to a lack of commitment to my job and/or potential departure. That could have resulted in negative consequence to portion of my compensation that is a discretionary bonus. Was it worth taking the chance of pushing for leave to not get it AND to then get a lower bonus? My cost/benefit analysis ultimately said no.
Opportunity Cost: My employer has specific restrictions on outside employment since we provide loans to entrepreneurs. They don’t want the appearance of a conflict of interest by allowing employees to start their own businesses on the side without prior approval. I would be trading this restriction over the next twelve months in exchange for five figures. If I were to apply the 4% rule, netting $80,000 after taxes is really only worth $3,200/year for me. There will likely be some hobby entrepreneurship opportunities to consider after I leave and $3,200 is not a difficult number to replace.
Geographic Arbitrage: We intend on moving after I quit my job. Part of the motivation of early retirement is life is too short to not live somewhere you enjoy. We live in a great place for a career, but a lousy place to enjoy outdoor activities. The beach is a day’s drive away, the mountains are a day’s drive, its excruciatingly hot in the summer and I’m writing this while its 24 with a strong wind in March. If I obtained a leave of absence, it would be a bit awkward dealing with the questions of selling my house/moving.
What was the biggest reason of all not to request a leave of absence?
Pride. There is a sense of pride for what we’ve accomplished. Requesting a leave of absence would be *yet another thing* I go to my employer for. I might have needed to lean on the some medical challenges in the past few years and garner sympathy to make this happen. You know what? Financial Independence is about being independent. Well, we’re finally independent. I want to go to the top of a mountain and scream it, but instead I will calmly give my notice and walk way.
I’ve run every possible scenario and we just don’t *need* the money. I want to leave and deliver the message that I’m Retiring from Corporate America. I’m sure it’ll come with mixed reactions from my co-workers, but that’s okay. I know it’ll come with a combination of disappointment and celebration from my clients, since almost all of them are former corporate employees who decided to carve a path of entrepreneurship. Controlling this message is what I want to put out to the world.