Any downside to unpaid leave of absence?

[ctmm]

I submitted my resignation, mentioning some contributing personal reasons but not FIRE. My manager talked to his boss and HR and came back and asked if I would be interested in an unpaid leave of absence.

I feel confident that I am ready for FIRE --we've run the numbers and psychologically feel ready -- but now with this unexpected potential option, I'm thinking it may be a good safety net just in case.

I don't have all the details yet--I think it would be 3-6 months. It would be unpaid and not include benefits. If/when I return, it is likely I wouldn't have the same role -- but that is a positive for me because I really don't like my current role. I'm in Texas if it makes a difference.

Has anyone done this -- either taken the unpaid leave of absence and returned or taken the unpaid leave of absence and decided not to return.

Are there any downsides or is this just upsides for a safety net?

 

[rodi]

I took a 6 week unpaid leave of absence when I first got married (late to marriage - so I was 39 at the time of the LOA). I was able to pre-pay my benefits and keep the benefits... keep the pension/401k vesting in place (but suspended for contributions or match)... For me - it was a much needed break and the start of a marriage with travel emphasized. We drove on an extended cross country trip and back. We went to Europe. We started nesting. (I found out I was pregnant when the stick showed a "plus" in a campground bathroom in Yosemite.)

If you're unsure about retirement - take the LOA option and go for it.

 

[RobbieB]

Sounds like they like you which is a good thing and since you don't care, I don't think there is a downside.

Worst is they fire you and so what? Or you go back and fire them -

 

[Katiek]

It seems like a nice safety net, even if you think you don't need it.

 

[bearkeley]

It's a great safety net, and if you are eligible for 401k matching or bonuses, you might also be eligible. Hubby took a 5 month paid leave and I just dropped to on call status for 5 months. Really nice to know I had a job in case FIRE didn't work out.

Down side for me was not benefiting from the true feeling of being retired. My company threw me a retirement party and all, but without the administrative culture, I never really felt retired....just very lucky to have an extended unpaid vacation and a job to come back to if needed....not a bad deal!


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[ivinsfan]

It sounds as if they don't want to lose you. If you really don't care one way or the other I'd see if they will throw in a few benefits.....never hurts to ask, especially when you are the one in demand. Will this be called FMLA leave?

 

[Aerides]

In your case, since you have fully planned to RE now anyway, then there's technically zero downside:

Option A - Retire, done, happily ever after
Option B - Retire, rethink, then go back for a while since the door is open

Since you no longer need the job - no downside. Perhaps if you find yourself thinking Option B down the road, you can negotiate for part time, and some work-from-home stuff as well?

But better yet, you retire, and a month from now have zero thoughts of ever going back.

 

[photoguy]

At my last two jobs, I resigned but my bosses wanted me to take a leave of absence instead. From their perspective they were losing a valued employee and while I made it clear that I wouldn't be returning, they figured there was always some (small) chance that I would change my mind.

In a big organization it doesn't cost them (your direct manager) anything to put you on LOA.

At the first company I quit I wasn't quite ready for FIRE. So I used the time on LOA to relax, recuperate and then near the end hunt for a new job. So technically I had no unemployment gap while I had 6 months break. While on LOA I did not receive any benefits but I just switched to my wife's health plan.

At the second company, I was FIREing for good. The company paid for my health benefits while I was on LOA. This was only a small financial benefit but I figured why not.

At both places I ended up with a few extra dollars in my 401k once my employment officially terminated. I suppose this was a true-up deposit but I'm not sure exactly why I received it as I was not eligible for matching/vesting/etc during LOA. It was only a few thousand dollars so I didn't bother to look into it further.

Main downside of LOA is psychological -- i.e. if you're prone to indecision, worrying, or rethinking you may decide to go back when you would have been better off with a clean separation.

 

[BeachOrCity]

I am starting a LOA myself but for a full year with benefits.
As the others have stated this is a litttle downside lots of upside situation for you. Why not take it and make your 'final' decision later?

 

[eyeonFI]

I took a year unpaid leave and then retired officially 2 weeks ago. It was a nice way to do a sort of ER test run. No downside for me, except the paperwork got screwed up somehow when I did cobra during my LOA, and it is causing some slight headache in getting the paperwork straight for my retirement. But not a big deal, an extra form and a phone call and they say it should be fixed (still waiting on confirmation though...)


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