want to take a sabbatical

[FinanceGeek]

I'm thinking really hard about taking a career break / sabbatical. Here's my situation:

• mid 40s
• BSEE degree and 25 yrs work experience doing electronic system design and low level software
• Self educated in finance/portfolio mgmt
• Married with 1 grade school age son, wife a SAHM
• Our portfolio is growing, in addition to which we own our house free and clear. We have no debt. Not counting our home, asset allocation is roughly 50/45/5 equity/fixed/cash, with equity 50/50 US/intl and fixed income 50/50 short term nominal/TIPs. Style wise it’s tilted slightly towards small value. Its all indexed. Average living expenses for the last several years are running 2.5% to 3.0% of portfolio. We have significant capital loss tax carry forwards from harvesting which was done in 2008-2009 which can be applied to offset future capital gains.
• No defined benefit pension plan

What's my idea?

A 2 to 2 ½ year career break, broken down perhaps as:

• 3 months of "downtime", e.g. R&R
• 3-6 months of "life experiences", e.g. I’ve got several eclectic thoughts in this area – anything from learning to ballroom dance to spending time helping on an archaeological dig to learning Chinese to building the Taj Mahal of tree houses with my son to learning to hang and tape drywall “so it looks good”.
• 12 to 18 months of full time masters program in computer science

At the end of my sabbatical I'd like to feel like I’ve refreshed my education and training to be more in line with the mainstream of software engineering, especially the newer skill sets such as .NET, C#, Java, Ruby, Python, web development, etc. that didn't exist back in the 1980s when I went to college. I feel a full time traditional on-campus educational program culminating in a MSCS is the best way to do this - as opposed to a distance learning program or self study. Plus a full time on-campus masters degree would likely open up networking opportunities through corporate partnered research I could do as part of a thesis, etc.

When to do this?

I'm mostly concerned about health insurance access, as my family has pre-existing conditions. I have 3 ideas:

• Summer 2012 – assuming the ACA holds together, I could resign any time after July 1 and get coverage through COBRA for 18 months until the pre-existing condition underwriting system goes away in January of 2014.
• Early 2013 – finish out this year under the current (lower than 2013) tax brackets. I could arrange to max out my 401k contribution early next year, have a small amount of earned income to fund a Roth contribution, have access to my megacorp’s HSA reimbursement account for another year.
• Early 2014 - health care exchanges should be in effect, coverage available without underwriting at less than COBRA rates

I’d like to ask the group for advice on anything I have missed in my thinking or on any optimizations to my idea. For example, I’m already thinking of doing Roth conversions during my time off. I’ve also given thought to “what happens if the ACA is thrown out”. It’s a risk, to be sure, but COBRA would cover us for 18 months in any event, and there still exists the possibility of getting a HIPPAA conversion plan after COBRA, looking into state level safety net policies, student policies, going back to work before finishing the degree, etc.

[mh]

Quote:

Originally Posted by FinanceGeek I'm thinking really hard about taking a career break / sabbatical. Here's my situation: mid 40s BSEE degree and 25 yrs work experience doing electronic system design and low level software Self educated in finance/portfolio mgmt Married with 1 grade school age son, wife a SAHM Our portfolio is growing, in addition to which we own our house free and clear. We have no debt. Not counting our home, asset allocation is roughly 50/45/5 equity/fixed/cash, with equity 50/50 US/intl and fixed income 50/50 short term nominal/TIPs. Style wise it’s tilted slightly towards small value. Its all indexed. Average living expenses for the last several years are running 2.5% to 3.0% of portfolio. We have significant capital loss tax carry forwards from harvesting which was done in 2008-2009 which can be applied to offset future capital gains. No defined benefit pension plan What's my idea? A 2 to 2 ½ year career break, broken down perhaps as: 3 months of "downtime", e.g. R&R 3-6 months of "life experiences", e.g. I’ve got several eclectic thoughts in this area – anything from learning to ballroom dance to spending time helping on an archaeological dig to learning Chinese to building the Taj Mahal of tree houses with my son to learning to hang and tape drywall “so it looks good”. 12 to 18 months of full time masters program in computer science At the end of my sabbatical I'd like to feel like I’ve refreshed my education and training to be more in line with the mainstream of software engineering, especially the newer skill sets such as .NET, C#, Java, Ruby, Python, web development, etc. that didn't exist back in the 1980s when I went to college. I feel a full time traditional on-campus educational program culminating in a MSCS is the best way to do this - as opposed to a distance learning program or self study. Plus a full time on-campus masters degree would likely open up networking opportunities through corporate partnered research I could do as part of a thesis, etc. When to do this? I'm mostly concerned about health insurance access, as my family has pre-existing conditions. I have 3 ideas: Summer 2012 – assuming the ACA holds together, I could resign any time after July 1 and get coverage through COBRA for 18 months until the pre-existing condition underwriting system goes away in January of 2014. Early 2013 – finish out this year under the current (lower than 2013) tax brackets. I could arrange to max out my 401k contribution early next year, have a small amount of earned income to fund a Roth contribution, have access to my megacorp’s HSA reimbursement account for another year. Early 2014 - health care exchanges should be in effect, coverage available without underwriting at less than COBRA rates I’d like to ask the group for advice on anything I have missed in my thinking or on any optimizations to my idea. For example, I’m already thinking of doing Roth conversions during my time off. I’ve also given thought to “what happens if the ACA is thrown out”. It’s a risk, to be sure, but COBRA would cover us for 18 months in any event, and there still exists the possibility of getting a HIPPAA conversion plan after COBRA, looking into state level safety net policies, student policies, going back to work before finishing the degree, etc.

Just to weigh in on the curmudgeonly side, the biggest optimization is probably to just stay put.

I am assuming you are close to , or at ,the peak or your earning/saving power right at the moment. If you are fairly happy with your current position & just looking for something new , I would be hesitant to do a reset at the start of a (i'll guess) 4/5 yr stint that could put me over the top (FIRE wise).

I was in pretty much the same train of thought you are in 4 yrs ago (from a financial standpoint) (and 3 yrs ago and 2 yrs ago ) and decided to just slog it out till i FIREd last month.

I'm pretty confident i made the right decision (for me). I can stay FIRED, I can tool up on new technologies (already doing some Apple ios stuff). I can go back to school if i feel like it. All w/o worrying about finances being a issue looming on the horizon.

If you're pretty confident on your 2.5 / 3.0 number mixed mixed in with Health costs + Kid Education costs. then of course never mind

[sailor]

IMHO Master's Degree in your situation is just wasted time and money.
How sure are you, that MSCS would provide you with practical knowledge of the technologies you want to learn?
How probable are your networking prospects? Employers frequently use internships as a screening tool, but I have not seen a lot of job offers from corporate sponsored research.
Also keep in mind your age will work against you.

Have you considered going part time with your current job?
Different companies have different rules - with health benefits available at various work weeks - DW's former employer required 20 hrs week to be eligible, my company 30, but they did bend the rules for some experienced folks who would have left otherwise.

A lot of the "life experiences" you are mentioning, are not incompatible with part time work (good luck with ballroom dancing and please show some pictures of the tree houses here!).

If your spending level is less than 3% of your portfolio, that you are close to being FIREd.
How many years away from FIRE are you assuming your current job?
How many year away if you went part time?
How many years away from FIRE you would be after finishing your Master's degree?

I also forgot the most important question: What does your wife think about it?


sailor, MSCS
PS: In order to optimize we need to know the value to be optimized - have you put your "life priorities list" in order? If you share it here we might provide a better insight

[MichaelB]

FinanceGeek, are there specific jobs or objectives you have in mind? If so, are you sure this degree will enable you to achieve them?

[eridanus]

For web apps, you add a feature and integrate with a db. The pay is good and the work is interesting but an MS is often overkill. Of course, getting an MS in computers is also a lot of fun if you like classrooms and computers. (Oh, I'd toss out .NET and learn iOS/Objective-C and Android/java instead.)

But, hey, you're spending less than 3% of your portfolio. Go for it. My early-30s sabbatical/unemployment hasn't hurt me at all as far as I know.

[MBAustin]

Interesting possibilities here. The previous posters all raise good points. A few other thoughts...

- Had you set a goal of FIREing in your 40s and now you are thinking you'd rather be in the workforce doing neat new stuff? Or is there some other reason you are considering the educational investment instead of doubling down on FIREing?

- Is the tuition for the MSCS factored into your sabbatical expenses? Are there strong programs in your local area?

- Is DW a happy SAHM or interested in going back into the workforce at some point? Is a "switch" an option?

- If you get the MSCS, how long would you have to w*rk to get back to FI? How long would you want to?

Good luck with the choice and keep us posted!

[zinger1457]

With your degree and experience consider getting an engineering position with the government. Where I worked in DOD they offered fellowship programs where you can take a year off from work to get your Masters degree. They pay for your schooling and you still draw your full time salary, a pretty good deal. It does require a commitment to continue working for the government for a number of years after getting the degree (2-3 years?) so it would put your sabbatical on hold.

[FinanceGeek]

Thanks to all for the comments. Wow - some good thoughts!

A key theme in the comments was "can I just RE?". I didn't really have that as a plan, but based on our spending for each of the last several years I'd be at a 2.5% WR which is generally seen of as being in the safe zone. But that's based on spending numbers while working full time. If I add to the budget numbers for COBRA and tuition the number goes to ~3% - still seen by most as relatively safe - but that increase would only be for a couple of years max assuming I return to work after my sabbatical.

The comments about the benefits of grad school being less than I anticipate are quite sobering. I need to think that through more. I actually like what I do now, it just feels like its been quite a few years and I'd like to change directions and work on some more mainstream stuff. OTOH, I'd be coming out with my freshly minted MSCS in my late 40s. Such a thing is not unheard of, but isn't typical. Trying to find a job at that age in what to me will be a related but still somewhat-new specialty ... and having to compete with the folks half my age ...

As for my wife, she's quite happy as a SAHM and not planning to return to work, but she's supportive of whatever I decide to do.

The government employment option is interesting. I've never worked in DOD, never held a clearance, but have no reason to believe I couldn't get one. From what I've seen there is often a chicken & egg scenario around needing each first to get the other. Its too bad you can't treat this an investment in your career marketability and apply on your own.

I guess I'm now thinking of this as 2 decisions - do I ER, and (if so) do I later pursue a masters as a learning exercise / hobby that may pay off (or may not). Or, slight modification, can I drop down to part time and semi-ER, maybe do school more intensively than nights/weekends...

I'm mulling it all over, thanks for the input!