Can I afford to quit after parental leave?
5 Financial Factors to Consider Before Quitting Your Job After You Have a Baby
A few weeks after my second daughter was born I laid on the playroom floor looking at my toddler and my newborn. How on Earth could I go back to work when my parental leave ended just a few weeks later? My postpartum hormones were raging. One minute I was dreading going back to work and the next it didn’t sound too bad to have responsibilities other than feeding, burping, and changing diapers. As my return-to-work date loomed over my head, I did my best to consider the pros and cons of quitting while I also fought postpartum anxiety.
I was in no place to be making a possibly life-changing decision. No new mom is.
But if you are contemplating not returning to work when your maternity leave or parental leave ends I completely understand. While there are so many things to consider other than if quitting is something you can afford, here is a breakdown of five different financial aspects to consider to hopefully make the decision easier for you and your family.
The cost of daycare
I often hear that the cost of daycare doesn’t make it financially worth it to work. Daycare could potentially equal your salary or cost even more than what you make, especially if you have more than one child in daycare. BUT, the cost of daycare is not just your responsibility. If you have a partner it should be considered an expense that comes out of both your salaries.
The opposite side of this coin is if you aren’t working, daycare isn’t a cost you and your family will need to worry about. However, being a stay at home mom can be lonely so make sure to budget for expenses like a zoo or children’s museum membership, a weekly coffee date with another stay at home mom, and date night. You deserve it.
The cost of a career pause
It is becoming more and more common for moms to take a career pause when their children are young and then return to the workforce once the kids are school age. Even just a few years ago, this elusive gray area of working motherhood was essentially unchartered waters and a mom was on her own. In response to the lack of support, organizations like Mother Untitled and The Mom Project are helping moms find work after a pause and providing the validations moms were desperately seeking when they left behind a career they had worked so hard for. I love that women now have the option to choose how far they lean into career or motherhood and have support to choose to work or stay home or something in between, but I don’t want you to take a career pause without understanding the consequences of taking a career pause.
Often after a year or more away from the workforce, many women struggle to get back into the workforce at the same responsibility and compensation level they left. Even women with years of experience at management or director level can find it challenging to find work at that level during their job search after a several year pause. A lot can change in the corporate America in just a few years. Just think about how much has changed in social media, AI, and real estate in the last few years. Additionally, returning to work to a title demotion will likely also mean a pay cut. The cost of daycare may be high, but the cost of a demotion when you return to work later could be higher.
The cost of health insurance
If you and your family get health insurance through your employer, consider the cost if you have to switch to your partner’s plan or if you can’t get insurance through your employer, the cost of health insurance on the open market—it’s expensive! My husband and I paid nearly $2,000 a month out of pocket for health insurance for our family of four when we couldn’t get health insurance through our employers.
Another health insurance cost to consider is that your employer can legally require you to pay back your monthly premiums they paid while you were on leave if you don’t return to work. For example, if your employer pays $600 a month for your premium and you take 5 months off, they could hand you a bill for $5,000.
Social Security and retirement losses
Your social security payment when you retire is based on how much you paid into social security during your working years. This means if you take a career pause or leave the workforce entirely, your social security payment will be significantly less than if you worked for the next few decades. Also, if you give up your career to raise your children, giving your partner the chance to succeed in their career, and 25 years later you separate, you might not qualify for any of your ex-spouse’s social security benefit. (This won’t happen to you, but I want you to know!)
Additionally, the size of your retirement accounts, like your 401K and IRA, are tied to how much income you make in your working years. Generally, working people contribute a percentage of income to their retirement accounts, but if you don’t have income there is no contribution. Moreso, women tend to have children earlier in their careers when retirement investments have more time to compound. So if you’re not investing early because you’re raising your children, you end up missing out on significantly more retirement income.
Work benefits
Workplace benefits can often offer a lot more perks than the typical package of health insurance and a retirement account. Some employers offer robust paid parental leave, wellness reimbursement, phone stipends, free meals, and access to professional organizations and development. While it’s harder to put a price tag on it, many people find value in getting out of the house to go into the office, socializing with colleagues, and exploring new places on work trips. If you were to quit, would you miss any of these benefits? Do you financially rely on any of them without recognizing it?
Lastly, if you are on parental leave, before you quit read the fine print of your employer’s parental leave policy to ensure you won’t be required to pay any benefits back. Some employers provide paid parental leave, but requirement repayment if the employee doesn’t return to work for a designated amount of time. (I hate these policies).
While most of this list makes the decision to quit after parental leave look pretty grim financially, I don’t want you to weigh this entire decision on finances if you can. There is so much else to consider, like how fulfilling your job is, not wanting to give up a career you have worked so hard for or how you enjoy contributing to your household. All of these reasons are valid and deciding to quit is a deeply personal decision.
My last two cents for you when you’re making this decision is don’t decide to quit on your worst or even your best day. This is a big decision and I don’t want you to accidentally make an emotional decision that you regret later.
The Park helps new and expecting parents navigate parental leave so they can max out their job-protected and paid leave, return to work feeling supported, and thrive as working parents. We answer all your questions and give you all the tips and tricks you need to advocate for yourself on TikTok and Instagram, 1:1 consulting calls, and through our CA Parental Leave Benefits Guide.
