Choosing to be a stay-at-home parent and forgoing a potential $1 million in income might sound extreme to some, but for me, the value of time spent with my son far outweighs any dollar amount. This decision often feels like the right one, despite the occasional doubts about what could have been had I stayed in the finance world.
Here’s a breakdown of the financial side: When I left my job in finance in 2012, I was making a base salary of $250,000, with bonuses that could double that depending on various factors. If I were to return to work now, I’d estimate my earnings could be around $500,000 annually. If I consider the income I’ve missed out on and assume I spent it all, that million would actually be about $620,000 after taxes, considering a 38% effective tax rate from both state and federal taxes.
How would I have spent that $620,000? Realistically, I wouldn’t splurge on luxury items like fancy cars or expensive watches, even if I indulged in a $30,000 Patek Philippe which might appreciate in value. Most likely, I’d use it pragmatically—for example, setting aside funds for private schooling if necessary or saving for potential home improvements. Any remaining funds, I’d likely invest to generate passive retirement income.
Investing the after-tax sum could potentially generate a decent annual income for retirement, perhaps around $20,000 to $31,000 depending on the returns. This wouldn’t drastically change our lifestyle, as our current retirement income already covers our needs and provides a comfortable buffer in expensive San Francisco.
The real math, though, isn’t just about finances—it’s about what you value. I’ve traded potential earnings for invaluable time with my family. Each day spent with my son, witnessing his milestones and growth, confirms that I made the right choice. The joy of parenting, with all its challenges and rewards, is something I wouldn’t trade for any job or amount of money.
For those contemplating this lifestyle, consider what you might buy with your earnings versus the long-term benefits and joy of being a present parent. It’s important to calculate not just the financial implications but also the emotional and lifestyle impact of such a decision.
While the financial aspect is significant, the true richness comes from the life you build and the time you spend with your loved ones. Isn’t that the ultimate investment?
