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| Rob Henderson and Pat Black loved taking a year off work. |
By Camilla Cornell
“Rich at any age”
MoneySense
December/January 2006 Issue
Think a year off is impossible? It may be easier than you think.
Last year, Pat Black and Rob Henderson’s nine-year-old daughter, Leila, learned to draw noses by copying the masters at museums in London and Florence. Their son Bruce, 11, developed his passion for history by exploring Rome’s ancient Coliseum. The two months the family spent in Europe were the most memorable part of a year-long break from work that also included long-weekend trips to Canadian historical sites and museums, as well as many hours spent just chilling out together.
Adrian Mastracci, investment counsel at Vancouver’s ‘fee-only’ KCM Wealth Management, says, "How to fund a sabbatical is probably the major impediment for people.”
A gift of time is something that a growing number of 40ish Canadians covet. Yet most of us only dream of doing what Black and Henderson did—taking a sabbatical. Such a leave isn’t out of reach, according to a study by Mercer Human Resource Consulting in Toronto, which found that a hefty 26.4% of all Canadian employers offer sabbatical leaves of some kind. The catch: not all of them pay you a salary while you’re away.
“How to fund a sabbatical is probably the major impediment for people,” says Adrian Mastracci, president of KCM Wealth Management in Vancouver. “The other is whether your job will be there when you get back.” Mastracci advises asking your employer whether there are plans available that make saving for a sabbatical more painless. Black and Henderson’s employer, the Toronto District School Board, allows teachers to take 80% of their salary for four years and then take the fifth off at the same pay rate. “We actually didn’t lose too much [in take-home pay] because we dropped a tax bracket,” Black says.
If your company has no such plan available, then launch your own, suggests Mastracci. “If you have a percentage of your salary withdrawn from your account as soon as your paycheque goes in, you’re not likely to miss it so much.” He advises putting the cash into a fixed-income investment such as a treasury bill or GIC so a dip in the stock market doesn’t give you a nasty last-minute surprise.
When the time comes for your sabbatical, avoid the temptation to raid your RRSP. Instead, look to your non-sheltered investment. Mastracci funded his own 17-month sabbatical seven years ago with a three-pronged method. You can do the same. Start by pruning your fixed-income assets such as GICs—they won’t have accumulated capital gains like stocks, and therefore they’ll pack less of a tax wallop when you cash them. Then look to investments that are losing money and aren’t about to come back. Finally, consider selling stocks or funds that have accumulated gains.
Once you’ve paid for your sabbatical, your problems are over—at least until you get back to work. “Reality can hit hard once your leave is over,” Mastracci says. You may find that your job has changed for the worse. You may be unable to face the old routine. Mastracci advises staying current with what’s happening in the office through e-mail or by reading journals and other work-related material.
Few people regret taking time off. “I can’t remember anybody coming back and saying, ‘I should have stayed at the office,”’ Mastracci says. Pat Black is with him. Despite a bigger line of credit caused by her year off, she’d do it again in a minute. “It was so worth it.”
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