Update on Reducing Work Hours

I figured I should give you all an update after my previous post when I mentioned I was thinking about dropping down to 80% time at my day job.  It was an interesting meeting with my boss to discuss what I was looking for and what I would be willing to accept.  Strangely enough, we barely discussed why I was looking to doing it.  Apparently my feeling stretch thin is obvious even to my boss.

The short answer is my boss didn’t say no.  He also didn’t say yes.  Which was to be expected, I had started the meeting saying this was just preliminary discussion and I didn’t expect an answer right away.  There are a few more complicated items going on in the company that would be required to be sorted out prior to me dropping down (long story, don’t ask).  Yet overall he was supportive of the idea which made me very happy.

I also learned some interesting items.  One was he seemed to be leaning towards me having a full extra day off each week rather than working reduce hours five days a week.  This surprised me as I thought work would have preferred to have me five days a week while I  prefer one full day off each week.  I also had a few discussions with others who already are on reduced hours and I found out a few interesting facts about our benefits.  Apparently when you are working at least 75% or more of the time you continue to keep full dental, health and family leave benefits.  I would lose 20% of my vacation, banked days off, salary and pension.

So overall the time score would look something like this:

  • Gain: 52 days off a year
  • Lose: 4 days vacation, 2.6 bank days off
  • Net Gain: 45.4 days a year

On the money side I would be losing salary and pension money, yet I would also be also having less tax to pay.  I’ve done some crude estimates of money lost and I’m comfortable with that number.  It would slow down my mortgage paydown plan, but not that badly since I’m now already under $100,000 owing.  I’m waiting for a full breakdown and estimate from HR before I model the impact this will have on my retirement plans.

So this might take a while, but at least the discussion has started.  I’ll keep you all posted on how this turns out.

5 thoughts on “Update on Reducing Work Hours”

  1. Sounds like a productive meeting.

    With this model you also would gain time – working 5 days a week means commute (even if short) and getting ready for work at a specific time vs. having more freedom in that extra day.

    Very Exciting!

    Dave

  2. I have been thinking of the same thing, but I will wait until the mortgage is done, approx. 2 years time. Hoping to do every Friday off.

    My other option was to take a leave of absence for 1 month every summer as the wife and kids are off, but I think that might be a harder sell to my employer.

    Looking forward to see how it pans out for you.

  3. I recall doing some of the same calculations wehn I switched from FT to PT work back in 2001. Back then, I went from 37.5 hours a week to 20 hours a week, At my (former) company, I needed to work only 20 hours per week to retain eligibility for the major benefits such as health, pension, 401(k) matching, annual company stock allocation, and most paid time off, even though I received less of each of them (or paid more for them) from my company.

    I calculated that even though my hours were reduced by 47%, my after-tax pay was reduced by only 40% because of the progressive income tax structure. Initially, my commutation expenses were reduced by 2/3 because I was dong some telecommuting. But later on, that was rescinded so my commutation costs returned to nearly their former levels (I went to the office 3 days a week).

    To compensate for the loss of 401(k) matching funds, I put more of my own pre-tax dollars into my 401(k).

    My savings rate took a hit, as one biweekly paycheck alone could no longer cover all my expenses. But I was still socking away a good chunk of my income. A key element of this gradual plan to my 2008 retirement was that I had paid off my mortgage in 1998 so my expenses were already down a lot for a few years.

    Just a thought for you – if I were to switch to a 4-day workweek, I would take Wednesday off because then you would have to work only 2 straight days tops. I did that a few times in 2000 when I had many surplus vacation days and I liked how it broke up the workweek. 🙂

  4. @ Dave

    Good point. Working four days a week would next some extra time off in a given week.

    @ Dave T

    A month off in the summer could be harder to sell or easy depending on when your busy time of the year is for our job. Just keep that in mind when you get to that point. Best of luck.

    @ degree

    Good point. Wed do offer a short work period. I’m currently leaning towards Friday’s off since my wife currently also has that day off. So it would be a 3 day weekend for the family every week.

    Tim

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