What this tool does
The Quit My Job ROI Simulator helps you understand the full financial picture of leaving your current job for freelancing, self-employment, or a new role. Most people only compare their current salary to their expected new income, but this overlooks dozens of hidden costs that can make or break a career transition.
This tool uses AI to analyze your specific situation, factoring in your location, industry, and work type to calculate costs that are easy to miss: healthcare premiums you will need to pay out of pocket, the self-employment tax burden, lost employer 401k matching contributions, reduced income during the ramp-up period, and other invisible expenses. It then projects your finances month by month for three years to show you the exact point where your new path becomes more profitable than staying at your current job.
Whether you are considering going freelance, starting a business, or switching to a new full-time position, this simulator gives you a data-driven view of when your move pays off and what financial cushion you need to make the transition safely.
How it calculates
**Formula:** \`\`\` Breakeven Month = Total Transition Costs / (New Monthly Income - Old Monthly Income) \`\`\`
Where: - **Total Transition Costs** = Healthcare Gap + Lost 401k Match + Ramp-up Income Loss + Additional Hidden Costs - **Old Monthly Income** = (Current Salary + Annual Bonus) / 12 + Employer Healthcare / 12 - **New Monthly Income** = Target Income / 12 (adjusted for self-employment tax if applicable)
The AI engine enhances these base calculations by factoring in location-specific healthcare marketplace premiums, applicable self-employment tax rates (typically 15.3% on net earnings for freelancers), industry-standard ramp-up timelines, and the value of lost employer benefits beyond just salary. It generates a full 36-month projection comparing cumulative earnings on both paths to pinpoint the exact breakeven month.
Who should use this
- **Aspiring freelancers**: Understand the true income gap before making the leap from full-time employment to independent work - **Career changers**: Compare the financial impact of pivoting to a new industry or role, including any expected salary adjustment period - **Side hustle growers**: Evaluate when your side project earns enough to justify leaving your day job - **Entrepreneurs**: Model the financial runway needed before your business replaces your current compensation package - **Anyone feeling stuck**: Get clarity on whether a career change is financially viable or if you need to save more first
How to use
1. Enter your current annual salary and any annual bonus or commission you typically receive 2. Input your employer's annual healthcare contribution (check your benefits statement or HR portal for the exact amount your employer pays) 3. Add your employer's 401k match percentage (for example, enter 4 if they match up to 4% of your salary) 4. Enter your current monthly expenses to help the simulator assess your financial runway 5. Set your target annual income for the new path, which is what you realistically expect to earn 6. Select the type of work you are transitioning to (freelance, self-employed, new job, or part-time) 7. Enter your field or industry and your location so the AI can estimate accurate healthcare and tax costs 8. Click "Run ROI Simulation" and review the breakeven analysis, invisible costs breakdown, and 36-month projection
FAQs
Q: What are "invisible costs" and why do they matter? A: Invisible costs are expenses that your employer currently covers or subsidizes that you will need to pay yourself after quitting. The biggest ones are healthcare premiums (often \$500-\$1,500 per month for marketplace plans), self-employment tax (an additional 15.3% on net self-employment income covering both employer and employee portions of Social Security and Medicare), and lost 401k matching (free money from your employer that disappears when you leave). These costs can easily add \$15,000-\$30,000 or more per year to your expenses and dramatically change the math on whether a career move makes financial sense.
Q: How accurate are the estimates? A: The AI provides estimates based on current typical costs for your specific location and industry. Healthcare premiums are based on marketplace rates in your area, and tax calculations use current federal self-employment tax rates. However, your actual costs will depend on your health status, family size, state tax laws, business deductions, and many other personal factors. Use these estimates as a starting point for planning, not as exact figures.
Q: What does a negative breakeven month mean? A: If the breakeven month shows as negative or says "may not break even," it means that based on the numbers you entered, the new path would earn less than your current job even after accounting for all costs. This does not necessarily mean you should not make the switch, since there may be non-financial benefits like flexibility, fulfillment, or growth potential, but it does mean you should plan for a long-term income reduction.
Q: Does this account for taxes beyond self-employment tax? A: The simulator focuses on the difference in tax burden between employment and self-employment. It highlights the additional self-employment tax that freelancers and independent contractors pay. However, it does not model your full income tax situation, which depends on deductions, filing status, state taxes, and other factors. For a complete tax analysis, consult a tax professional.
Q: What if I am switching to another full-time job, not freelancing? A: Select "New Full-Time Job" as your work type. The simulator will adjust its analysis accordingly, removing self-employment tax from the calculation and focusing on differences in benefits packages, potential salary gap during the transition, and any ramp-up period in the new role.
Q: How should I estimate my target freelance income? A: Be realistic rather than optimistic. Research typical rates in your field, factor in that freelancers typically bill for only 60-70% of their working hours (the rest goes to marketing, admin, and business development), and account for the ramp-up period where you may have few or no clients. A common rule of thumb is that your freelance hourly rate should be roughly double what you earned per hour as an employee to account for benefits and non-billable time.
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