What would a 12-month income shock really cost you?
A free UK calculator showing the full lifetime cost of unemployment, illness, redundancy, sabbatical or career break. Most people only count the income lost during the shock — but the real cost is two to four times larger once you include the opportunity cost of the savings that never got made and never got to compound. See your number in seconds.
Your figures
Income & expenses
£
£
Shock severity
Income lost (% of your usual income)
% lost
Shock duration
12 months
1mo6mo12mo24mo36mo
Years until retirement
30 years
5152540
Long-term real growth rate
Direct cost
—
Net savings shortfall during the shock
Opportunity cost
—
Growth foregone over your remaining years
Lifetime cost
—
Direct + opportunity cost at retirement age
Net worth projection · baseline vs scenario
Baseline (no shock)With income shock
⚖️ Information only, not financial or insurance advice. Figures are projections based on the inputs you provide and a constant growth assumption. Real outcomes vary. For decisions that matter, talk to a regulated financial adviser.
See this against YOUR finances
WealthR's in-app Scenarios feature runs the same maths against your actual income, expenses, current net worth and projected FIRE date — so the lifetime cost appears as a real impact on YOUR plan, not a generic worked example. Save scenarios with names, compare two side-by-side.
The lifetime cost is built from two transparent components:
1. Direct cost (savings shortfall during the shock)
monthlyShortfall = (income × lossPct/100 − 0) / 12 capped so that residualIncome covers expenses where possible
In practice the calculator computes the net surplus that would have been saved during the shock months but wasn't — that's the direct hit to your savings trajectory. For a typical UK household this surplus is the difference between income and essential expenses.
2. Opportunity cost (compounding lost over remaining years)
The £6,000 of surplus that didn't get invested during a 12-month shock can't compound for the years between today and your retirement. Over 30 years at 5%, that's an additional £19,000 of foregone growth — bigger than the direct hit itself.
3. Lifetime cost
lifetimeCost = directCost + opportunityCost
The full cost the income shock will have produced by the time you reach your assumed retirement age. The chart above shows the gap between baseline and shock-scenario net worth, year by year.
What's excluded from the maths
Universal Credit or other benefits (set the loss percentage to reflect your net post-benefit income), income protection payouts (similarly, set the loss percentage to reflect the residual after IP pays out), redundancy payments (subtract these from the direct cost yourself if applicable), and career-progression damage (lost promotion timing, pension contribution gaps) — these are all real but harder to standardise into a calculator. The figure shown is a clean lower-bound estimate of the savings impact.
Why opportunity cost is the big one
Most income-shock conversations stop at the direct cost — "I lost £18,000 of net pay during my 12-month redundancy". That number is real, but it's not the full bill.
The full bill includes the wealth that money would have grown into if your savings rate hadn't been disrupted. Some realistic UK examples:
£35k income, £24k expenses, 100% loss for 12 months, 30 years to retirement, 5% growth. Direct cost: ~£11,000. Opportunity cost: ~£36,500. Lifetime cost: ~£47,500. Four times the direct figure.
£60k income, £36k expenses, 50% loss for 6 months, 25 years to retirement, 5% growth. Direct cost: ~£6,000. Opportunity cost: ~£14,300. Lifetime cost: ~£20,300. Three and a half times the direct figure.
£45k income, £30k expenses, 100% loss for 12 months, 5 years to retirement, 5% growth. Direct cost: ~£15,000. Opportunity cost: ~£4,200. Lifetime cost: ~£19,200. Only 30% larger than the direct figure — because there's barely any time left to compound.
Two patterns fall out of this. First, the same shock is mathematically much more expensive earlier in your career than later — time horizon is the multiplier. Second, the size of your savings surplus (income minus expenses) matters as much as the shock itself — a household with a £24k surplus loses far more than one with a £6k surplus, even at identical income.
Common questions
Income shock is any period of reduced income — job loss, illness, career break, parental leave, redundancy. The full cost is much larger than the income lost during the shock because the surplus that would have been saved during those months can no longer compound for the years between the shock and retirement. A 12-month income shock at age 35 can cost three to four times the direct income lost once you include the compounding lost over 30 years.
ONS labour market data shows the median UK unemployment spell sits around 3-6 months but the right-tail is long — around 1 in 4 unemployed people in the UK remain unemployed for over 12 months. Health-driven income shocks tend to be longer. Most personal finance commentators recommend planning a buffer for 6-12 months of essential expenses minimum, with longer for those in volatile industries or single-earner households.
The shock severity slider lets you set the percentage of income lost — so if you expect to receive UC or other benefits during the shock period, set the loss to the net reduction in your total monthly income rather than 100%. UC is income-based and asset-tested above £16,000 of savings, so households with significant savings often don't qualify regardless of unemployment status. This is general information, not benefits advice.
Opportunity cost is the growth your money would have produced if it had been invested rather than spent absorbing the shock. £6,000 of surplus that would have been saved during a 12-month shock, if instead invested at 5% real return for 30 years, would have grown to over £25,000 in today's money. The £19,000 difference is the opportunity cost — real wealth that didn't compound because the savings never got made. This is why income shocks early in your working life are mathematically more expensive than the same shock late in your career.
Standard UK personal finance guidance suggests 3-6 months of essential expenses for stable single-earners, 6-12 months for the self-employed, sole-earners or those in volatile industries, and 12-24 months for those approaching FIRE or retirement when re-employment is harder. The calculator can be run with shock duration set to match these scenarios to see how big a buffer is needed to cover the worst plausible case.
No — early shocks are mathematically more expensive. A £6,000 hit to savings at age 30 with 35 years to compound at 5% becomes £33,000 of foregone wealth at age 65. The same £6,000 hit at age 60 with 5 years to compound only becomes £7,700 of foregone wealth. Setting the years-to-retirement slider lower shows the smaller opportunity cost for shocks closer to retirement.
5% is a reasonable real (after-inflation) long-run UK equity assumption used in many UK financial planning contexts. 7% is closer to long-run nominal global equity returns. 3% is a conservative figure closer to a balanced portfolio with significant bonds. The chips let you compare quickly. The opportunity cost figure scales with this rate — using 7% will show roughly 50% more opportunity cost than 5% over a 30-year horizon.
Yes, and arguably it matters more for self-employed people. UK self-employed individuals have no statutory sick pay, no employer redundancy entitlement, and Universal Credit eligibility for the first 12 months is partial. The realistic emergency-fund recommendation for UK self-employed people sits at the longer end of typical guidance (12+ months of essential expenses), which the calculator can model directly via the shock duration slider.
Income protection insurance pays a percentage of your income (typically 50-65%) if you can't work due to illness or injury. Premiums vary by age, occupation and policy. Running the calculator with shock severity set to your post-IP residual percentage shows the financial gap insurance would need to fill. For families with a single earner and significant fixed outgoings, income protection often comes out as financially logical even with the premium drag. Talk to an FCA-regulated adviser for personalised guidance — this calculator is information only.
WealthR's in-app Scenarios feature (Pro, £5.99/month) runs the same maths against your actual income, expenses, current net worth and retirement projection — so the lifetime cost appears as a real impact on YOUR FIRE date, not a generic worked example. Save scenarios with names, compare two side-by-side, sync across devices.
No. This is an information tool for projecting typical income-shock costs. WealthR doesn't give financial, tax or insurance advice. For your specific situation talk to a regulated adviser.