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Old 03-19-2015, 04:24 PM   #21
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Getting laid off from big oil.
Scared crapless. Doubt I can get another job right now.
I've been there to several times. Laid off from big oil. In fact I was just let go in December. I received a generous layoff package of 10 months pay for my four years of engineering work, I'm paying COBRA, I'm getting unemployment of about $450 per week.

My company just had a mass layoff about two weeks ago – 400 people. I've run into some of them, and they generally have smiles on their face. The ones that were with the company for several years got made whole to retirement.

I'm just saying this to try to reassure you that the big oil companies will probably give you a pretty good package.

As I said, I've been through this several times in the oil company cycles, including 1986. Each time I looked for work I wound up eventually in a better place. So if getting another job is what you do, you'll likely have a better situation the next time. I did have to be very flexible and take whatever I could find. It was just contract work at first, but it kept me in the industry through these other downturns. Even though the news is all gloom, you and I both know that these downturns don't last, and that things three years from now are likely to be much much brighter. Once again they will be begging for workers.

Things are going to work out for you – this is happening to lots of people, it's happened before to lots of people, and it always works out. I've been scared, just like you, and I wish you the best!

This is also an opportunity for you to closely track your expenses by the penny each month, and ask yourself which expenses are really needs for you. You might read the book your money or your life. Many folks are living on a lot less than $125,000 per year. I'm just saying, this might point in the direction of your ultimate freedom.

You are also being given a gift of having some time to reflect on what you want to do next and where you want to fit best. If things were so great at the last place you and I both would still be there.

This will be a temporary problem for you. Please don't discount yourself. You walked out of the company with all the skills you walked in with. It's no accident that they hired you. No matter how you feel right now you have a lot going for you or you would not have gotten a job at big oil - they are very picky.
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Old 03-19-2015, 04:26 PM   #22
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Didn't you just ask these questions 2 times in the last 3 months? Answer is still the same - you probably have plenty of money if you'd consider cutting expenses a bit.

Can I RE? Would you?

Can I retire on $3.1MM? Anybody here done it?
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Old 03-19-2015, 04:30 PM   #23
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+1

Community colleges in TX are a great way to cut costs with virtually zero negative impact to the quality of degree obtained. Your world has changed and your kids need to share in that change. They will likely be better off in the long run and it is a great opportunity to make for a stronger, closer family.
+1

Also, by working through this together as a family, you are modeling good behavior for how they might handle tough times in their own futures. They'll learn how to hold a marriage together, how to tighten the family's budget, how to appreciate each other in the midst of challenges.

DH-- at our house-- always saw it as his job (as a dad) to help our son learn how to manage disappointment. None of us can guarantee what our futures will hold; but, as DH used to say, "One thing we can guarantee is that-- at some point in life-- he WILL be disappointed. If I can teach him how to weather that, it would be a good service."

Best of luck; and, remember, you have much more in savings than most of the American population!
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Old 03-19-2015, 04:40 PM   #24
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Does the $120k of spending include income taxes? mortgage payments? If so, then you'll probably be fine as your taxes will likely be lower in retirement and if you have a mortgage it will eventually go away and mortgage payments don't increase for inflation like other expenses do. What are you doing for health insurance?

I figure that carving out $200k for kid's college you have $2,800k so at a 3.5% WR that would be $98k, but that doesn't factor in any SS so realistically you can have a higher WR and still be safe.

But I agree with others that things will be more comfortable for you if you look through your expenses and see if there are any opportunities to reduce them. We did a lot of easy things to reduce ours.... we cut our landline and use a VOIP provider (Ooma in our case) for our home phone... we had more modest needs for cellphones in retirement and went with a pay-as-you-go, bring your own phone plan, etc.
================================================== =

Yes, the $120k/yr includes taxes and mortgage. My health insurance would be "free" for a couple of years due to credits I've built up, but then it would go up to over $10k per year. We already cut our landline and alarm monitoring after reading this site which was great. Cut our cell bill a bit. I'll mow the lawn myself now too and cut out one of the cable tv's.
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Old 03-19-2015, 04:49 PM   #25
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Well, your mortgage will end at some point so your expenses would go down at that point. I would take the mortgage out of the expenses and reduce the nestegg by your mortgage balance to get a better assessment of your real WR. You can get a good idea of your taxes in retirement by taking your tax return, taking our your earnings and making other appropriate adjustments but your taxes will likely be a lot lower meaning that your expenses will be lower as well.
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Old 03-19-2015, 05:10 PM   #26
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We used to spend more per year. We cut our spending and work at hobby jobs. It has been fine.

I agree with most of the other posters to look at cutting your spending. Look for expense cuts that do not lower your quality of life. Take up gardening as a hobby and lose the gardener. Shop more at Costco. Install solar lights outside and LED bulbs and fixtures inside. Install low flow shower heads. Price shop insurance. Raise your deductibles. Look for a 100 - 200 items like that and it can add up to huge drop in annual expenses.

Average income for 65+ households in 2011 was $43K per the consumer expenditure survey. Do you have to spend almost 3 times that? Could you get by on twice that and reinvest the rest for a higher confidence level? Every $10K you cut off your annual expenses means needing $500K less required in total retirement funding over a 50 year retirement. A $20K annual cut gives you at least an extra $1M cushion over 50 years.

In our state community college does not cost much at all and many of the public colleges make the good values lists:

Kiplinger's Best College Values-Kiplinger

College Rankings: How To Make Your Own
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Old 03-19-2015, 05:36 PM   #27
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Cut expenses - not grass!

LOL!

Doing my own lawn would not be quality of life neutral!

-gauss
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Old 03-19-2015, 07:21 PM   #28
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Are you in Houston?
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Old 03-19-2015, 07:37 PM   #29
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Are you in Houston?
============

yes I am in Houston
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Old 03-19-2015, 08:02 PM   #30
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Unless all your savings are in tax deferred accounts, your income taxes will fall drastically. Research that.

Also, I think the most important question is not financial. It is "Are you ready to retire?" Do you know what you'll do with your time? What will be the immediate family's reaction? I think those are pre-requisites to the financial question.

All the best. You're in good company here.
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Old 03-19-2015, 09:20 PM   #31
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============

yes I am in Houston
Great. You can come to the next lunch in The Woodlands.

My company is laying off people in Upstream in substantial numbers. It was hard for people to comprehend that I actually retired/left on my own. I was owned by Downstream.

We've had many "I have $3MM. Is that enough to retire?" threads. The answer is yes but you have to have a plan. What I found as the kids left for college is that expenses fell dramatically. It was amazing how much I was being dollared to death for when they were in high school. In college they were responsible for their own extra-curricular activities.

All of my kids got a significant number of JC credits and they all started college (TAMU or Tx State) right out of high school. All of them were done at 4 years and one was done at 3 1/2. It's best to minimize their "giant auditorium" classes when you can save pain, anguish and money at the JC. Also, retirement funds do not have to be reported as assets in financial aid applications (unless something has changed). Leave IRAs and 401ks out of the asset total. Your income will also drop so that will make your kids more eligible even if you have assets.

I take a variable 5% from my portfolio. I have a "sinking fund" to bridge me to my eventual SS. After I deduct this from my portfolio, I allocate 5% plus my future SS to the next years spending. Of course, the spending amount will track the stock market performance but I can survive on a lot less than my current allocation. If you can live on a varying income, you may want to consider something equivalent.
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Old 03-19-2015, 10:04 PM   #32
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============

yes I am in Houston
Yes, like 2B said, come to our next lunch meeting. We would love to meet you! There are a lot of us in the Houston area and not all are in oil & gas anymore.
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Old 03-19-2015, 11:56 PM   #33
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Getting laid off from big oil. At the end of the day we will have a little over $3MM.

Scared crapless. Doubt I can get another job right now.

I would be realistic about job opportunities and prospects that will eventually come to surface from this energy industry cycle.

The biz is pretty much dog crap right now and you and a bunch of others will get walking papers. Within the next two years oil prices will go back up and the same companies that were laying off will be looking to work all the shelved developments. Only they will be looking for consultants on a project by project basis and not full time employees. So opportunity for more pay, working at your own pace although you'll need to be more entrepreneurial than in the past.

So now is a good time to get back in physical shape, spend time with the family, take some trips and bone up your resume and network for the next boom.

$3MM isn't a bad nest egg, it could be worse and you have plenty of room to regroup.

BTW I am in almost the same spot in the energy biz although at 59 with higher investable assets. I am leaving the end of this year to start a new life as a gentlemen farmer and the Houston house will be sold.

Good luck although I am of the opinion that you will be fine, maybe even better off.




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Old 03-20-2015, 06:43 AM   #34
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As a relatively young guy in Houston's Big Oil, how worried should I be?
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Old 03-20-2015, 07:46 AM   #35
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As a relatively young guy in Houston's Big Oil, how worried should I be?
Being with a "big oil" operating company is heavily political. You should worry primarily if your ranking is in the bottom third and you your area of activity is declining in funding. In the 1980s you had to be pretty high up the rankings to survive if you were a project manager/engineer. Big projects were shut down for almost a decade.

Over my career, I eventually became somewhat of a fatalist. There are some situations you just can't avoid or effectively turn around. In your case you are probably in one of the companies least likely to make a knee jerk reaction to flush people but they won't be against some "trimming." Employment stability is important to your upper management.

That said. I recommend you always "be ready." I've been sent into the great void several times. Once I began realizing it could happen without warning, it ceased to be as significant event. The last time I was laid off I shook my boss' hand and thanked him for all the wonderful experiences and opportunities. My layoff was to be effective at the end of the month but was cancelled one day before my "last day."

You're also invited to our next lunch if "available."

Good luck. Plan ahead but I wouldn't do anything crazy. The whole industry is "girthing their loins" at the moment. It's normal and will pass.
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Old 03-20-2015, 08:25 AM   #36
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I like the person who mentioned that tough times are never pleasant and of course they are not. I was in computer sales for 30 plus years and for various reason changed jobs over seven times. Companies downsize, companies get bought, companies go under, companies reorganize and with me. It was some of all of this besides working for a manager on illegal drugs, one hooked on their Meds and two were alcoholics.

The part that hit home with me was the comments about the:

1). Test of your marriage, becoming more in tune with your present expenses and those in the future( like the car needing replacement or that college cost(s) coming in a few years) that you and your family need to plan for.
2) The understanding and lessons learned about losing your job, how to mentally and physically deal with that when it happens, how to look for the next job, what do you do in the time between employment and loss of employment, what expenses should be put off, revisited or flat canceled when looking for a job OR WHEN STARTING A NEW ONE!!

If you have friends, relatives or children in the working age range, talking to them about what you have experience, your feeling and what you did to "get through" all of this.

The people above will all being going through many job changes throughout the working careers. Right now if you are retired or near retirement, you should of experienced a lot that can be passed on to others.

My concern is taking what I have learned and experienced and passing it along so it can be helpful to younger workers that need it in the near future.

I would think and hope as the younger generations are going through multiple jobs, that books, people and courses at all levels would surface to address the job environment they will all face unless they are self employed.


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Old 03-20-2015, 08:36 AM   #37
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OP,

I have similar asset and 2 kids in college right now. I am few years older. I have recorded the last 2 years of bank statement, CC statement and put in spreadsheet. I see that we spend $55K annually.

There are expenses obfuscated from this number though. Taxes are paid from payroll; Healthcare premium is paid from payroll and DW's HRA account; so they are not accounted for.

When I started to estimate the ER true cost, I find that I have to include these extra:

1. Tax ---$9K (try to maintain below 15% tax rate)
2. Healthcare --- $16K
3. Travel ---- $16K
4. Retirement home --- $13K

The true ER estimated expense for us is then: $110K. This is about 3.8% WR. And we are stuck with OMY...

If you are already spending $120K, your will then need to look into detail and see what extra expenses incurred when there is no payroll deduction anymore.
Right. This is what the OP needs to look at.

In your case, instead of OMY, you could delay your travel and sell the retirement home. I know you don't want to, that's why you OMY. Just saying it turns you you have options.

OP may too, but OP needs to seriously look where that 120k is going.
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Old 03-20-2015, 09:05 AM   #38
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1
1). Test of your marriage, becoming more in tune with your present expenses and those in the future( like the car needing replacement or that college cost(s) coming in a few years) that you and your family need to plan for.
This is a big one. DW and I never really had an issue here but I've seen some blowups. They were usually associated with couples spending "it all." The paycheck stops and unemployment doesn't come close to covering the mortgage. The typically non-working wife gets more and more upset and the out of work husband becomes the villain. It soon goes to divorce court where the "princess" suddenly discovers that an out of work formerly well paid individual doesn't get hit with a big "alimony" or "separate maintenance" as Texas calls it. Child support is also pretty much below her expectations. Now it's a real financial mess with a repo inevitable. The former husband starts working at a retail job but still can't cover alimony and child support.
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Old 03-20-2015, 09:05 AM   #39
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I was never actually laid off but I've been through a number of major personnel or force reductions and it's scary for everyone there. Based on the numbers you provided (ages, dollars, debt, commitments, "expected" rates of return??), it looks to me that, unless you go back to work, you may need to cutback on your annual spend rate.
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Old 03-20-2015, 11:00 AM   #40
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As a relatively young guy in Houston's Big Oil, how worried should I be?
As I mentioned earlier, I went through several of these staffing reductions over the years (both in and out of the oil industry) The biggest one I went through was when I had less than one year of service with a particular mega corp. So even a young person or short service person can make it. Of course it depends on the company and managements specific goals, which can change over time with any particular force reduction event. Looking back, what I see that helped me through these was having unique or specialized skills and being regarded as a higher performer. YMMV....
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