Being forced out

[daylatedollarshort]

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

 

[gauss]

Cut expenses - not grass!

LOL!

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

-gauss

 

[soupcxan]

Are you in Houston?

 

[bulbar]

Are you in Houston?

============

yes I am in Houston

 

[walkinwood]

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.

 

[2B]

============

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.

 

[aja8888]

============

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.

 

[wingfooted]

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.




Sent from my iPad using Early Retirement Forum

 

[soupcxan]

As a relatively young guy in Houston's Big Oil, how worried should I be?

 

[2B]

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.

 

[HawkHorn01]

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.


Sent from my iPhone using Tapatalk

 

[JoeWras]

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.

 

[2B]

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.

 

[Car-Guy]

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.

 

[Car-Guy]

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....

 

[2B]

bulbar,

I don't think anyone brought it up yet but you mentioned a financial adviser. If not a fee only relationship, it's a good time to ask what they bring to the table. Paying them 1% out of your $3MM works out to $30,000/yr. I suspect it's very hard to justify that type of expense in your present situation. Read Bernstein's Investors' Manifesto and Hallam's Millionaire Teacher.

I don't know the specifics of what you used to do. I'm pretty sure it will be a scramble to find anything close to what you were making but it isn't impossible. If retirement isn't your short-term goal, you should begin the networking and start looking at the online job boards. Don't discount the possibility of a contract position. I discovered that after 50 you are only evaluated on what you bring to the table now. No one is looking at your potential to go into senior management. If you were let go from a management position like I was, don't hold out for another one like I did for over a year. There's a lot to be said for being a smiling individual contributor.

 

[bulbar]

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.

=======================

Where exactly is the lunch and when?

 

[gregory r.]

OP,

Don't forget, kids can also partially finance their college, tough to to get a loan for retirement , just saying. Agree with others though, hard look at current spend and see where cuts can occur that won't won't be significantly impacting

 

[Live And Learn]

I know this is scary but please take a deep breath. You will be FINE. You are not a stupid person and you know how to take control of this situation. How much of your current spending is compensation for the time and stress associated with your j*b ? What do you really need to spend to be happy ? I'd bet that it is less than you are spending. Take a deep look at all those $20 and $50 items that you spend money on. They add up. At one point I was spending $200 / month at Bed Bath and Beyond, and I would talk about how much I saved by using my 20% off coupons. And then it dawned on me - I wasn't saving $40; I was wasting $200 because I didn't need any of that stuff --- in the grand scheme of things it didn't really add to my happiness at all. Deep breath. It will be ok.

 

[aja8888]

=======================

Where exactly is the lunch and when?

We just held a lunch at a spot in The Woodlands. I don't know if that's convenient for you, but several of us are around that area or a short drive. We were planning on another lunch get together later this month or early April. No plan have been set yet. Stay tuned.

 

[2B]

We just held a lunch at a spot in The Woodlands. I don't know if that's convenient for you, but several of us are around that area or a short drive. We were planning on another lunch get together later this month or early April. No plan have been set yet. Stay tuned.

I'll put bulbar on the distribution list. I have mixed feeling about another totally open invitation. It's not that I don't want more people to come I just wonder if it's a reasonable use of this forum to do a post monthly or bi-monthly.

To bubar, our last lunch was at Goose's Acre in The Woodlands. It's a great place but you have to be careful how much you drink if you're walking home. Alan pointed out that walking while intoxicated is far more dangerous than driving. I believe British data was used so it can not be challenged.

Future lunches could be in other locations. I'm open.

 

[maloney50]

Great point on the financial advisor, open an account with vanguard and transfer everything in there. Go with index funds you can save 1 to 2 percent on 3 million that can be 60 k per year. Financial advisors love the alternative asset class now and that just means they will stick you with high fee investments. Kid should go to public colleges. Keep the cars you have. Cut out any ridiculous expenses such as high cost kid activities. I'd consider this a blessing. The sun will come up tomorrow and you will realize a new life. You are in a great position compares to most I would imagine.


Sent from my iPad using Tapatalk

 

[Terryjm51]

Hey I am another Texas guy, I am on the south side and work in petro-chemicals. Been working for megacorp 29 yrs.
I totally agree with "once the kids are out of college" expenses go way down. I was dollar to death. I
have a monthly excel budget. Been seriously watching dollars for 3 yrs. and if we had too we could get down real low if needed under 30k
Know that means no Starbucks cable no eating out no more weekly golf at the club would have to sell my field seats for the Texans game. Cars are all paid for house will be done by summer of 2017 and if needed emergency fund could knock it out. It is all how you look at it. I plan to throw in the towel in 40-45 months from today. I will be 56 1/2 I will not have 3mm most likely over half of 3mm but we will be very comfortable. Op look at your spend every dollar should have a name. You will be surprised just how low you can go. Now also this all works because Dw understands how the budget is drawn up. We are in this together. She is the one that wants me to retire. Working at megacorp in upper management can be stressful.
3am calls the unit is down or having issues can get old. I also seriously believe in the firecal that has Bernicke's Reality Retirement Plan.
I can sure see how spend will go down after 56.

Hey I would love to pick your guys brain on doing self retirement
Not sure what all is discussed in the lunches. But I am scared to death of doing this on my own. I have had lengthy discussions with Vanguard in the past on how I would roll 401 and pension to them. Currently with trowe through megacorp. Megacorp takes care of the fees today. Also health insurance is scary.
If I stay on until 59 half we should have 2mm but I am not sure I am willing to give 3years of limited time.


Sent from my iPhone using Early Retirement Forum

 

[maloney50]

Vanguard has a group that can handle your transfer, we just transferred my mother in laws assets to our account due to her passing. I'd transfer things as is and then do a financial plan with them, in some cases it is free in other cases a few hundred dollars. Vanguard was and is a non profit owned by the shareholders so their interest is in serving you, not separating you from your money.


Sent from my iPad using Tapatalk

 

[2B]

Hey I would love to pick your guys brain on doing self retirement
Not sure what all is discussed in the lunches. But I am scared to death of doing this on my own. I have had lengthy discussions with Vanguard in the past on how I would roll 401 and pension to them.

In our first and only lunch to date we didn't discuss finances at all. I think all of us live in The Woodlands so I'm pretty sure none of us was limited to $30K/yr but I could be wrong.

I think the best way to get more comfortable with your plan is to do what you are doing which is to start with a budget. You then run FireCalc and most any other calculator you can find. It's best to be a little conservative knowing that market returns can't be predicted and neither can future expenses. Post your plan here and get a thorough review of your plan. Everyone won't agree but you'll get a good feel if you are being overly conservative or a wild-eyed dreamer. You won't have to totally go it alone but ultimately it's your (and your DWs) decision.

I believe in Bernicke too. I have a basic budget for maintaining our current lifestyle. That's very secure. The add on budget includes traveling, gifts and charities. With kids out on their own, the basic budget is much lower than what we spent for a similar lifestyle when they were home.

I also spent many years in petrochemicals. Most of it was along the Houston Ship Channel. When I was kicked to the curb in 2002, my greatest consolation was that I had been scheduled to be management coverage for Christmas and New Years that year. I kept wanting to find out if the stupid idiots I worked with figured out that I wouldn't be there. I didn't miss the late night calls or the visits to the emergency room when someone was injured.