Being forced out

[bulbar]

Getting laid off from big oil. At the end of the day we will have a little over $3MM. 2 kids starting college this fall. Only a mortgage, no other debt. Spending $120k per year currently. I'm 54, my wife 48. Figured in SS for me and my wife later. Included $200k for college for 2 kids.

***** says 95% at $125k/yr spend
Financial Planner says about the same using a fixed 5.5% return
EarlyRetire Pro says 99% at $123k/yr spend. It uses historicals and includes all taxes
My FP says about $120k/yr at 6% fixed return

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

 

[REWahoo]

You need to cut your spending.

 

[aja8888]

Getting laid off from big oil. At the end of the day we will have a little over $3MM. 2 kids starting college this fall. Only a mortgage, no other debt. Spending $120k per year currently. I'm 54, my wife 48. Figured in SS for me and my wife later. Included $200k for college for 2 kids.

***** says 95% at $125k/yr spend
Financial Planner says about the same using a fixed 5.5% return
EarlyRetire Pro says 99% at $123k/yr spend. It uses historicals and includes all taxes
My FP says about $120k/yr at 6% fixed return

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

^^^ What he said too!

Retire if you want to, but pre-college kids are an unknown. State colleges here in TX are a bargain and community college time is directly transferrable to a big U. Maybe go into stealth mode for a while and watch the job market.

Hang in there if you want to go back to work. Sharpen up your resume, start networking. It may be a while but the oil patch will come back and those who hang in there will get a new job.

 

[utrecht]

I would be OK with your numbers providing theres some fluff in your budget that you cut out if the market takes a hit. I'd like to know how a financial planner figures $120K at 6% fixed return? If you could get a 6% fixed return, which you obviously can't, you could spend 6% of whatever your portfolio was (give or take).

 

[athena53]

You're probably better off than 95% of the others who will be forced out, too, but I know it's darn scary pulling the plug on a paycheck- I just did it myself last year.


Are you sure you'll NEVER get another job? Not even something in an unrelated field that pays less? What about your wife? Can your kids get scholarships or other aid? Can they do a Co-Op Program like the one my alma mater offers (University of Cincinnati) where after the first year they alternate quarters going to school and working at a co-op job in their field? Can they commute or go to a community college for the first couple of years?


This sounds like an issue the whole family needs to work together to resolve.

 

[REWahoo]

State colleges here in TX are a bargain and community college time is directly transferrable to a big U.

+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.

 

[NW-Bound]

People manage all the time with less than $3M. So, I think your family will figure out a way and be OK too, even if you do not work again. But you need to be proactive and make the necessary changes early enough. Do not wait until it's too late.

 

[bulbar]

You're probably better off than 95% of the others who will be forced out, too, but I know it's darn scary pulling the plug on a paycheck- I just did it myself last year.


Are you sure you'll NEVER get another job? Not even something in an unrelated field that pays less? What about your wife? Can your kids get scholarships or other aid? Can they do a Co-Op Program like the one my alma mater offers (University of Cincinnati) where after the first year they alternate quarters going to school and working at a co-op job in their field? Can they commute or go to a community college for the first couple of years?


This sounds like an issue the whole family needs to work together to resolve.

My wife will work at least part time, but not make much. I'll be looking for another job. We'll be cutting where we can of course. One kid has a big scholarship, we won't qualify for aid.

 

[travelover]

Sorry to hear this, but agree with others that you will be fine, especially if you thrift the kids' educations. Nothing wrong with community college and most kids have no idea what they want to study anyway. Why pay dorm expenses and college tuition while they study basic topics?

 

[nuke_diver]

yeah sorry to hear this but I think you might be selling yourself short on the job front. And you will be able to do with less that you think ...once you start thinking about it.

Good luck

 

[gauss]

bulbar,

It might be interesting to see a breakdown of how the 120k/year is spent.

There may be obvious savings that we could collectively see and suggest that would not impact your quality of life too much.

If you could go from 120k/year to 80k that would be from a 4% wr down to a quite safe 2.6% wr. Also please remember that you will have SS available too in the future and that can be very valuable especially if you are concerned about living a long time and/or outliving your money.

Have you ever used quicken or a similar to tool to track your expenses by category? This was a god-send to me having done this over the years and having a record of how much I was spending when I was unconstrained.

Once the passive income was able to support our unconstrained level of spending and I started to get jacked around at work, it was goodbye to the job for me with not much anxiety (other than the awkward social situations of being retired in my late 40s).

FWIW -- Our retirement budget is 80k per year and includes taxes,travel, frequent entertainment (dining and drinking) with friends, 1800 sq ft suburban home for two, fairly high property taxes, multiple vehicles, throwing parties, HS internet, Android smart cell phones, season football ticket etc. etc. Also thinking about taking private pilot lessons.

Don't be scared of changes like this (well I was at the time, but have grown to see it as a wonderful life changing opportunity in retrospect).

-gauss
"living the dream"

 

[38Chevy454]

I say embrace the challenge. You should understand your spending and see where the required vs discretionary costs are. Obviously a lower total spending makes the risk go down and odds for success increase. I think you are just being a bit too risk averse, many survive on less than $120k/year without any real sacrifice in their quality of life.

Agree college expenses can be a lot, but the good thing is they are short term. Assuming your kid is not a professional student!

Also don't forget SS can supplement once you get there. Only 8 years until that can kick in at minimum.

 

[Walt34]

You need to cut your spending.

What he said.

That said, many retire on less and do just fine. The biggie is being able to control expenses and reduce them if/when needed. Here's a checklist of things to consider:

http://www.early-retirement.org/for...re-asking-can-i-retire-69999.html#post1399715

 

[pb4uski]

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.

 

[2017ish]

Does your 125,000 include projected taxes when you draw assets out? (I assume that much of your pile is in tax deferred accounts upon which you will be paying ordinary income tax rates at withdrawal.) That could be an important point to not overlook.

Otherwise, I'll twelfth (or whatever!) the recommendations to get a handle on the spending by category and strive to slim it down while maintaining a nice comfort level.

 

[petershk]

Sorry to hear you had this happen .

That said. Lemonade from Lemons. Let's assume you consider not finding another job that will also then cause you stress of potentially losing it among other things. Can you tweak your life and never be scared crapless again (about losing a job I mean). If so what is that worth?

Without details it's hard to make specific suggestions but...
Kids going to college. Hmm perhaps a smaller or cheaper house is possible? Less stuff to fill it with, less to clean.

Not working means less gas, clothes, coffee, eating lunch etc. In my own plan this is about 400-500/mo.

Food. My food budget is about 1000/mo (2 kids), but if I changed my eating out habits, I can drop it about 30-40%.

Cable, phones, internet, etc. Those add up... And do I REALLY use them? You have time to find cheaper alternatives.

Do you have interests or hobbys that can generate SOME income?

Also... make the situation non binary. I think getting psychological balance is super important.

In most situations with 3m and 120k/year you will be ok. In some cases you will EVENTUALLY run out of money. In any case (other than a zombie apocalypse) you have many years to adjust. If you saved 3m I'm pretty sure that you are a flexible spender and probably like almost everyone else on this board have this horror moment thinking about the 3 going to 2.9.

Maybe you can put a year or two of money aside to live on. Give yourself a year of deliberate time off. During that year you try and figure out how to either bridge whatever gap in income you need or adjust spending. This way you won't take a job in desperate psychological mindset which may cost you more in the long run.

Instead of a job you have to be scared to lose your new job ensures you never have to worry again and you can assign yourself any task you want, cancel any meeting you think is stupid and set your KPI to be whatever you like.

Sure... Your new job pays a bit less, but those perks seem pretty good to me.

Maybe you can run the numbers the other way. Adding taxes, healthcare, etc. and subtracting work related expenses, How much does your new job safely pay . I also bet your family will be very supportive if they knew you would be less stressed and have more time with them.

You may look back and post in 2 years that this was a gift instead of a curse.

Sent from my HTC One_M8 using Early Retirement Forum mobile app

 

[fh2000]

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.

 

[petershk]

Also... How much is the financial planner . That might be something you can now do and if it's % of total assets, you could be well on your way to filling any gap.

Sent from my HTC One_M8 using Early Retirement Forum mobile app

 

[Hermit]

One of my kids had a quite large scholarship from a private school. That brought our cost down to about 20% more than a public school. She went to a public school and, in my opinion, got a better education.

 

[Choices]

......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.

This is very wise counsel.
Everyone needs to be in on the budget changes. I am guessing much of your community is going to be in layoff status. Your kids are old enough to be above keepin up with the Joneses and this will make it even easier. There are so many more important things in life than money!

 

[Grigori]

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.

 

[Fishingmn]

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.

http://www.early-retirement.org/forums/f26/can-i-re-would-you-75960.html

http://www.early-retirement.org/forums/f26/can-i-retire-on-3-1mm-anybody-here-done-it-74885.html

 

[LitGal]

+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!

 

[bulbar]

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.

 

[pb4uski]

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.