Do I need to go back to work?

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unixfreak

Dryer sheet aficionado
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I just agreed to a voluntary separation with my employer. I will in turn receive 97 weeks of severance paid out every other week as normal. That will start at the beginning of July.... so I still work a few more months. I will still be under the company's healthcare plan for that whole time, then I can go cobra if need be.

I really wanted to work another 5 years, but here are the numbers:
401k = 460k
My house is valued at 220k and is paid off.
I have zero debt and a very frugal wife. :)

I will be 61 when the pay stops coming in and would have to live off of liquid for a year before social security which will be 2200/ month if I take it then. I also pull in another 1600 a month with a free lance gig that I've been doing for 15 years. I just bumped my 401k contributions to 10% from 6% since the company won't be matching after June. I have a small pension coming at 62 that's 150/ month. I expect the 401k to be 600k at 62 and don't see a problem living off of 4% of it per year.

Should I go back to work ... or does this look doable?
 
Depends what you need to spend in a month to live. How old is wife? When will she take SS? What about insurance from 61 - 65?
 
Don't need to spend much per month since there's no debt. The wife is 50 so it'll be a while on the SS. She's only slated to get 900 / month at 67. I can do cobra until about 65 so I'll need to pay what ... a couple of grand per month until medicare?
 
Also, I've saved a ton of money over the years doing my own repairs. My paid off cars never go to the garage, I do all the repairs on the house ....etc....
 
How can you do cobra for 4 years? Its usually 18 months. You can look at healthcare.gov for a price estimate for wife if you are going that route for 15 years.


I don't care how much you need to spend a month but YOU need to know a number and throw in some unexpected things like new roof! and figure out where that money is going to come from. What did firecalc say?
 
Trust me someone will come along with better advice soon just a few things I thought of off top of my head.
 
Cobra will only go 18 months, that's right. I thought I said until 62ish ... after that, I have to find health insurance.

FireCalc said that I have a 73% chance of success. 32 of the 119 cycles failed.
 
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The plus' are you live in a low cost of living area, and the house is paid for.

Almost 2 years of severance pay is hard to turn down. Will you also be able to draw unemployment when you separate or when the paydays stop?

How's everyone's health? I'd say go for it.
 
Health is good. I’m not sure about unemployment. My fidelity score is 108 but actually drops if I take SS older than 62 because I’d have to draw down on the IRA.
 
I would take the separation, and then go get another job, or make more $$$ from the free lance work.
Basically double dip while you can.

Certainly you are not going to have a luxury retirement and working 2 more years means you can save for 2 more years and have 2 less year of retirement to fund.
 
Golden sunsets said:
73% would be too tenuous for my tastes.
Click to expand...

likewise for me.

Plus, it seems you don't have much fat in your budget to trim should things go sideways for a bit.

I think things could be even more tenuous for your 50 year old wife.
 
I think it's doable...so long as you keep the side gig, at least for a while to see how everything goes. If you can do "ok" on the $1600 plus SS, I think it can work out for you. As you're likely already thinking, and others are pointing out without saying it, the overall position, with only the $460k in the 401k is a little light. Maybe, as your regular job phases out in a few months, you can look to expand the side gig a little to increase that income to $2000 to $2500/month, or look into a mindless part-time job. The almost 2 years of severance should give you opportunity to see how things go before making a permanent decision.

What I would not do, is immediately look for an alternative full-time job. Also, the first month off of the regular job - take a break, relax and enjoy yourself.

You are certainly not in a bad situation. Again, the two years of severance is wonderful - make the most of it while it's there.
 
How much do you currently save? You mention the 401k, but I mean your taxable take home - how much is socked away from that? If you have a decent savings rate from your paycheck, then you're going to have a bigger nut in 2 years when the severance ends. So I'd start from what that picture should look like, without factoring in any growth.

In the meantime, get a detailed handle on your expenses. Not "don't need to spend much" but pull your actual data from the last two years (from all your accounts). Insurance, taxes, on top of all that.

And as far as ongoing expenses, do plan on occasional big tickets. Handy or not, a new car, a new roof, a new AC - things happen.

You have the luxury of time to plan, and do a bit more on the math before deciding anything.
 
Sunset said:
I would take the separation, and then go get another job, or make more $$$ from the free lance work.
Basically double dip while you can.

Certainly you are not going to have a luxury retirement and working 2 more years means you can save for 2 more years and have 2 less year of retirement to fund.
Click to expand...

Sunset said:
OP - you are also counting your chickens before they hatch, your 401K maybe worth less than it is now at age 62, or simply flatten out and not increase the 30% you expect.
Click to expand...

Golden sunsets said:
73% would be too tenuous for my tastes.
Click to expand...

Heed these cautions.
 
"I can do cobra until about 65 so I'll need to pay what ... a couple of grand per month until medicare?"



Uh...why would you ever mess with Cobra when the ACA is available to you?
 
Do you have any savings at all besides the 401? That's what is jumping out at me. If you are spending everything you make then you'll need to keep working. What number did you use for expenses?
 
Your DW, who is seven? years younger than you, has some SS expected and it sounds like it’s on her own work record—if she is not working now, consider if she returned to the work force whether full or part-time, a percentage (if not almost all) of what she earns could go toward retirement.
 
Think maritally, act individually

Are you genuinely content with 73% success rate? :hide: I've been trudging through OMY because I wasn't comfortable with my plan being at only 150% (I am still a little uncertain whether discretionary expenses will jump in concert with more free time).

Also, suppose you were to catch the early bus to heaven? Would your widow still be okay without the dough from your side gig?
 
I wouldn't be comfortable retiring with 73% either.
 
* House value is not part of the retirement calculation. You can't spend the $ without replacing a roof over your heads.
* Your 401K MIGHT go to 600K in 2 years, but then again it might not.
* No where in the math presented is there an allowance for inflation.
* IF the ACA stays in place at your income levels you should qualify for health insurance premium subsidies.
* 73% success rate = a 1 in 4 failure rate. You want to bet your wife's well being at those odds?



If 460K is all you got (no other savings) and a wife that is going to need income for 40 years, it sounds like a very lean retirement to me. As others have stated, with no wiggle room for error, you need to KNOW your actual spending.
 
There is no way you could make a informed decision without knowing your expenses. Plus what do you intend to do with your free time? Do you want to travel, eat out, etc.
 
You've made some very bold assumptions that are flat out wrong or inconsistent with history at best.

You might be able to eek it out, but your wife will be on her own.
 
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