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Do I need to go back to work?
Old 04-22-2019, 09:50 PM   #1
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Do I need to go back to work?

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?
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Old 04-22-2019, 10:01 PM   #2
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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?
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Old 04-22-2019, 10:05 PM   #3
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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?
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Old 04-22-2019, 10:08 PM   #4
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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....
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Old 04-22-2019, 10:08 PM   #5
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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?
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Old 04-22-2019, 10:09 PM   #6
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Trust me someone will come along with better advice soon just a few things I thought of off top of my head.
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Old 04-22-2019, 10:11 PM   #7
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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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Old 04-22-2019, 10:24 PM   #8
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This link may help...

http://www.early-retirement.org/foru...ire-69999.html

Welcome to the forum.
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Old 04-22-2019, 10:56 PM   #9
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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.
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Old 04-22-2019, 11:09 PM   #10
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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.
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Old 04-22-2019, 11:12 PM   #11
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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.
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Old 04-22-2019, 11:15 PM   #12
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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.
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Old 04-23-2019, 04:49 AM   #13
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73% would be too tenuous for my tastes.
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Old 04-23-2019, 04:54 AM   #14
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73% would be too tenuous for my tastes.
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.
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Old 04-23-2019, 05:29 AM   #15
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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.
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Old 04-23-2019, 06:05 AM   #16
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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.
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Old 04-23-2019, 06:12 AM   #17
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Quote:
Originally Posted by Sunset View Post
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.
Quote:
Originally Posted by Sunset View Post
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.
Quote:
Originally Posted by Golden sunsets View Post
73% would be too tenuous for my tastes.
Heed these cautions.
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Old 04-23-2019, 07:09 AM   #18
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"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?
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Old 04-23-2019, 07:56 AM   #19
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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?
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Old 04-23-2019, 08:21 AM   #20
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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.
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