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47 yrs old, and... could I?
Old 01-19-2008, 01:51 PM   #1
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47 yrs old, and... could I?

Hi,
After 25 years of hard work for a Big Pharma company, my department is being outsourced. I have the option of working for the outsourcing vendor, doing the same job at basically the same salary, but... I'm really tired of it. While working my full-time job (computer related) I've also been building up a good reputation as an artist (landscape painter). My question is, do you think I'm ready for retirement, or should I work for the outsourcing company and save some more? I want to treat this as retirement although it's really a career change to a much lower paying job as an artist (my true passion) where I'll have some income but don't want to count on it too much.

age: 47, single, no kids
savings: little over $1 million
house paid off, worth ~$350k
no debt
current salary: ~$116k + $18k bonus
annual expenses ~35k
live in central NJ, USA and don't want to move anytime soon.

I'll have a pension that gives me
$1336/month at age 55, or
$2449/month at age 60, or
$4453/month at age 65

I currently make $10k to $20k/year profit as an artist, and I'm sure I could do better without the day job. But for the sake of argument, I don't want to count on more than say $15k/year.

What do you think?
Can I drop out of the corporate world?
Or should I build up my savings some more before taking the leap?

Joe
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Old 01-19-2008, 02:20 PM   #2
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Not that I'm an expert or anything (disclaimer: older than you and less savings). But you look like you are all set here. With $1 million, the conventional 4% SWR gives you an income of $40,000 or so, which is more than your current expenses of $35,000. If you make any money from your art, or eventually from your pension, or eventually from your SS you will only get into even better shape. But even with zero from any of those sources, you seem to have sufficient savings for your current rate of expenses. You seem FI. You just have to decide if (when) you want to RE.
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Old 01-19-2008, 06:56 PM   #3
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I agree with GROWING OLDER. If your after tax expenses are 35k, you will probably be OK, but you would need perhaps a 40-45k pre-tax income to support your expenses, depending on your tax rates and your asset allocations (i.e., long term dividends and cap gains, or short term divs and gains as income). Also you will need to consider where the funds are: 401k/IRA or in taxable accounts. Access will be easier from taxable accounts but not impossible from the tax deferred accounts. See other posters for that, I am not that familiar with the process of taking funds from 401k/IRAs early, but I hear there are ways to do it without penalty.

Good luck, and let us know how it goes.

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Old 01-19-2008, 11:18 PM   #4
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Is there a buyout for those who don't go with the new company? That could be your deal-maker.
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47 yrs old, and... could I?
Old 01-20-2008, 08:02 AM   #5
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47 yrs old, and... could I?

Quote:
Originally Posted by Rambler View Post
...Also you will need to consider where the funds are: 401k/IRA or in taxable accounts...
~ $565k in my 401k, $55k in an annuity, the rest I believe I can use at any time and I think that'll get me past age 59 1/2. Maybe.
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Originally Posted by Gazingus
s there a buyout for those who don't go with the new company? That could be your deal-maker.
That's the part the really stinks: some people are just being let go, and they'll be getting severance pay. But for those of us being offered jobs with the outsourcing vendor, if we turn down the offer, we're not entitled to severance. The way it was explained to me is that my company worked so hard to line up good jobs for us, that if we don't take the offer, they don't owe us anything. My severance would have been 56 weeks pay, and if I had been entitled to that, I wouldn't hesitate to RE. (I don't sound disgruntled, do I? ) Another evil twist is that if I take the job with the outsourcing vendor, I still get my last year's bonus (payable in March) but if I turn down the offer, I loose that bonus because I won't be employed by either company.
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Old 01-20-2008, 08:09 AM   #6
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JoeDreaming, I agree with growing_older -- I think you've got it made. Time to paint!

Two questions -- do you have health insurance resolved? And have you run your numbers through FIRECalc (link at the top of the page)?

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Old 01-20-2008, 08:11 AM   #7
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Joe, I second what Coach is asking. Do you have a plan for medical coverage and have you run your numbers through FIRECalc to see what it tells you?

Also, if you do decide to hang it up, why not take the job with the outsourcing vendor until you get your bonus in March, then pull the ripcord?
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Old 01-20-2008, 08:29 AM   #8
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Health insurance is something I need to get a handle on. It was always simple to pick plan a, b or c from my employer. I am in very good health, and from the Blue Cross website, I think I can get a decent policy for $300 to $350/month. And maybe I could use COBRA for a while first.

I have used FIREcalc and it indicates that I'm in good shape. One thing that makes me nervous is that I don't have a lot of confidence that my money is invested wisely. I think my 401k is well balanced across different funds. I moved some money to Ameriprise working with one of their financial advisors, but I'm not sure if I trust that advisor. And I probably have too much $$ sitting in 4.5% CDs Whether I retire now, or in a few years, I really need to get better at this.

"Why not take the job with the outsourcing vendor until you get your bonus in March, then pull the ripcord?" That would be the financially sensible thing to do, but it would feel sooo much more satisfying to make my exit right now. But, you're right, and I may take that approach: take their job offer, get my bonus, and do a little more research into health insurance and investment options so I have everything ready when I do make the jump.
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Old 01-20-2008, 10:55 AM   #9
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Quote:
Originally Posted by JoeDreaming View Post
Hi,
... I want to treat this as retirement although it's really a career change to a much lower paying job as an artist (my true passion) ...
One last thought, Joe. I hope you do take the leap as soon as you feel comfortable doing so. An opportunity to completely change course and pursue a true passion is something that not too many people your age have a shot at.

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Old 01-20-2008, 11:02 AM   #10
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My only concern would be turning a hobby/passion into a 'job'. I think as long as you really don't count on the cash and can still paint for the joy you will be OK.

2 months salary and 18k bonus to wait till March. $37k, same as living exp for one year. I think I would stay.
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Old 01-20-2008, 11:10 AM   #11
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So, if you take the job, yiu remain employed and get the bonus. Is it big enough to be worth a couple months of work? Yoiu can always quit that job as easily as this one when you are ready. Too bad you cannot get the severence, that would be so much better for you. Do you have health insurance lined up if you leave?
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Old 01-20-2008, 11:11 AM   #12
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In all honesty, I'd hang on for the bonus. March will be here before you know it, and that gives a little more time to do investment homework, etc. I hate to sound greedy, but it would really hurt to leave a bonus earned last year.
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Old 01-20-2008, 01:54 PM   #13
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One last thought, Joe. I hope you do take the leap as soon as you feel comfortable doing so. An opportunity to completely change course and pursue a true passion is something that not too many people your age have a shot at.
And the irony is that I can thank my current employer for giving me this push - if it wasn't for the outsourcing, I might keep going to work every day for years, not realizing that I can RE.

Quote:
Originally Posted by Rustic23
My only concern would be turning a hobby/passion into a 'job'. I think as long as you really don't count on the cash and can still paint for the joy you will be OK.
Thanks, Rustic23, I have considered that and that's why I want to make sure I'm ready to RE without relying on an art income. Selling paintings to be able to pay the electric bill is a situation I don't want to be in! Also, there's a good art community around here and that'll help fill the social void when I leave my job. It'll also help to keep it fun - I've met a lot of great people in my art circles.

Quote:
Originally Posted by growing_older
..Do you have health insurance lined up if you leave?
Not yet, as I'm not positive about my timing. When I leave my job, they have to send me something about COBRA, no? And I'm clueless about how much lead time is needed to get my own policy. Is there and idiot's guide to making the transition on this site somewhere? It would be nice to see a checklist of things I might need to worry about, and when I should start planning for certain things, like health insurance.

Quote:
Originally Posted by bubba
I hate to sound greedy, but it would really hurt to leave a bonus earned last year.
Thanks, Bubba, you're right. And since the outsourcing vendor will probably be anxious to replace me with cheaper labor eventually, maybe I shouldn't do them that favor.
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Old 01-20-2008, 04:30 PM   #14
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Not yet, as I'm not positive about my timing. When I leave my job, they have to send me something about COBRA, no? And I'm clueless about how much lead time is needed to get my own policy. Is there and idiot's guide to making the transition on this site somewhere? It would be nice to see a checklist of things I might need to worry about, and when I should start planning for certain things, like health insurance.
Joe, check out this thread in the Best Of forum -- lots of great transition planning ideas.

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Old 01-22-2008, 10:38 AM   #15
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Hi Joe,

Those are some tough decisions. But, I am with Growing_older. Why not keep the bonus and stay with the new employer for awhile. That will buy you some time to clear your head and make more solid plans. (I am a planner by nature). Then you can spread your wings when you are ready instead of being pushed. You are in a much better situation than you think...
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Old 01-22-2008, 10:58 AM   #16
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One thing that makes me nervous is that I don't have a lot of confidence that my money is invested wisely. I think my 401k is well balanced across different funds. I moved some money to Ameriprise working with one of their financial advisors, but I'm not sure if I trust that advisor. And I probably have too much $$ sitting in 4.5% CDs Whether I retire now, or in a few years, I really need to get better at this.
Suggest you search the forum for some of the previous posts on Ameriprise -- you might be surprised to read about some of their practices and high expenses. In investments, even a very small savings in expense ratios can make a huge difference in your long term results and most of the folks on this forum (myself included) are very satisfied with Vanguard or Fidelity for their portfolios.

PS: Sounds like you have a workable plan to cover your expenses. I'd vote to stay with the vendor until you get your bonus and figure out your health care situation. And congrats on having a passion to turn to in retirement!
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