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"Layoff ahead" no more!
Old 02-10-2015, 12:40 PM   #1
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"Layoff ahead" no more!

Hi everyone! I want to thank all who read & replied to the post "Layoff ahead!" that I wrote 14 months ago. A lot has happened since then and it seems time for an update. I'm posting this in "Hi, I am…" because I never really introduced myself before. Mea culpa.

Note that all income & expense numbers are monthly. I am now 56.5, DW is 55.5

DW's layoff did happen in Jan 2014 and her company was wonderful about everything, keeping every promise we had been given. She was able to start taking a $450 pension plus $490 medical retirement late 2014. Both are joint & survivor, but don't have COLA. Her severance was a year of salary and she got leftover accruals and a couple of small bonuses. She still meets with some cow*rkers for lunches and leaving on good terms was healthy for both of us. She has determined that she couldn't go back to 40 hr weeks although PT might be possible.

I'm continuing to operate my small business, a hotel gift shop / convenience store plus wholesaling to several other hotels that have self-service kiosks. I take a salary of $3600 but have lots of extra withheld for taxes as DW's pension doesn't have withholding. The bad news is that while we had a full cash offer to sell the business, it fell through because the hotel wouldn't write a lease for the new buyer. I'm still exploring selling the wholesale part but it isn't worth much without the brick & mortar location. It still only takes about 20 hrs per week, but requires attention almost daily so does not fit with plans for more travel & leisure. Planning to close down at end of April this year, we will probably walk away with $5-10k cash plus a good deduction from the final K1. After 11 years on my own I couldn't handle full time again, but would consider a PT j*b if we get into a bind.

The good news is that DD is in her last semester of college and graduates in May! Yippee! We achieved our goal of getting her through 4 years at a reasonably priced state school without any loans. Last tuition payment sent 4 weeks ago! We've also matched part of her earnings to start her a ROTH now worth $26k.

We've been working hard to get our financial house in order. Here are the numbers as of today:

ASSETS:
$860k Traditional IRA's (DW's 401K through Vanguard didn't allow partial withdrawals via the out-at-55 rule, so we rolled it over to be able to do conversions.) Overall these are 90/10 AA.
$179k ROTH IRA's (starting slowly on conversions this year, faster if we get a large K1 loss for the business). These are 80/20 AA.
$149k After tax investment account which gives off $560 / mo dividends. 100/0 AA. We stopped DRIP'ing these late 2014. Mostly in utilities, REITs and telecom to get this level of income.
$17k HSA. This is in a 0.5% interest account. I'm nervous about reaching for higher income with investments as I look at this as part of our "emergency fund".
$80k Cash…large stack of crisp $100 bills under the mattress…just joking!
$1265k Total, up 19% since previous post. Almost all at Fidelity so our account guy now sends occasional invites to lunch or dinner. Nice perk!
Townhome ($150k), cars ($20k) & CC's fully paid. No debt!

EXPENSES:
$1800 Essential costs - HOA fees, utilities, insurance (including Health Insurance), cell phones etc. Not much room for cutting here.
$1600 Variable costs - gas, groceries, wine, dining out, etc. We could crunch this by 50% if we had to, and some should drop after I close the business.
$700 budget for 2-3 longer trips per year while we're still healthy & able, and we are at about $50k total spending next year.

The expenses are firm numbers, based on past 3 years of data from Quicken. We've been banking the pension, medical and dividends to build after-tax cash account while living off my salary & reimbursements.
With $450 + $490 + $560 = $1500 passive income we have most of our essential costs covered. Getting to 59.5 without raiding the investment account will be a challenge, but I think we can. I've looked at different options for SS and we plan to file at 62 to prevent having to deplete our TIRA's before FRA. At 62 my SS will be about $1000, DW's about $1200.

Our near-term goals:
4-5 wk trip to Europe this summer. Estimated total cost $8k. we have friends to revisit and are experienced in traveling the continent so we should be able to keep it in this budget.
4-5 week trip to South America in early 2016. Never been there, want to explore some new things. Also want to get out of MN for part of winter. Estimated total cost $6k.
New flooring, kitchen update, and other fix-ups on the townhome. Nothing is urgent and we're fairly handy, so total budget of $20k could be trimmed and certainly will be spread out over 1-2 years.

I know there are some gaps in this plan - if we burn through cash at $2000 per month plus trips plus remodeling our $80k of cash will be gone before we reach 62. That could prompt some PT w*rk for a few months each year, something we're OK with.

Alternately, DW could now qualify for unemployment 6 months @50% salary and after closing the business I could qualify for 5 weeks @50% salary (special rule limits owner's unemployment from their own business!) Since she isn't really looking for FT j*b, would this be a bad thing to do? It would certainly help! Moral dilemma.

Whew! This got to be longer than I thought but much of the progress we've made this past year is due to the GREAT people who give their time & experience on this forum. I hope our story gives others some ideas.

As for comments & criticism: Fire away!

BrianB
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Old 02-10-2015, 01:22 PM   #2
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Sounds like you've done a lot of careful planning and have examined your cost of living closely. Others will have more specific suggestions, I'm sure, but I just wanted to say congrats on being well positioned to handle the changes life presents.
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Old 02-10-2015, 01:32 PM   #3
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Congratulations on getting to this point (especially launching DD with no student loans and her own Roth!).

Have you considered one or both of you to take on some temporary w*rk a few months each year (so as not to crimp your travels) to fund the travel/remodeling and give you a bit more of a cushion now rather than scrambling for more income in 20 years? I just heard this morning on NPR that Home Depot is looking to hire 80K people across the country for the spring season, which is like their Christmas season. Others do tax work, also seasonal. Etc.

Just a thought...
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Old 02-10-2015, 01:51 PM   #4
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katiek: Thanks for the encouragement! Sometimes I feel like I'm obsessing about the details but in any plan:

"there are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns -- the ones we don't know we don't know."

Those "unknown unknowns" are the worst!
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Old 02-10-2015, 01:58 PM   #5
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MBAustin: We have a Home Depot just a few blocks from home. I know the place well! One concern is a planned trip to Denver or Seattle (hint! hint!) in the near future. They have large signs on the door to Home Depot warning applicants about pre-employment testing.

We're also wondering about the ethical implications of applying for unemployment while not really being active in a job search. Neither of us has ever applied for UI before!
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Old 02-10-2015, 02:05 PM   #6
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Originally Posted by BrianB View Post
We're also wondering about the ethical implications of applying for unemployment while not really being active in a job search. Neither of us has ever applied for UI before!
Translation: As I close this post, I'm going to throw a lit match into a gas-filled room to see what happens...
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Old 02-10-2015, 02:30 PM   #7
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REWahoo: Nothing incendiary intended!

Actually, I am in favor of applying (never done it, paid in through wages for many years) while DW is conflicted (we don't really need it, other people do).

I'm curious which side of the issue others weigh in on.
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Old 02-10-2015, 02:36 PM   #8
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Originally Posted by BrianB View Post

Actually, I am in favor of applying (never done it, paid in through wages for many years) while DW is conflicted (we don't really need it, other people do).

I'm curious which side of the issue others weigh in on.
So you want to know if folks on the forum have ethical standards equal to yours - or higher like your DW?
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Old 02-10-2015, 02:59 PM   #9
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One of the many reasons I married her!
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Old 02-10-2015, 05:50 PM   #10
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And to set the record straight, I suspect you didn't pay anything into unemployment. Isn't that a burden of the employer as is worker's comp?
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Old 02-10-2015, 07:23 PM   #11
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Looks like your annual expenses are about $49,200, which is just about 3.89% of your portfolio of $1.265M. Looks borderline to me. But you indicated your willingness for part-time work and there are future incomes from social securities. It is certainly doable.
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"Layoff ahead" no more!
Old 02-15-2015, 01:55 PM   #12
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"Layoff ahead" no more!

Quote:
Originally Posted by flyingaway View Post
Looks like your annual expenses are about $49,200, which is just about 3.89% of your portfolio of $1.265M. Looks borderline to me. But you indicated your willingness for part-time work and there are future incomes from social securities. It is certainly doable.

I think you didn't factor in the $940 a month income. OP would need to draw $37,900 from portfolio yearly. Unless I'm the one mistaken. Much more reasonable WD

OP. If you have the discipline to stick to your budget, and have no desire to leave a substantial inheritance, and have no need to assist your daughter financially, and no major medical expenses later in life not covered by LTC insurance, you should be fine. Your situation is similar to ours.




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Old 02-15-2015, 05:57 PM   #13
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Your ages and funding are/were very close to ours at retirement in 2006. A bunch of nice travel adventures a new truck and were are almost 400k ahead of where we started. YMMV.
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We made it!
Old 06-29-2015, 10:15 AM   #14
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We made it!

Bumped this thread for an update:

A GIANT THANK YOU to the members of this board who have given us honest, blunt advice over the past year, and now...

Today is Day 1 of Retirement!

We had expected to be done in March or April, but as a business owner / operator it took a lot longer to wind it down. We were able to sell through almost all inventory, so we walk away with no unpaid bills and will get a few thousand $ after all is done.

In preparation we've gone to about $120k of our $1.3m investable assets in cash, with another $130k of those assets in an after tax investment account paying $550 / month dividends (not reinvested). The other $1.05m is $850k TIRA and $200k ROTH.

We're still getting the $940 / mo pension and we are planning to draw down the cash at about $2500 per month so with the dividends our budget of $4k per month should be safe for at least 4 years. I will be 59.5 in 2.5 years and 62 in 5 years (DW is one year younger) so we will have flexibility in managing our taxes & income levels by 2018. Based on our situation then we will decide whether to early file for SS.

What are we going to do? Well, we just bought a small Nissan NV200 cargo van (already fully paid in cash) that I am converting to a micro-camper. It's been a great learning experience and we will be using it as a "daily driver" as well as for camping. This could be a whole new thread if people find it interesting?

Once again, thanks to the dedicated & incredibly knowledgeable people here who share their time & advice so freely. You have been a big part of making this possible for us.
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Old 06-29-2015, 10:17 AM   #15
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Your post made my day! So happy it all worked out for you!!!
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Old 06-29-2015, 10:38 AM   #16
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Congrats!
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Old 06-29-2015, 11:33 AM   #17
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Well, we just bought a small Nissan NV200 cargo van (already fully paid in cash) that I am converting to a micro-camper. It's been a great learning experience and we will be using it as a "daily driver" as well as for camping. This could be a whole new thread if people find it interesting?
I vote yes for a whole new thread - with pictures.
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Old 06-29-2015, 06:59 PM   #18
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Congrats ,and I look forward to seeing more from your "stage 2"
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Old 06-29-2015, 11:01 PM   #19
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Congrats and welcome to the "other side".


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Old 06-30-2015, 07:57 AM   #20
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Congrats from another in the Twin Cities! My DW retires in November and I'm already semi-retired so we aren't far behind you
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