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Major turning point -- help needed
Old 01-30-2009, 02:31 PM   #1
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Major turning point -- help needed

Hi everyone. I am reaching a major crossroads in my life and need some encouragement. I am tied by golden handcuffs to a job I do not enjoy. Like everyone else, I lost a considerable amount in the stock market in the past year. I have not sold any shares but my net worth is down about $1 million. I am 41 years old. I don't want to stay at my job just for the money, but given the current economy I am reluctant to leave. Should I stick it out another year, in the hope that if I do I can RE? Or should I look for a different job I might actually like? Part of me says that 41 is too young for complete retirement. The other part says why not retire if you can? Right now, I am at the low end of FI. Thanks for your advice.
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Old 01-30-2009, 02:35 PM   #2
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I think we need a little more information about your current financial situation and the nature of your "golden handcuffs" in order to provide any kind of semi-informed opinions or suggestions.

If your net worth is down about $1 million you're probably still worth well over $2M unless you took excess risks or weren't diversified in your investments. How much of this is in your house and how much of this is in investments? And finally, what level of income do you feel you need to live on? (That is -- if you really want out, how much of a lifestyle/standard-of-living hit are you willing to take to make it happen?)

I note again the "one more year" syndrome, too. It's very common for people contemplating RE to say "one more year.... just one more year..."
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Old 01-30-2009, 02:52 PM   #3
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Ziggy 29, my current net worth is about $4 million; about $250,000 is in home equity. The rest is either in cash/investments or is illiquid until I leave my current job (lump sum pension payout). To be on the safe side, I would need about $120,000 pretax to cover expenses, including health insurance. I will not have any pension after taking the mandatory lump sum when I leave. So I am on the edge of FI, assuming a 3% withdrawal rate. I would prefer a 2-2.5% withdrawal rate given my age. With one more year in my job, I would be closer to 2.5 withdrawal rate (which also would be the case if the market recovers in the next several years). Thanks.
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Old 01-30-2009, 03:29 PM   #4
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Ziggy 29, my current net worth is about $4 million; about $250,000 is in home equity. The rest is either in cash/investments or is illiquid until I leave my current job (lump sum pension payout). To be on the safe side, I would need about $120,000 pretax to cover expenses, including health insurance. I will not have any pension after taking the mandatory lump sum when I leave. So I am on the edge of FI, assuming a 3% withdrawal rate. I would prefer a 2-2.5% withdrawal rate given my age. With one more year in my job, I would be closer to 2.5 withdrawal rate (which also would be the case if the market recovers in the next several years). Thanks.
The more conservative withdrawal rate that you would have if you worked and saved for another year is worth a lot more than the supposed more conservative rate that you would have if the market recovered.

You can probably see why.

Guys can stand Iraq for a year, why not keep your job and make the rest of your life easier- even if at the end of the year you decide to just change jobs and go on working.

Ha
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Old 01-30-2009, 04:55 PM   #5
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Obviously this is not a good time to be looking for a new job. On the other hand 4 million is plenty of money to retire on even at your young age for most people. Although if you have several pre college age children perhaps less so.

When you so you have golden handcuffs, what do you mean precisely? Does it involve stock options or just another year of pension benefits. Any chance that your company will be having lay offs? If so volunteering to be laid off may work out to be a win win situation for all involved. Even if you are a really good employee, bosses are generally happy to have volunteers to reduce their headcount.
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Old 01-30-2009, 04:59 PM   #6
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clifp, thanks for the response. We don't have kids. I don't think there will be layoffs, but who knows. The golden handcuff is the high income level (roughly $1 million per year, although this year could be lower), which I can't come close to duplicating elsewhere. So each month I stay is significant financially, but with that reasoning I will never leave. Thanks for your input.
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Old 01-30-2009, 05:54 PM   #7
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clifp, thanks for the response. We don't have kids. I don't think there will be layoffs, but who knows. The golden handcuff is the high income level (roughly $1 million per year, although this year could be lower), which I can't come close to duplicating elsewhere. So each month I stay is significant financially, but with that reasoning I will never leave. Thanks for your input.
Those are some tough handcuffs to throw off. However, you seem determined to get out, so why not draw up a plan to definitely pull the plug in 1 or 2 years and then get your head down and work towards that goal. Another year or 2 at that income level will make a big difference to the survivability of your portfolio in the long run, and knowing a date in the near future is a lot easier on the day to day stress levels - at least it has been for me.

Of course if the job is truly toxic and damaging your health then other options need to be considered.
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Old 01-31-2009, 09:19 AM   #8
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If one more year (seriously, just one) would make me truly secure, I'd tough it out no matter what. One year in the grand scheme of things isn't much. When summer gets here, I really think (pray) some of us struggling with the day to day, will find the going gets easier. You'll take some vacation days, you'll be working your plan, really one more year will go by faster than you think. But, if I'd made up my mind to leave in one year, I'd go at the end. That means taking this year to get ready, examine all your expenses, decide if you want to stay in that house, etc etc. Since you are so undecided at this point, maybe take it one day at a time. If one day is too much, take it an hour at a time. The others here know so much more about this than I, but personally, I'd not plan on a SWR greater than 2.5% in your 40s.
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Old 01-31-2009, 09:51 AM   #9
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Since your on the edge of FI why not look at it this way... Would I rather retire now and live on less (curtail lifestyle etc) until my retirement savings grew to allow the higher draw or continue working until the retirement savings grew to allow the higher draw.

Both would induce pain but which would be more tolerable.

Course keeping the job is the less risky choice as long as you can maintain your sanity/health.
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Old 02-01-2009, 11:22 AM   #10
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Thanks for the feedback. I realize that 1 year does not seem like a long time, but this job is pretty toxic at this point. The decision I am unable to make is whether I should put up with a job that is very bad for my morale and self-esteem in order to retire in the next year, or try to find a more rewarding, less lucrative job that I would actually like. Has anyone else been in that situation? Thanks again.
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Old 02-01-2009, 11:30 AM   #11
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Old 02-01-2009, 11:35 AM   #12
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The decision I am unable to make is whether I should put up with a job that is very bad for my morale and self-esteem in order to retire in the next year, or try to find a more rewarding, less lucrative job that I would actually like. Has anyone else been in that situation? Thanks again.
Of course. I have been doing that several years already, and will retire in November. Jobs, by their very nature are (for many of us) bad for morale and self-esteem. I thought that that is why they call it "work", not "play".

If it is your decision to continue until you can retire in the next year, then what you need to focus on is that paycheck. Let the others play their games, and try not to get too battered by it. Time will pass. You can do it.
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Old 02-01-2009, 11:55 AM   #13
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I have posted this line of thinking before. If you had retired a year ago, and had the 1M you lost, and FireCalc said you could do 30 years, then you should be able to retire today based on the figures a year ago. Now as REWhoo pointed out you may only be good for 29 years, and that may make a difference, but the guy that did retire last year with your exact same conditions and FireCalc took into consideration that there could be losses such as last year.
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Old 02-01-2009, 12:35 PM   #14
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Is the poster Tony Soprano? Just kidding.

This is a tough post to respond to. The numbers are a little different, but it kinda sounds like me 5 years ago.

I was in high paying job that was producing a lot of stress and unhappiness. I could have ER'd. But as I got closer to ER, I got cold feet about the effects of ER on my spouse and thought I might become bored.
Instead of quitting, I cut back on the hours and some aspects of the job that were the most stressful. Of course, the pay was less. 5 years later, I am still working. Sure, the job still has it's painful aspects and I complain to my wife (she's frugal and a blessing....well, mostly) about it sometimes, but the job is a lot better. I could still ER, but with the asset crash, I am content to continue to work, probably for a few more years as long as my job does not become too painful. If it does, I will drop it like a bad habit.
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Old 02-01-2009, 01:55 PM   #15
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I found in my last year of working in my crappy job that I gained a lot of satisfaction from being RIP (Retired In Place), or downshifting as Gumby said. I felt like it was payback for all the crap I had taken, and it felt good. I ended up getting a different job in the company for 2 more years after that, and I enjoyed it immensely. I think if you can make the mental shift to knowing you own them instead of them owning you, you could make that last year work in your favor.
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Old 02-01-2009, 02:41 PM   #16
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I'm a big believer in "make hay while the sun shines" and a 1 million a year job is something I would think long and hard before I gave it up. If you are in a field or have such a reputation that you could exchange your toxic job for another of similar compensation then that's one thing, but if this really is a one of a kind opportunity and a job change means huge drop in income then I'd be very inclined to stick it out. It might not last all that long anyway. If you know you are only there temporarily and making the best of the situation, that might make enough attitude adjustment to make it tolerable. I've worked with contractors who put up with situations employees fled from, based on attitude. As an employee, people cared about the politics and the success of the organization. As a short-timer or contractor, people cared about doing what they were asked to do well, and then what the company did with it, or wasted, or made bad choices, was of much less significance and therefor tolerable.

Now, some jobs are so toxic that you can hurt your health or personal relationships and if this is that bad, that's a whole different story.
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Old 02-01-2009, 04:41 PM   #17
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I was in a very toxic job too with no where near your compensation. What I did was to start planning for my exit financially and strengthened my community relationships. Never for a moment did I whine about my job or give less than full measure, but there were assignments I handed back to managers when they tried to dump on me.

What you need is to prepare business plan for the rest of your life. The process of preparing for departure can actually relieve stress. It is amazing how empowering it can be. Meet with an attorney who knows your industry and employment agreements, utilize your health plan. If a substantial part of your net worth is in your employer's stock which you can sell only after you leave know what your options are. If you are locked into a hold period think long and hard about exercising options.

When I had my plan in place I negotiated my exit with management well above my managers. They were stunned.
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Old 02-02-2009, 06:55 AM   #18
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Hoping, I am almost in exactly the same shoes that you are: similar net worth (but one million in primary home), similar income requirement post FIRE, just a few years older at 47, golden handcuffs are similar (some years twice yours and some years about 75%). It seems there is also the potential for a sizeable "going away gift", depending on how things work out, but that is not guaranteed. My non-home assets are primarily in my taxable account.

If I were you, I would stick it out another year, and at the same time, learn to be like a duck...let the nonsense just roll right off your back. I am personally working on (yet again) adjusting my attitude to be able to do just that. Why? Because at my age, 3% is more comfortable than 4% (2.5% is better for you at 41, I agree). I have episodes every once in a while that remind me why I want to FIRE, and had another just last friday. But, you know, being 100% assuredly FI and being able to do exactly what you want when you want, knowing your parameters, is probably worth a year or two of letting the "water roll off your back" like the duck. I think it would be better than "worrying" all the time that you weren't going to make it because you bailed too soon.

So, barring any physical issues being presented because of not taking the (very) early out, I would advise stikcing it out just a little longer. A year for you probably means at least $300-400k new money to invest, two years would be twice that. Personally, I'm sticking it out at least another year, probably two, and maybe even three.

Good luck, hoping!

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Old 02-02-2009, 09:09 AM   #19
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Thanks, everyone, for the extremely valuable and insightful responses. Gumby, thanks for sharing your decision. We have a lot in common. I am a lawyer as well, and I am thinking of moving to more meaningful government work. How have things gone in your new position? Has it been more professionally rewarding for you? One concern I have is that litigation is litigation whether in government or not, and maybe it will be just as aggravating and stressful in government, with lower compensation. Thanks again for taking the time to respond. This is a difficult decision for me.
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Old 02-02-2009, 09:52 AM   #20
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A perspective on the "just one more year" thing, from an experienced sufferer of that syndrome (my dilemma is that I have a job I like, a good income, but not enough free time to do other things and visit with distant family - aiming at early semi-retirement):

Assume you are age 60 and will live til age 85, remain quite active until age 80 - 25 years of retirement, and 20 years of highly active retirement if you were my age 60 today. Putting things off for one year means relinquishing over 4% of my retirement years and perhaps 10% of my remaining active retirement years. And of course the numbers get more and more compelling every year thereafter. That's where I am, and feel like I am nearing the tipping point (the recession is the main reason I am reticent).

Looking at it from your age of around 40, you are have 45 years of retirement and perhaps 40 years of active retirement. Every year of delay costs you 2.2% of your remaining retirement years and 2.5% of your highly active retirement years.

My main point is that deferring for a year is a much lower relative sacrifice of retirement play time at age 40 than it is at older age groups. If you have to leave because work is toxic, so be it. But if you are uneasy with your current numbers (I am not) then waiting a year or two could mean a lot in terms of your future comfort level.

Just another look at the numbers. Sounds like you need an escape strategy from a really bad environment - the money's there. And if you give 6 months notice, another half million less taxes is still yours for the taking. By the way, do NOT assume that health insurance will be there after you quit, even if you are perfectly healthy -- make sure you have access through work, or get a private policy in place before you cut the cord.

Congratulations on accumulating and impressive nest egg at a young age.
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As if you didn't know..If the above message contains medical content, it's NOT intended as advice, and may not be accurate, applicable or sufficient. Don't rely on it for any purpose. Consult your own doctor for all medical advice.
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