On The Cusp of ER

[Which Roger]

First of all, I want to say thank you to everybody who has contributed to the forums. I've been lurking for a while, and have learned a lot from all of you. Hopefully I can give back at least some of what I've gotten from you.

I'm in my early 50s, married, no kids, and have been working at MegaTechCorp for quite a few years. The company has been struggling for a long time and just ain't what it used to be, and other factors (achieving FI, having too many interests outside of work that just can't wait anymore, frozen pension for which I recently became eligible, and the potential for getting a decent severance package) have made 2013 the right time for me to pull the plug. I haven't set a date yet, but barring some major unforeseen circumstances, the plug will be pulled sometime this year.

 

[retire2020]

Congrats! Welcome to forum...lots of good info and ideas around here. All the best!

 

[obgyn65]

Welcome aboard.

 

[ERhoosier]

After you pull the plug, will you be changing your handle to "Jolly Roger"
Sorry...just couldn't resist.
Congrats! And welcome.

 

[Which Roger]

An update on my situation: I have been in somewhat of a holding pattern for the past couple of months, since there was the possibility of receiving a buyout sometime in the very new feature. The buyout would have made pulling the plug a no-brainer, so I didn't worry too much about finishing up crossing the Ts and dotting the Is. That opportunity has come and passed - got the word a couple of days ago. (I gave it a 50/50 chance of happening, and everything my boss told me leading up to the final outcome makes me believe that I had computed the odds correctly).

The good news is that receiving a buyout was not a necessary condition for me pulling the plug, and I now control of my own destiny. The bad news is that I now control my own destiny and have a decision to make. Thus, my recent flurry of activity on these forums - I have gotten back to finishing up crossing the Ts and dotting the Is.

The really good news is that I haven't discovered anything that makes me want to hold off on ERing, and so I'm leaning toward taking the plunge sooner rather than later. Next steps are a little more analysis and some more soul searching, but it's pretty clear where this is all heading.

 

[Which Roger]

While I'm on a roll, here's a brief summary of the things I have learned or verified in the past few days:

- My (frozen) lump sum pension value is computed annually. Since the interest rates used for the 2013 computation were at historic lows, the value of the lump sum will likely be less next year.

- Plugging in my lump sum into an annuity calculator, I can get about 91% of what my employer is offering per month. Makes sense since the companies offering annuities need to make a profit.

- I can get a 15-year annuity (which would end at about the time I reach my full retirement age for social security) that pays about 60% more per month than a lifetime annuity. This would provide relatively constant income, as the annuity payment would be roughly equal to my social security payment. Not strongly considering this route, but it is an interesting option.

- If I choose an annuity for my pension, and PBGC takes over my pension between my ER date and 2018, my payment will be reduced. If that happens after 2018, I will receive the full amount.

- Neither pension income nor retirement plan distributions are subject to state income tax in my state.

- For a family of 2, the tipping point for the ACA exchange subsidy "cliff" is 62K income, which is 400% of poverty level. With 62K income, DW and I can get a Silver Plan for an (estimated) $491 per month. With 63K income, the cost jumps to $1312 per month! Not sure if we'll be going this route, and I'm guessing the law will change to address the cliff, but at least I know where things currently stand.

- DW's 401k has an expense ratio of 0.9%. If she leaves her company and moves the money to Vanguard (expense ratio around 0.1%), she can save about $300/month in expenses. One of the "hidden costs of w*rking" that we don't think enough about. The difference for me is much less dramatic, since my 401k has low expense ratios.

- Married filing jointly, with income less than about 72k, capital gains and qualified dividends are taxed at 0%.

- (something I haven't found out yet) - cost of retiree health insurance from my employer. I can get it if I pay the full premium. I think it will be in the range of $400 per month (for me only), but that's just a ballpark figure.

 

[Live And Learn]

Make sure you budget for the $2k deductible with ACA (per person, I believe)

 

[MichaelB]

- I can get a 15-year annuity (which would end at about the time I reach my full retirement age for social security) that pays about 60% more per month than a lifetime annuity. This would provide relatively constant income, as the annuity payment would be roughly equal to my social security payment. Not strongly considering this route, but it is an interesting option.

Have you plugged those numbers into FIRECalc to see how each option affects your lifetime income and spending?

 

[ERhoosier]

Make sure you budget for the $2k deductible with ACA (per person, I believe)

And an allowance for annual out-of-pocket max. Doubt it will hit you every year, but that potential expense is something to consider.

 

[Which Roger]

Have you plugged those numbers into FIRECalc to see how each option affects your lifetime income and spending?

Haven't done that, because for various reasons the 15-year annuity really isn't something that fits nicely into the overall plan. It was just something I learned while doing my research, and prior to that, I didn't know such a thing existed.

Regarding the comments on the ACA exchanges, I won't necessarily be using them either (but may at some point), but I uncovered a lot of interesting info along the way. So my post was more of a brain dump than an action plan.

Thanks all for reading and providing the good input!

 

[Milton]

The bad news is that I now control my own destiny and have a decision to make....

[O]ther factors (achieving FI, having too many interests outside of work that just can't wait anymore, frozen pension for which I recently became eligible, and the potential for getting a decent severance package) have made 2013 the right time for me to pull the plug.

Seems like an easy decision! Those are all excellent reasons to hang it up.

I'd suggest going sooner rather than later, while you can still enjoy the better part of the summer months.

 

[Which Roger]

Seems like an easy decision! Those are all excellent reasons to hang it up.

I'd suggest going sooner rather than later, while you can still enjoy the better part of the summer months.

Thanks, Milton! If those reasons weren't good enough, I found out a few days ago that my role at work will likely be changing, and my old role will be disappearing, so there may not even be a need to transition my work to somebody else. I think I'll take the plunge in early September, and will make it official within the next couple of weeks. I won't be missing out on summer entirely since I have some vacation days to burn.

 

[gauss]

While I'm on a roll, here's a brief summary of the things I have learned or verified in the past few days:

.....

- (something I haven't found out yet) - cost of retiree health insurance from my employer. I can get it if I pay the full premium. I think it will be in the range of $400 per month (for me only), but that's just a ballpark figure.

Which Roger,
Do you currently have coverage on your wife/family with your employer?
If so, you might want to look at your 2012 W-2 form Box 12-DD. The total value (employee + employer share of premiums) of your health insurance premiums (which is often the same as the COBRA value less the 2% COBRA markup) should be listed. This new information might assist you with your planning.

Haven't done that, because for various reasons the 15-year annuity really isn't something that fits nicely into the overall plan. It was just something I learned while doing my research, and prior to that, I didn't know such a thing existed.

Are you having technical trouble modeling the temporary income stream in FireCalc, or is this a more profound issue that you are referring to?

If the former, I have had similar issues with my wifes pension receiving a Social Security supplement between the ages of 52 and 62.

I believe that I was able to model this with 2 lifetime streams one Pension Income that starts at age 52 and One offchart spending that starts at age 62 which negates the original stream.


-gauss

 

[gauss]

Thanks, Milton! If those reasons weren't good enough, I found out a few days ago that my role at work will likely be changing, and my old role will be disappearing, so there may not even be a need to transition my work to somebody else. I think I'll take the plunge in early September, and will make it official within the next couple of weeks. I won't be missing out on summer entirely since I have some vacation days to burn.

Always good to end on a high note.

Actually that was one of my quotes while I was working that I applied to when my work day would end. I think that it was psychologically pleasing.


-gauss

 

[Which Roger]

Are you having technical trouble modeling the temporary income stream in FireCalc, or is this a more profound issue that you are referring to?
-gauss

Gauss - thanks for asking. It wasn't a technical issue. What I meant is that I didn't follow up because a 15-year annuity isn't something I'm really considering, given the timing of other income sources, etc.

 

[Milton]

I found out a few days ago that my role at work will likely be changing, and my old role will be disappearing, so there may not even be a need to transition my work to somebody else.

Perfect!

 

[robbridg]

Definitely change your user name to Jolly Roger! Congrats

 

[Which Roger]

IT'S OFFICIAL!
​

I pulled the trigger and will be joining the class of 2013 next month.

(I told DW that the last time I was this certain about something, it involved an engagement ring).

 

[pb4uski]

That is a very jolly post Roger! Congratulations!!

 

[redduck]

First of all, I want to say thank you to everybody who has contributed to the forums. I've been lurking for a while, and have learned a lot from all of you. Hopefully I can give back at least some of what I've gotten from you".

+++
Well, I'm not sure what you've learned from me so far, but...
"Duck, do you have to do this?" (Duck saying to himself).
"Yeah, it's my destiny." (Duck answering himself...because Duck is sometimes a DIY kind of guy (but, not all that often).

OK, Which Roger, read on. And, by the way, congratulations on your retirement.

The good news is that receiving a buyout was not a necessary condition for me pulling the plug, and I now control of my own destiny. The bad news is that I now control my own destiny and have a decision to make..."
+++

Ah, Roger, you can't control your own destiny: that sucker is predetermined, unchangeable, fixed forever. You're stuck with it. If you don't believe me, just ask Achilles or his mother.

 

[TimSF]

Let me add my congratulations and share that I was in a similar boat. I spent the past year or so waiting/hoping my employer would lay me off and give my package. Finally got tired of waiting and took matters into my hands this month. Once I made the decision and announced it, I realized how "right" it felt to have made the choice rather than having it made for me. That feeling is worth the cost of the foregone severance, which may or may not ever have come. Next week is my final week of work.

 

[MBAustin]

Congratulations, Roger!

I guess I was somewhat fortunate when I was deciding that my company never offered "packages" and the severance was so minimal as to be a joke. So I wasn't tempted to wait for an "offer".

 

[Which Roger]

Let me add my congratulations and share that I was in a similar boat. I spent the past year or so waiting/hoping my employer would lay me off and give my package. Finally got tired of waiting and took matters into my hands this month. Once I made the decision and announced it, I realized how "right" it felt to have made the choice rather than having it made for me. That feeling is worth the cost of the foregone severance, which may or may not ever have come. Next week is my final week of work.

Thanks, TimSF. You'll beat me to the finish line by less than 3 weeks!
I guess we can take it as a compliment that our employers refused to get rid of us even after we asked them to get rid of us!

 

[Which Roger]

Congratulations, Roger!

I guess I was somewhat fortunate when I was deciding that my company never offered "packages" and the severance was so minimal as to be a joke. So I wasn't tempted to wait for an "offer".

Good point. While I was waiting for an offer, I found myself in a holding plattern, unable to plan for the case of not getting an offer. Once I found out they wouldn't pay me to leave, things fell into place very quickly.

 

[Which Roger]

I'm outta there! Could hardly contain my giddiness as I walked out the door for the last time.

My first reaction when I got into the car was "I think I lost my badge!" But I'm sure I'll make that adjustment quickly. Old habits die hard.