Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
This is it, 2 weeks notice, July 15, 2013
Old 06-29-2013, 12:52 AM   #1
Confused about dryer sheets
 
Join Date: Apr 2013
Location: Los Angeles
Posts: 7
This is it, 2 weeks notice, July 15, 2013

Posted once couple months ago. Today I summited my severance package at age 56 ( wife 55 ), very nervious sending out the signed package via FedEX but I am very relax now and at peace with myself. My aerospace megacorp package is not great but it is time to start a new chapter. I will get one week pay for every year of service with 27 years giving me half year salary. In additional, one year medical, one year education assistance, and that's it. I am making $120K as Operations Manager in California and my wife $50K in major insurance claim rep, now I have to rely on her for the medical and serveral more years before she retires. No debt, two daughters just got married and we paid off their college loan, so feel free althoght it seems odd with her supporting me for a change but her supports has improves our 32 years marriage. I like to stay for several more years but it will be at the expense of my health. I work hard all my life and feel guilty to be supported by my wife in return. Our calculation are as follows. $1M total 401 K, hope not to touch it until 591/2. I will get a pension of $3K before tax, therefore may be $2K after tax. Her $50K annual salary will be about $2000/month after tax. Our expense are $5K therefore I am short about $1K/month. Our mortage is $40K remaining and I like tp pay it off with my $60K severance. In 5 years, my SS will be $1700 at 62 or $2400 at 65. I will take it at 62. I am afriad that I am not able to slow down from my fast pace job, but I know the next few years will be very tough. I hope to start a second carrer but have no plan. People in our office is very stress because one additional major player is taking the package as well. I love my job but used to be 80/20 and now 60/40. I hope I would be able to adjust quickly and how long would it take and should I start taking the 401K or get a line of credit from my bank? I have LTC at $2500 and wonder I should drop that? My wife did not qualify due to a kidney transplant. I feel better now after sharing my thought with you. Thanks!
__________________

__________________
51togo is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 06-29-2013, 05:47 AM   #2
Full time employment: Posting here.
 
Join Date: Jan 2006
Posts: 688
Congratulations! I would take the $1K per month using a 72t. That would only be 1.2% withdraw rate, so very safe. And only for 3 years. Enjoy it while you can.
__________________

__________________
48Fire is offline   Reply With Quote
Old 06-29-2013, 06:38 AM   #3
Recycles dryer sheets
 
Join Date: Aug 2012
Location: Murfreesboro
Posts: 57
Congratulations!

(You might want to edit title to 2013 not 2003 )
__________________
5971 is offline   Reply With Quote
Old 06-29-2013, 06:49 AM   #4
Recycles dryer sheets
 
Join Date: May 2011
Location: Twin Cities
Posts: 434
How much is the mortgage and at what interest rate?

Instead of using the severance to pay off the loan you might just keep paying the mortgage and use those additional funds as a means to cover the monthly shortfall. I'd at least look at that as an alternative.
__________________
Fishingmn is offline   Reply With Quote
Old 06-29-2013, 06:58 AM   #5
Thinks s/he gets paid by the post
obgyn65's Avatar
 
Join Date: Sep 2010
Location: midwestern city
Posts: 4,061
Congratulations. It seems that you are all set.
__________________
Very conservative with investments. Not ER'd yet, 48 years old. Please do not take anything I write or imply as legal, financial or medical advice directed to you. Contact your own financial advisor, healthcare provider, or attorney for financial, medical and legal advice.
obgyn65 is offline   Reply With Quote
Old 06-29-2013, 07:30 AM   #6
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
clifp's Avatar
 
Join Date: Oct 2006
Posts: 7,451
No need to do a 72(t). You can withdraw money penalty free from a 401K, unless your administrator does not allow it. (rare) It you terminate employment after 55.
You have $12,000/year shortfall and you have $1 Mil in your 401K just take the money out you need and don't worry about it!
__________________
clifp is offline   Reply With Quote
Old 06-29-2013, 08:33 AM   #7
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 16,490
Quote:
Originally Posted by clifp View Post
No need to do a 72(t). You can withdraw money penalty free from a 401K, unless your administrator does allow it. (rare) It you terminate employment after 55.

You have $12,000/year shortfall and you have $1 Mil in your 401K just take the money out you need and don't worry about it!
+1 also, I don't think the tax bite on your pension will be anywhere near 1/3. but then again you do live in California. If you do you own taxes you could create a dummy return with your estimated 2013 and 2014 numbers to get an idea.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
pb4uski is offline   Reply With Quote
Old 06-29-2013, 11:05 PM   #8
Confused about dryer sheets
 
Join Date: Apr 2013
Location: Los Angeles
Posts: 7
Thank you everyone, I feel better already. I will check with my 401K admin. to see if no penalty since termination after 55. I also like the idea from fishingmn to pay the monthly mortage using severance. We own $40K at 5% or $850/month. My severance will be about $70K before tax, how much do you think after tax? We do have an emergency account of $35K for major car repair, big ticket items like LTC insurance $2500, life insurance etc. to tap into this account. Our 401K is 70% income fund at 3.5% and 30% company stock returning 10% would you feel I should change? It's a big aerospace firm and been stable return. This will be a special 4th of July. Thank you!
__________________
51togo is offline   Reply With Quote
Old 06-29-2013, 11:07 PM   #9
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Apr 2013
Posts: 5,606
Quote:
Originally Posted by clifp View Post
No need to do a 72(t). You can withdraw money penalty free from a 401K, unless your administrator does not allow it. (rare) It you terminate employment after 55.
You have $12,000/year shortfall and you have $1 Mil in your 401K just take the money out you need and don't worry about it!
You stole my plan! +1.
__________________
MRG is online now   Reply With Quote
Old 06-30-2013, 06:13 AM   #10
Full time employment: Posting here.
 
Join Date: Jun 2012
Location: Suburban Woods in Ohio
Posts: 503
Congratulations, 51! You will find this site most helpful as you make your way through the maze of decisions and calculations. There are many folks here with seasoned experience in so many ER matters. You'll find it's like walking into coffee klatch at Panera, with old acquaintances and friends welcoming you with good advice and a pat on the back!

Best Wishes!

__________________
"Everything becomes more itself." --C.S. Lewis
LitGal is offline   Reply With Quote
Old 06-30-2013, 08:15 AM   #11
Thinks s/he gets paid by the post
 
Join Date: Nov 2006
Posts: 2,268
How does your wife's $50K salary only amount to $2000 per month after taxes?
__________________
utrecht is offline   Reply With Quote
Old 06-30-2013, 08:23 AM   #12
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 16,490
Quote:
Originally Posted by 51togo View Post
....My severance will be about $70K before tax, how much do you think after tax? We do have an emergency account of $35K for major car repair, big ticket items like LTC insurance $2500, life insurance etc. to tap into this account. Our 401K is 70% income fund at 3.5% and 30% company stock returning 10% would you feel I should change? It's a big aerospace firm and been stable return. This will be a special 4th of July. Thank you!
Try TurboTax® TaxCaster - Free Tax Calculator - Free Tax Estimator to get an idea of the tax bite of your severance.

I would not be concentrated in a single company stock. Think of Enron. I think it is better to be diversified. Can you change the company stock to a diversified equity fund after you leave while still being in the 401k? If so, I would.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
pb4uski is offline   Reply With Quote
Old 06-30-2013, 08:34 AM   #13
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas Hill Country
Posts: 42,151
Quote:
Originally Posted by pb4uski View Post
I would not be concentrated in a single company stock. Think of Enron. I think it is better to be diversified. Can you change the company stock to a diversified equity fund after you leave while still being in the 401k? If so, I would.
+1!
Quote:
It's a big aerospace firm and been stable return
Past performance is no guarantee of future returns.

I know two individuals who were way too concentrated in their company stock (two different companies) but wouldn't diversify because they "knew" the company was solid. Both took major hits when their company stock tanked.
__________________
Numbers is hard

When I hit 70, it hit back

Retired in 2005 at age 58, no pension
REWahoo is offline   Reply With Quote
Old 06-30-2013, 08:50 AM   #14
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Ed_The_Gypsy's Avatar
 
Join Date: Dec 2004
Location: the City of Subdued Excitement
Posts: 5,293
Quote:
Originally Posted by 51togo View Post
Thank you everyone, I feel better already. I will check with my 401K admin. to see if no penalty since termination after 55. I also like the idea from fishingmn to pay the monthly mortage using severance. We own $40K at 5% or $850/month. My severance will be about $70K before tax, how much do you think after tax? We do have an emergency account of $35K for major car repair, big ticket items like LTC insurance $2500, life insurance etc. to tap into this account. Our 401K is 70% income fund at 3.5% and 30% company stock returning 10% would you feel I should change? It's a big aerospace firm and been stable return. This will be a special 4th of July. Thank you!
Yeeeow! I would reduce company stock to 10%. I have seen too many loyal employees destroyed by company stock. I am happy that it has been good to you. Now, say good bye and think globally. It is your butt, not theirs.

(Let me guess about 'big aerospace firm'--no, check that. )
__________________
my bumpersticker:
"I am not in a hurry.
I am retired.
And I don't care how big your truck is."
Ed_The_Gypsy is offline   Reply With Quote
Old 06-30-2013, 08:54 AM   #15
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Ed_The_Gypsy's Avatar
 
Join Date: Dec 2004
Location: the City of Subdued Excitement
Posts: 5,293
Quote:
Originally Posted by clifp View Post
No need to do a 72(t). You can withdraw money penalty free from a 401K, unless your administrator does not allow it. (rare) It you terminate employment after 55.
You have $12,000/year shortfall and you have $1 Mil in your 401K just take the money out you need and don't worry about it!
Yeah. This is the reason I kept a 401K until I was 55. Rock on, rocketman.
__________________
my bumpersticker:
"I am not in a hurry.
I am retired.
And I don't care how big your truck is."
Ed_The_Gypsy is offline   Reply With Quote
Old 06-30-2013, 10:51 AM   #16
Thinks s/he gets paid by the post
Katsmeow's Avatar
 
Join Date: Jul 2009
Posts: 3,400
In your first post here you said you had $125k in cash and now you mention $35k. What happened to the other $90k?

If you have $125k in non-tax deferred accounts then it might be OK to use the severance to pay off the mortgage. If you only have $35k in non-tax deferred accounts then I wouldn't do it as I think you need more easily available cash.

You said then that you will get a pension of $3k a month and your wife will get one of $2k a month. How old do you each have to be for those pensions?

It might be better for at least one of you or your wife to not take SS at 62 and to let it grow for awhile. That isn't something you have to decide now, but it might work out better.

I would get out of the company stock entirely if it was me. I wouldn't like the risk concentrated in one stock.
__________________
Katsmeow is offline   Reply With Quote
Old 06-30-2013, 03:30 PM   #17
Confused about dryer sheets
 
Join Date: Apr 2013
Location: Los Angeles
Posts: 7
wow, many comments on company stock and I got the message. I thought I am already conservative at 30%. At one time, I was at 70%. Utrecht, my wife's $50K annual salary returns little over $2.5k per month after 401k deduction while I have reduced to $2K since I have been and will be using her medical coverage adding about 400/ month since the begining of this year we have double coverage until my medical runs out next July. My pension starts Aug 1, 2013 at $3K monthly. The company severance adds one more year of service or $100/month, however one cannot collect until next year July 2014....what do you think, long run a good deal but need the money now. Another reason not to pay off the mortage? Katsmeow, with a large ( and last )wedding last month and set aside $25K ( annual gift limit )for each daughter for their house downpayment. That's it...althought many think we should save more for ourselves but we feel it will be harder for the next generation and with low interest rate its good time to be homeowners. I think we will hold off paying off the house and see how it plays out. I not sure I need to apply for $100K line of credit just in case. I have been paying for a Genworth LTC insurance of $2500 for three years now. I wonder if most of you ER agree that this is a good investment. I understand it comes down to afordability, is it really necessary and how the Obama care will affect the LTC? Thank you all for your encouragements and support!
__________________
51togo is offline   Reply With Quote
Old 06-30-2013, 03:43 PM   #18
Thinks s/he gets paid by the post
Katsmeow's Avatar
 
Join Date: Jul 2009
Posts: 3,400
On your wife's salary I probably wouldn't have her make 401(k) contributions above whatever is necessary to get any match from her employer. That is, if you are withdrawing from your 401(k) or an IRA I can't see any reason to be contributing to her 401(k) unless beyond whatever is necessary to get any employer matching.

If it was me I would probably continue to pay the LTC premiums. Like many you seem to be in that gray area where not enough to self insure but too much to just ignore it.
__________________
Katsmeow is offline   Reply With Quote
Old 07-04-2013, 11:26 PM   #19
Full time employment: Posting here.
 
Join Date: Jun 2006
Posts: 926
I think it is a mistake to buy LTC insurance while planning to take SS at 62. Generally you buy LTC insurance because you may not have enough income or assets to cover the cost of long term care and you do not know what inflation will do in the future and how LTC costs will increase due to that inflation. SS is COLA'd (at least for the foreseeable future) and waiting to get full SS at 70 provides inflation protected longevity insurance. With the OP's SS numbers he posted ($1700 at 62 and $2400 at 65) it would be almost $3000 at 70. He also has a million in the 401K and a pension and presumably his DW's SS. If I was in his shoes I would use the file and suspend SS tactic to get the spousal benefit for himself or his DW at age 66 and then get full SS for both of them at age 70. That full SS plus what is left from the 401 (after drawing some down as an income bridge until they are both getting full SS) plus the pension should be enough to safely consider self insuring rather than spending $2400 a year on LTC insurance. Also the LTC insurance will almost certainly be subject to rate increases in the future.
__________________
CW4, USA-(ret)
RN, BSN-(ret)
jclarksnakes is offline   Reply With Quote
Old 07-10-2013, 12:31 AM   #20
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Chuckanut's Avatar
 
Join Date: Aug 2011
Location: West of the Mississippi
Posts: 6,337
Congratulations on your soon to be retirement.
__________________

__________________
The worst decisions are usually made in times of anger and impatience.
Chuckanut is online now   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
How much notice did you (should I) give? ER Eddie Life after FIRE 83 05-28-2013 11:35 AM
The Economy in 2013 imoldernu FIRE and Money 1 01-12-2013 09:42 PM
PPACA: So What's New for 2013? Midpack Health and Early Retirement 1 12-14-2012 10:25 AM
2013 401(k) limit: $17,500; catchup unchanged ziggy29 FIRE and Money 27 10-23-2012 03:56 PM

 

 
All times are GMT -6. The time now is 10:57 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.