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D- (Decision) day is approaching
Old 01-09-2007, 06:55 PM   #1
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D- (Decision) day is approaching

I'm a 57-year old, single engineer. I've been LBYM, so I have my house paid off and a decent amount saved up.

I'm struggling with an upcoming decision. I have been offered a separation package from <meager corp>. I need to decide by Jan. 29.

I have been offered 2 options, both of which are retirement packages:
  • One will give me a non-COLA'd pension (about 20% of my salary) AND a lump sum of 12 months pay (which I can roll into an IRA).
  • The other is an enhanced non-COLA'd pension package (about 25% of my salary) and no additional money.
Either option gives me co-paid medical coverage until age 65 (when I'm supposed to go on Medicare, etc.)

I'm really struggling with the thought of leaving. Had this been offered 2 years ago, when I was working for a crazy workaholic boss, I'd grab this opportunity and run for the door. But now I'm hesitating. Currently, my job is OK and I have a great supervisor. Of course, after we lose 1/3 of our salaried staff through these separation packages, who knows who I'll be working for and what I'll be doing. Most likely, everyone's workload will be ramped-up as we'll have to "do more, with less [people]".

Also, we have a new CEO who is not a proponent of paying people to leave, so I foresee that any future staffing reductions will not be accompanied by separation packages. I've heard rumors of another round of staffing cuts in October 2007.

I'm trying to think of the things that I would miss if I were to leave. A big one is the intellectual caliber of the people I work with. Everyone is top-notch, so any conversation I have with any person is at a very high-level. These are people who think (like me) and can have reasoned conversations about most anything.

So, if I decide to leave, this is something that I'd have to recreate somewhere else.

I'd also miss the very good paychecks that I regularly get. I feel like I'm walking away from a perfectly good job. (Sort of like the comments you often hear about sky-diving -- why would someone jump out of a perfectly good airplane?)

So, as you can see, I am hesitating...

I have enough in savings that, combined with the pension, I can survive.

Besides fear, I think one of the things that is keeping me from retiring, is the admission that I will now be on a fixed income. In other words, I currently don't have to worry about a little overspending every once in a while, as I can count on that steady, good-sized paycheck every month. In retirement, I feel like I'll need to be much more limited in my spending (even though dory's calculator and I-ORP show my future income as being more than I spend today).

Any suggestions on how to get over my fear? What about my concern about now being on a fixed income forever? Is this anything someone here else has had to deal with? How did you handle it?

With regard to my 2 options -- I'm leaning towards the smaller pension with the lump sum. My thinking being, "a bird in the hand...", if I invest the lump sum well, what it earns when added to the smaller pension, should outperform the enhanced pension. Any thoughts?

RED
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Re: D- (Decision) day is approaching
Old 01-09-2007, 07:08 PM   #2
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Re: D- (Decision) day is approaching

Hey, you're an engineer so do the math on your pension/severance package. Use the current CD interest rate of 5% to discount your choices and 3% to estimate inflation. Assume you'll live to 85 -- reasonable but not crazy. I'm too lazy to run the numbers for you since you should have the math skills or at least know how to run Excel.

You didn't say anything about your other assets. Have you run FIRECalc? It's one of the most conservative financial planning programs around and if you are close on it you are probably fine. You have a "paid for house" so the obvious question is if you weren't working where you are currently working would you sell it and move somewhere cheaper.

If you still want to w*rk, send me an email. I'm with an E&C company and they are killing themselves to find people. They will take all sorts of backgrounds if they can find a billable client. My current boss struggled with my background before I was hired but since then they've hired people that I have been truly amazed at their limited, questionable backgrounds. I will keep the referral fee. It's a couple of hundred bucks that I'll blow on a wild woman I know (DW).
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Re: D- (Decision) day is approaching
Old 01-09-2007, 07:20 PM   #3
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Re: D- (Decision) day is approaching

Quote:
Of course, after we lose 1/3 of our salaried staff through these separation packages, who knows who I'll be working for and what I'll be doing. Most likely, everyone's workload will be ramped-up as we'll have to "do more, with less [people]".
Been there, done that. There's no way to sugarcoat it -- it sucks out loud to be one of the few left standing.

What I HAVE noticed, however, is that management often cuts too close to the bone on these things, and eventually ends up hiring back some of the same workers it's let go (I've seen a few come back as soon as the next WEEK!)

What if you chose the retirement package of your choice and, once the option was totally non-reversable, let it be known that you'd be willing to come back on a consulting basis? I work with several folks who took the pension when they were eligible and consult. Many work half time, six months out of the year, etc. Best of both worlds, with you in the driver's seat.

Good luck to you, regardless.
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Re: D- (Decision) day is approaching
Old 01-09-2007, 08:22 PM   #4
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Re: D- (Decision) day is approaching

1. Take the lower pension and the lump sum. You can invest the lump sum better than they can, and it gives you more flexibility for the occasional bigger withdrawal (new roof, new kitchen appliances, new car, fantasy vacation). It also helps you sleep better at night if you don't have to worry about them going bankrupt and trying to ditch your pension on the PBGC.

2. Join a chess club or MENSA. Or join them both-- you'll have the time. Hang out at coffee bars or bookstores. Surf the Internet for intellectual discussion boards (in addition to this one, of course). Volunteer at the local library.

3. Make sure Meager Corp has your phone number. In a few years they'll overshoot the rightsizing mark and be desperate for a consultant or two. And while you're waiting for the phone to ring, one day you'll realize that you don't care if it never rings!
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Re: D- (Decision) day is approaching
Old 01-09-2007, 08:43 PM   #5
Confused about dryer sheets
 
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Re: D- (Decision) day is approaching

One more comment:
Caroline and Nords have suggested possible future re-employment with Meager Corp as a consultant. To get a severance package, I must sign a statement that I will never be allowed to be employed by Meager Corp. directly or through an agency (e.g. as a consultant or temporary employee).
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Re: D- (Decision) day is approaching
Old 01-09-2007, 08:49 PM   #6
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Re: D- (Decision) day is approaching

Quote:
Originally Posted by REDreaming
One more comment:
Caroline and Nords have suggested possible future re-employment with Meager Corp as a consultant. To get a severance package, I must sign a statement that I will never be allowed to be employed by Meager Corp. directly or through an agency (e.g. as a consultant or temporary employee).
Ditto here!
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Re: D- (Decision) day is approaching
Old 01-09-2007, 08:58 PM   #7
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Re: D- (Decision) day is approaching

Quote:
Originally Posted by REDreaming
To get a severance package, I must sign a statement that I will never be allowed to be employed by Meager Corp. directly or through an agency (e.g. as a consultant or temporary employee).
Yeah, right, like they'll never change their minds about that ever again.

The agreement will be used against you, not against them...
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