Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 06-29-2013, 09:58 PM   #41
Thinks s/he gets paid by the post
 
Join Date: Oct 2006
Posts: 3,812
This looks kind of like my financials at 56. Other people at my company were getting generous severance, but I didn't get the chance. I was hoping they'd fire me.

But, I had a DB pension as well. That gave me a cushion. I also had kids in college and getting fired would have increased their financial aid.

Realistically, you can't plan on getting $65k of real income from a $950k portfolio. So you have to be prepared to see your portfolio drop (at least in real terms) between now and the time SS starts. You or your wife may find that psychologically unsettling, even if the numbers say it's okay.

My company provided heavily subsidized medical to early retirees when I retired. They dropped it two years later and that was a serious financial hit. Your medical deal may be guaranteed, and if Obamacare stays around you've got it as a fallback.
__________________

__________________
Independent 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, 10:08 PM   #42
Thinks s/he gets paid by the post
gauss's Avatar
 
Join Date: Aug 2011
Posts: 1,708
Regarding unemployment, in Michigan since there is no law against it, employers typically require you to contractually agree NOT to apply for unemployment in order to get the severance. You might want to check with HR to see if this is the case for what is being offered.

Also please remember that if your company were to go through restructuring ie bankruptcy that your severance would not be protected.

-gauss
__________________

__________________
gauss is offline   Reply With Quote
Old 06-29-2013, 10:37 PM   #43
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Sep 2005
Location: Northern IL
Posts: 18,264
Quote:
Originally Posted by Independent View Post
--

Realistically, you can't plan on getting $65k of real income from a $950k portfolio. So you have to be prepared to see your portfolio drop (at least in real terms) between now and the time SS starts. You or your wife may find that psychologically unsettling, even if the numbers say it's okay. ..
Yes, I just took his 'All the calculators say we can get $70K' at face value. But where is it coming from? If it is the only source while waiting for 70 for SS, that could deplete that portfolio to a pretty low level - would SS still get you in to the $70's (in today's dollars) if the portfolio took a hit?

Is there a pension in there somewhere?

-ERD50
__________________
ERD50 is online now   Reply With Quote
Old 06-29-2013, 11:56 PM   #44
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: 5,292
My 2 cents:

First, forget the tax consequences, how ready you are, your mindset, etc. Take the package. Because...

You are not likely (like a snowball's chance) to get a better deal. If you don't take this, it could turn out much worse.

You are going to have to make this transition some time. Adjustments will be necessary no matter when you stop working. It hurts to do it on someone else's schedule, not yours, but it will hurt a lot more if you miss this opportunity.
__________________
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, 01:13 AM   #45
Thinks s/he gets paid by the post
 
Join Date: Aug 2006
Posts: 1,356
+1

You always want to try to be the first person off the sinking ship. The layoff deals almost never get better over time.

Quote:
Originally Posted by travelover View Post
I'd also mention that in the first round of layoffs at my workplace, the offer was pretty generous (when I left). The second round wasn't pretty as there was a change in upper management with a different "outlook" on what was owed to excess employees. That combined with a death of a good friend who was working "one more year" and never got to spend a day in retirement, gives me my current perspective.
__________________
Hamlet is offline   Reply With Quote
Old 06-30-2013, 06:33 AM   #46
Thinks s/he gets paid by the post
target2019's Avatar
 
Join Date: Dec 2008
Posts: 3,705
I would take the offer, and try to get UI, and whatever else can be had legally.

At 56 you will be able to pick up part-time work easily if necessary. Or you can try to find a business need and start your own business.

Just be careful with your time once it is all free. I know in the 10 weeks I was recently off it was difficult to stay on task. You can probably take care of a lot of the necessary home remodeling chores you mentioned.
__________________
target2019 is offline   Reply With Quote
Old 06-30-2013, 07:19 AM   #47
Recycles dryer sheets
padlin00's Avatar
 
Join Date: Oct 2010
Posts: 113
Quote:
Originally Posted by ERD50 View Post
Yes, I just took his 'All the calculators say we can get $70K' at face value. But where is it coming from? If it is the only source while waiting for 70 for SS, that could deplete that portfolio to a pretty low level - would SS still get you in to the $70's (in today's dollars) if the portfolio took a hit?

Is there a pension in there somewhere?

-ERD50
Savings is all we have, SS for wife at 66 would be 15k, myself at 70 is 39k. And yes, it does drop a lot waiting to take SS at 70. The only way I know around it is to spend less. The figures I use are what Firecalc and Quicken say I can spend at have a 95% chance or better of success. Do I have 20% extra to handle such a loss in the market? No, but I have no need to spend it all of it at any given time. I am susceptible to market sequence issues but there's not much I can do about it.
__________________
padlin00 is offline   Reply With Quote
Old 06-30-2013, 07:25 AM   #48
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: 42,077
Quote:
Originally Posted by padlin00 View Post
Savings is all we have, SS for wife at 66 would be 15k, myself at 70 is 39k. And yes, it does drop a lot waiting to take SS at 70. The only way I know around it is to spend less.
What does FIRECalc say if you plug in taking SS at 66 instead of 70? (I'm not trying to start a debate on when to take SS, just asking if the numbers might work better for you if you didn't burn down your savings too far before taking SS.)
__________________
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, 08:06 AM   #49
Recycles dryer sheets
padlin00's Avatar
 
Join Date: Oct 2010
Posts: 113
If I leave all else the same getting SS at 66 we run out of cash in early 90's as opposed to 95.
__________________
padlin00 is offline   Reply With Quote
Old 06-30-2013, 08:19 AM   #50
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: 42,077
Quote:
Originally Posted by padlin00 View Post
The only way I know around it is to spend less.
Short of passing up $100,000 and working full time for another 3.5 years under what you believe will be unpleasant circumstances, there is another solution: a part-time job. This has been suggested a number of times but I sense you don't think this is a viable option.
__________________
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, 09:03 AM   #51
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: 5,292
Quote:
Savings is all we have, SS for wife at 66 would be 15k, myself at 70 is 39k. And yes, it does drop a lot waiting to take SS at 70. The only way I know around it is to spend less. The figures I use are what Firecalc and Quicken say I can spend at have a 95% chance or better of success. Do I have 20% extra to handle such a loss in the market? No, but I have no need to spend it all of it at any given time. I am susceptible to market sequence issues but there's not much I can do about it.
Grab the deal and learn to spend less. You will have to adjust sooner or later. It does not matter if you are a postman or a PhD. Your time is up. Grab the damn brass ring.
__________________
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, 09:13 AM   #52
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: 5,292
This is a really serious thread, but to go majorly off-topic, how many here know what 'grab the brass ring' refers to? Have you ever done that? It is one of the unique bits of Americana that is almost gone from our common experience. (Brat, you know! Oaks Park?)
__________________
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, 09:14 AM   #53
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: 42,077
Quote:
Originally Posted by Ed_The_Gypsy View Post
This is a really serious thread, but to go majorly off-topic, how many here know what 'grab the brass ring' refers to? Have you ever done that? It is one of the unique bits of Americana that is almost gone from our common experience. (Brat, you know! Oaks Park?)
I tried as a kid but you needed arms the length of an NBA center to reach it....
__________________
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, 09:20 AM   #54
Thinks s/he gets paid by the post
DFW_M5's Avatar
 
Join Date: Sep 2003
Posts: 4,982
I took a deal like that when I was 54 with only 26 years of service. The environment sucked and I got sick of having to layoff perfectly good subordinates year after year. That said, I did go back to work and found a lower paying although more enjoyable company to work for with much less stress.
__________________
Doing things today that others won't, to do things tomorrow that others can't. Of course I'm referring to workouts, not robbing banks.
DFW_M5 is offline   Reply With Quote
Old 06-30-2013, 09:23 AM   #55
Moderator Emeritus
Bestwifeever's Avatar
 
Join Date: Sep 2007
Posts: 16,373
Quote:
Originally Posted by Ed_The_Gypsy View Post
This is a really serious thread, but to go majorly off-topic, how many here know what 'grab the brass ring' refers to? Have you ever done that? It is one of the unique bits of Americana that is almost gone from our common experience. (Brat, you know! Oaks Park?)
Yes. But they made me give it back.
__________________
“Would you like an adventure now, or would you like to have your tea first?” J.M. Barrie, Peter Pan
Bestwifeever is offline   Reply With Quote
Old 06-30-2013, 09:37 AM   #56
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: 16,410
The concern that I would have is unless your 401k plan allows penalty-free withdrawals for employees terminating service after age 55, what will you live on between ER and 59 1/2? Depending on when you made your Roth contributions you may be able to tap some of those funds penalty-free.

You're in a real dilemma. If your stay your work will go from bad to worse, but it may be challenging to ER. If I were in your shoes I think I would take the package and try to find some other part-time work doing something enjoyable to ease the transition financially and psychologically.

Taking SS before you are 70 could be a bail out if the markets go to hell and it forces you to reduce your nestegg more than is comfortable.
__________________
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, 09:58 AM   #57
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: 5,292
Quote:
The concern that I would have is unless your 401k plan allows penalty-free withdrawals for employees terminating service after age 55, what will you live on between ER and 59 1/2?
Pee, I believe that is federal law. He can withdraw at any time as far as the 401k is concerned. The penalties are federal. If the morons withhold 10%, he can protest. Regardless, he will get it back sooner or later (via income tax).
__________________
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, 10:14 AM   #58
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: 16,410
You are right that he can withdrawal at anytime, the question is whether or not there is a penalty.

My understanding is that the federal law is not totally clear and as a result some 401k plans report such withdrawals as subject to penalty and others would not. For example IIRC Vanguard reports such withdrawals as subject to penalty for 401k plans that it administers.

Even if the withdrawal is reported as subject to penalty, you could report it as otherwise on your tax return but then you are taking the tax risk that if the IRS challenges you that you would have to defend your position and you might lose. OTOH, if the plan reports the withdrawal as not subject to penalty your tax risk is less but there is still a chance that the IRS could challenge the plan's reporting as penalty-free and you could get caught up in their dispute.
__________________
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, 02:43 PM   #59
Recycles dryer sheets
padlin00's Avatar
 
Join Date: Oct 2010
Posts: 113
Quote:
Originally Posted by REWahoo View Post
Short of passing up $100,000 and working full time for another 3.5 years under what you believe will be unpleasant circumstances, there is another solution: a part-time job. This has been suggested a number of times but I sense you don't think this is a viable option.
I have no problems with a part or even full time gig, just needs to be doing something else. Depends on what I find out about unemployment.


Quote:
Originally Posted by Ed_The_Gypsy View Post
how many here know what 'grab the brass ring' refers to? Have you ever done that?
I know but have not personally tried one, just seen them in my travels.

Quote:
Originally Posted by pb4uski View Post
The concern that I would have is unless your 401k plan allows penalty-free withdrawals for employees terminating service after age 55, what will you live on between ER and 59 1/2?

You're in a real dilemma. If your stay your work will go from bad to worse, but it may be challenging to ER. If I were in your shoes I think I would take the package and try to find some other part-time work doing something enjoyable to ease the transition financially and psychologically.

Taking SS before you are 70 could be a bail out if the markets go to hell and it forces you to reduce your nestegg more than is comfortable.
We can take 72t withdrawals last I knew. I also heard from one that retired early that he transferred his funds to an IRA giving him full access to the $ and no longer held to the once a year requirement. It's another thing to look into. Has anyone else heard of such?
I agree with everything else you mention pb4uski, thanks all.
__________________
padlin00 is offline   Reply With Quote
Old 06-30-2013, 03:25 PM   #60
Thinks s/he gets paid by the post
Katsmeow's Avatar
 
Join Date: Jul 2009
Posts: 3,394
Quote:
Originally Posted by padlin00 View Post
We can take 72t withdrawals last I knew. I also heard from one that retired early that he transferred his funds to an IRA giving him full access to the $ and no longer held to the once a year requirement. It's another thing to look into. Has anyone else heard of such?
There are several issues, which sometimes get combined.

(1) You mentioned 72t which is one option based upon periodic payments
(2) Another option - for some - is that if you separate from service and retire in the year you turn 55 or older, the law allows in certain circumstances withdrawal from a 401(k) without paying the 10% penalty (you do have to pay taxes). I don't what limitations there are on this. Note that for this option, the money must be in the 401(k) plan and you can't do this if you have rolled over to an IRA.
(3) Note that apart from whatever limitations exist on (2) many company 401(k) plans limit how you can take withdrawals from it. For example, when DH retired (he was in his early 60s) once he was retired he had to either take out all of his 401(k) at once (bad for taxes obviously) or had to take it out in equal periodic payments. He couldn't take $X amount one year and then take $Y amount the next. So check to see what your plan provides.
(4) 401(k) plans can be rolled over to an IRA and stay tax-deferred. Once in the IRA you can invest them in your choice of investments at wherever you send it and you can withdraw whenever you like. You do have to pay a 10% penalty under 59 1/2 unless you do SEPP.

There might be other options that I don't know about.
__________________

__________________
Katsmeow is offline   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


 

 
All times are GMT -6. The time now is 05:31 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.