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Layoffs.
Old 06-29-2013, 01:09 PM   #1
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Layoffs.

Hi all, I'm in need of some opinions on my situation. Layoffs were just announced at work this week which includes losing a couple of my subordinates, I have the opportunity to take a voluntary if I so desire, my taking it would not save anyone else's job. The question is should I take it?

I'm 56 employed at the same place for 35 years, wife is 57 and self employed, she has cut back her hours to spend time with the grand kids. Job prospects for me would not be good as aside from the age thing, while I'm in computers few of the skills I have are transferable to local businesses. I'm in manufacturing and honestly wouldn't want to do this anymore even is there were other opportunities.

I've been planning on FIRE'ing in 3.5 years when I turn 60, this would give us income equal to what we currently spend. We do not live all that frugally, have been taking 4 weeks of vacations a year so continuing this lifestyle would be agreeable, we just don't waste $. All the calculators say we can do 70k - 75k for 40 years. We need about 50k (figures are after taxes) for the basics and could cut to about 40k if we had to, but have been closer to 70k lately with some long delayed home remodeling after 32 years. We've been tracking spending with Quicken for the last 18 months.
If I take the layoff package I get 1 years severance and some retraining bennies, due to time worked and age I already qualify for medical till medicare kicks in, not to include dental or eye care. After the 1 year it amounts to me leaving the workforce 2 years earlier then planned and needing to tap into savings at that time. Using this timeline the calculators say we'd have 60-65k per year so those missing 2 years make a fairly large dent of 10k.

My wife plans to keep working till 60 or 61, she makes about 10k a year. I make 100k.

Planning on SS at 70, have 800k in 401k and another 150k in Roths and I Bonds, no debt and own a smallish house.

I'm kind of torn, but leaning towards continuing to work. I hate to pass up a fairly well timed layoff opportunity but if I pass it is just 3.5 more years to the life we've been planning on. With the layoffs, forced on many, our work load will be getting even worse then it already is, which is not something I look forward to.
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Old 06-29-2013, 01:20 PM   #2
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...if I pass it is just 3.5 more years to the life we've been planning on.
Hard for me to reconcile the "just" with the remaining part of the above sentence. 3.5 years is a very long time to delay and continue working when you have a choice - and it appears you do.

Any prospects for some part-time or temporary work to allow you to make you feel more comfortable in taking advantage of the one year "free" money and continued bennies?
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Old 06-29-2013, 01:21 PM   #3
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The question is should I take it?

.

Take the one year severance pay and head off into the sunset!

I walked your path a few years ago. Also working in manufacturing at 58, I took a one year severance and never looked back. If you're happy with your present spending, go for it. It sounds like you're in fine shape financially.

EDIT: Don't forget you'll be collecting unemployment benefits for at least six months and perhaps much longer depending on Congress and the situation in your state.
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Old 06-29-2013, 01:22 PM   #4
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Hard for me to reconcile the "just" with the remaining part of the above sentence. 3.5 years is a very long time to delay and continue working when you have a choice - and it appears you do.

Any prospects for some part-time or temporary work to allow you to make you feel more comfortable in taking advantage of the one year "free" money and continued bennies?
Doubtful but worth asking when we meet next week, this happened while I'm on vacation this week.
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Old 06-29-2013, 01:22 PM   #5
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Sounds like a pretty sweet deal. I'd not pass it up. If you stick around, you get paid for 3.5 years, but if you leave now, you get paid for 1 year, right? So you're only giving up 2.5 years of pay, but getting 3.5 years of "vacation". Since you're leaving after the year you turn 55, you have penalty-free access to the 401k, if you need it. You can try i-orp to see how you'd be pulling from income sources over time to minimize taxes. I guess it comes down to if the time now, while you're younger, is valuable enough to you to live on less "forever". The 10k seems a little high for the 2.5 years of pay difference, are you pretty sure of that?
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Old 06-29-2013, 01:23 PM   #6
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Lots of your coworkers just got hit with an involuntary layoff. Your company may be in trouble and there's no guarantee that there won't be more layoffs with much less generous terms in the next 3 years. In fact it may be likely. If you only plan to work 3 more years anyway, this is one third of that future earnings! Unless you are sure you will have problems finding ANY work at 2/3 or more of your pay, then this seems like a good deal.
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Old 06-29-2013, 01:24 PM   #7
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What is the buyout package you will receive for being laid off now vs. picking your own date at some point down the road?
One years severance ($100k), and $5K for retraining which I'd probably use for fly-fishing or golf school.
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Old 06-29-2013, 01:25 PM   #8
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One years severance ($100k), and $5K for retraining which I'd probably use for fly-fishing or golf school.
Take it!
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Old 06-29-2013, 01:27 PM   #9
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I would be inclined to take it. If you don't take it, you may be in the next round of layoffs and may not get anything.
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Old 06-29-2013, 01:29 PM   #10
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Sounds like a pretty sweet deal. I'd not pass it up. If you stick around, you get paid for 3.5 years, but if you leave now, you get paid for 1 year, right? So you're only giving up 2.5 years of pay, but getting 3.5 years of "vacation". Since you're leaving after the year you turn 55, you have penalty-free access to the 401k, if you need it. You can try i-orp to see how you'd be pulling from income sources over time to minimize taxes. I guess it comes down to if the time now, while you're younger, is valuable enough to you to live on less "forever". The 10k seems a little high for the 2.5 years of pay difference, are you pretty sure of that?
10k is in the ball park, maybe a bit high, but that's what Firecalc and Quicken say. Previously I had been figureing 3k per year worked added to future spending power or 7.5k. I put away 35k per year into the various accounts.
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Old 06-29-2013, 01:36 PM   #11
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I am in the same boat right now.
I took it at 51 with just a few weeks to go.
No telling if these deals will be there down the road.
A bird in the hand............
I have $10k over 2 yrs for "education" Never thought of fishing school. Need to look into that........
Thanks!
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Old 06-29-2013, 01:42 PM   #12
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One years severance ($100k), and $5K for retraining which I'd probably use for fly-fishing or golf school.
Add to that unemployment benefits. Look up the situation in Mass and see how much and how long you'll collect.

Also note that you gave your spending in after tax dollars. Your taxes will almost surely be significantly lower once the year with your severance passes.
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Old 06-29-2013, 02:17 PM   #13
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Ditto on the unemployment (I got $810/2wks). Think about the growth of the $100k invested too. Maybe another $20-30k over 2.5 yrs?

We went into the 10-15% tax bracket and will likely qualify for health care subsidies to boot. Didn't plan on it, but seems to be playing out this way.
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Old 06-29-2013, 02:22 PM   #14
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Not all states allow unemployment for employees taking voluntary separation packages, so I would check state regulation before on counting this. Even without, however, it still sounds like an decent option.
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And Your Quality of Life.....?
Old 06-29-2013, 02:27 PM   #15
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And Your Quality of Life.....?

During those next 3.5 years, if you stay, what do you think will become of your present quality of life? With this round of lay-offs (including your loss of subordinates), will you now be responsible for their tasks? Will your department's/division's goals be revised (downward?) by your superiors to reflect your reduced workforce? Or will you need to meet the same goals with less help?

What happens if you don't meet those (or higher?) goals? Will you face pressure and/or increased work hours that will prevent any enjoyment of your 3.5 years of additional salary and retirement savings? Will your stress levels make you wish you had taken the buy-out?

I only ask this because I watched my husband and his colleagues after they "escaped" a major downsizing in his co. 3 years ago. Those laid off received generous severances, bennies, PLUS unemployment. The "lucky" ones left behind to do the work faced major increases in workloads, pressures to "meet the numbers," and overall stress. I sometimes heard DH comment, "Wow, I might have enjoyed that severance package....)

Best of luck! As others noted, it looks like you could be free to "walk away" if you like.

FWIW, DH and I both ER'd earlier than expected.....partly because of working in settings where the pressures grew as the number of workers declined. Though we had planned to retire a couple years later, for the sake of higher monthly income, we've never regretted forgoing it. The past year (for me) and 1 1/2 years (for DH) have MORE than compensated for the lower income. Living in ER has cost less than we'd expected, partly because we no longer spend $ escaping the pressures of our jobs. Each day is a pleasure.......there's nothing to escape!

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Old 06-29-2013, 02:31 PM   #16
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Not all states allow unemployment for employees taking voluntary separation packages, so I would check state regulation before on counting this. Even without, however, it still sounds like an decent option.
+1

That's why I said to OP:
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Look up the situation in Mass and see how much and how long you'll collect. 
In Illinois, at least in the late 2000's, there was no distinction between voluntary or involuntary packages. Your employer (we're talking major layoffs here as opposed to the termination of a few employees) filed paperwork prior to the downsizing. There is a minimum time limit required by law. Names, whether they were given the boot or whether they raised their hand, were submitted. Applying for unemployment was a snap because the folks at the unemployment office were already expecting you.

But, I agree, this might vary from state to state as many of the unemployment compensation rules do. Each states rules need to be checked. I'll guess OP can collect in Mass. But he needs to look. The real question is likely whether he'll be able to get the full 99 weeks or whether that's been cut back in Mass.

It can work out very well. I watched a friend, living in Wis, apply for NJ benefits. He got $600/wk for 99 weeks and collected SS simultaneously. (NJ has no offset for SS.) So that was about $50k/yr for almost 2 yrs. Everything done absolutely per the rules. It allowed him to postpone starting his pension for those 2 yrs, increasing it about 15%, which pushed him over the edge into FIRE.

OP might have a similar opportunity.
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Old 06-29-2013, 02:38 PM   #17
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Depends how much you value your time. Life expectancy for someone your age is around 25 years; if you want to spend about 15% of that earning money you could easily do without then keep working. I doubt many here would make that choice and I know there is zero chance I would. The severance, UE & fly fishing lessons make it an even easier choice. Good luck deciding.
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Old 06-29-2013, 02:43 PM   #18
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During those next 3.5 years, if you stay, what do you think will become of your present quality of life? With this round of lay-offs (including your loss of subordinates), will you now be responsible for their tasks? Will your department's/division's goals be revised (downward?) by your superiors to reflect your reduced workforce? Or will you need to meet the same goals with less help?

What happens if you don't meet those (or higher?) goals? Will you face pressure and/or increased work hours that will prevent any enjoyment of your 3.5 years of additional salary and retirement savings? Will your stress levels make you wish you had taken the buy-out?

I only ask this because I watched my husband and his colleagues after they "escaped" a major downsizing in his co. 3 years ago. Those laid off received generous severances, bennies, PLUS unemployment. The "lucky" ones left behind to do the work faced major increases in workloads, pressures to "meet the numbers," and overall stress. I sometimes heard DH comment, "Wow, I might have enjoyed that severance package....)

Best of luck! As others noted, it looks like you could be free to "walk away" if you like.

FWIW, DH and I both ER'd earlier than expected.....partly because of working in settings where the pressures grew as the number of workers declined. Though we had planned to retire a couple years later, for the sake of higher monthly income, we've never regretted forgoing it. The past year (for me) and 1 1/2 years (for DH) have MORE than compensated for the lower income. Living in ER has cost less than we'd expected, partly because we no longer spend $ escaping the pressures of our jobs. Each day is a pleasure.......there's nothing to escape!

Same amount of work for our dept. I lost 2 of 6 techs, so 5 guys, me included, to cover 7 days a week 2 shifts. Won't be fun...

Thanks
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Old 06-29-2013, 02:51 PM   #19
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Same amount of work for our dept. I lost 2 of 6 techs, so 5 guys, me included, to cover 7 days a week 2 shifts. Won't be fun...
It will if you aren't there...
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Old 06-29-2013, 02:57 PM   #20
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You should not think twice about taking this deal. I would KILL for such an offer.
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