sever or stay

[firesoon]

Hello!

Today I got a severance offer from the megacorp where I have worked for the last 20 yrs.

-- 6 months pay + subsidized healthcare premiums for 6 months
-- Additionally, I was offered a lesser role in the organization but without any pay cut if I don't take the severance.

Was planning on FIRE at 55.
Age: 51, Spouse:50 (retired already), no kids.
NW: 1.8m [excluding Home Equity: 500k (250k loan remaining)]
Non COLA Pension: 50k/yr at age 65, SS:??
Planned retirement expenses: 110k/yr

If I don't take the severance and stick around until March 2020 then stock vesting, plus bonuses would be equivalent to severance amount in addition to the regular pay.

If I take the severance there is no guarantee that I'll find a job that pays as well quickly enough.

What would you advise?

 

[Bamaman]

They're not offering a very good severance package for 20 years with the company. If you like the job and the company is going to be around, why don't you stay and be vested?

In the real world, you can easily run into age discrimination if you look at jobs when you're 51 years old.

When my megacorp decided to retire everyone 55 and older in 2008, they offered 1 year severance pay, 5 weeks vacation, 50 weeks unemployment, ability to buy their healthcare to age 65, and a pay supplement until we reached 62 and could draw SS. It's a big difference from what you've been offered.

Your megacorp could always sweeten the deal if there are many other potential retirees that don't take the deal.

 

[golfnut]

Tough call here.



- If you like the people you work with and the job is at least tolerable, I'd probably stick it out. If the above does not apply, I'd take the severance. Life is too short.



You would have to tighten the spending a bit and maybe both you and wife could find something.

 

[stepford]

How long before you project to reach your retirement financial goals?
Could you survive in some measure of comfort for the next 14 years until your pension arrives if you don't find another decent job?
How secure will your job be if you refuse the package?

I guess I'm saying this is a risk/reward scenario with the optimal solution strongly dependent on your situation. If you're near FIRE then the risks associated with taking the buyout may be small enough to go for it. If you need a few more years of good income to get where you need to be then it seems to me the decision tilts the other way.

In a similar situation I refused a RIF package at 50 and 53, and was fortunate enough to be offered (and take) the same package at 55.

 

[MarieIG]

Stay. After you vest, you can start looking around and see if there are other jobs that you pay well and you would like. It is also easier to find a job when you have a job.

 

[brucethebroker]

Stay. After you vest, you can start looking around and see if there are other jobs that you pay well and you would like. It is also easier to find a job when you have a job.

Yep!
And you might want to start thinking about what to do if you cannot find another similar job at that time. Maybe find a "dream" hobby job or PT gig. 50 somethings have a tough time in today's job market. Be prepared to reduce expenses if nothing shows up and you are forced into retirement.

 

[brett]

That is a very poor severence offer. I would have expected it to be at least a year, probably more like 18months fiven your age and service.

I would NOT accept it. The OP’s comments on vesting are right on. They to make it until at least you are vested.

 

[mrfeh]

Stay. After you vest, you can start looking around and see if there are other jobs that you pay well and you would like. It is also easier to find a job when you have a job.

+1

Stay, but look for other options.

 

[pjigar]

Hello!
If I don't take the severance and stick around until March 2020 then stock vesting, plus bonuses would be equivalent to severance amount in addition to the regular pay.

If I take the severance there is no guarantee that I'll find a job that pays as well quickly enough.

What would you advise?

One word: Stay. If you were only couple of years away then I would ask this question. Either way, your comments in red would conclude that you should stay.

PS: Do you realize that why they are offering a "lesser job"? Typically these kind of people will be silently given a pink slip in a year or two. I have seen few of these people who stepped out of higher roll (choice or force or who knows) but then they were gone from company in couple of years without anyone noticing since they were buried down in the ground in their new "role". So like others said, start looking for alternatives while you have this job.

 

[Dawg52]

I would stay until 55. I could put up with a lesser role for 4 years at the same pay.

 

[street]

I also would stay and look for something else, and just see how your new position goes etc..

 

[Aerides]

Stay. 3 key numbers:

You need 4 years
Severance is only 6 months
You are 51

If you sever and go, chances are very good you'll end up with less money than you make by staying till 55.

 

[Spock]

Severance isn't what it used to be. When well known megacorp did its first layoffs after years of a full-employment policy it was so guilty it offered 2 years pay, retraining, etc etc. Fast forward to now and that megacorp gives 3 months salary, you have to use all your vacation before leaving, and you have to do your day job for the 3 months while you're looking for a new job, and you forfeit the annual 401K match unless you can time your exit date for year end.



It also depends on the offer. Where you "selected" for the offer or was it a blanket policy for anybody X old + Y years of service? If selected vs. blanket, the writing is on the wall and the focus on you is going to get tighter. If you stay I'd start looking elsewhere immediately, treating staying on as 100% unemployment until you find something new.

 

[athena53]

I would stay until 55. I could put up with a lesser role for 4 years at the same pay.

I'm sort of in the "stay" camp but I wouldn't assume the OP will have that job for 4 years. He could get booted out later and the severance might not be as good, especially if the company is cutting costs due to financial problems. OP also has a mortgage balance of $250K. Depending on how long they've lived in the house it could have started out much higher and thus be hard to handle on a reduced salary. If he does decide to stay he should look into refinancing although that might be difficult to do with reduced compensation and the OP will then have a mortgage for a longer time in retirement.

I agree that the severance package is stingy- but I guess it depends on the industry and how healthy the employer is.

 

[rpguy4]

Do you have enough $$ in an after tax account to cover your expenses to age 59 1/2 ?


My vote would be stay and pay down/off the mortgage.

 

[ckelly78z]

It sounds to me that they are offering you a lesser position to make you want to leave at a later date, without having to pay you any of the benefits for leaving now. I would leave now, and find something different, there is no guarantee they will pay bonuses in the future.

 

[cyber888]

Your expenses of $110K and $1.3 M without the home equity is a tough call. If you can cut expenses, that my work to tide you up to your pension at 65.

 

[Jerry1]

+1 for staying and looking for options. However, I do think you’ll be able to stay until you vest, unless the company suffers a significant loss. The closer you get to vesting, the more risk the company has in laying you off. The threat of an age discrimination claim the longer you stay will help you if they were to let you go later. Nothing’s guaranteed, but I’d try to run out the clock.

If I were 51 and waiting and ready to retire, then I’d take the severance and run, but you are not at that point.

 

[Aiming_4_55]

A few questions:

Are you mentally ready to retire? Are your planned retirement expenses solid? What will Social Security benefits be for you and DW at age 62 or 65? At age 65, pension and SS might cover 100% of your retirement expenses.

Would you automatically look for a new job? If so, what is the market for your skills and a fair salary?

I would stay if, mentally not ready and/or retirement expenses are wild estimates; if a replacement job is in a limited field and/or significantly lower, say 20%. Also, March 2020 can come quick if you have good sick/vacation time banked. Perhaps talk to the new boss and understand expectations and see if you can get a few extra paid weeks off in between positions.

I would leave if the new boss and role is a PITA/bad commute or reasonable work can be found.

What would you do for healthcare after the 6 months?

What does DW think? Is she willing to consider a PT job? Depends on her field and potential income, but that might be a consideration.

Good luck.

Hello!

Today I got a severance offer from the megacorp where I have worked for the last 20 yrs.

-- 6 months pay + subsidized healthcare premiums for 6 months
-- Additionally, I was offered a lesser role in the organization but without any pay cut if I don't take the severance.

Was planning on FIRE at 55.
Age: 51, Spouse:50 (retired already), no kids.
NW: 1.8m [excluding Home Equity: 500k (250k loan remaining)]
Non COLA Pension: 50k/yr at age 65, SS:??
Planned retirement expenses: 110k/yr

If I don't take the severance and stick around until March 2020 then stock vesting, plus bonuses would be equivalent to severance amount in addition to the regular pay.

If I take the severance there is no guarantee that I'll find a job that pays as well quickly enough.

What would you advise?

 

[38Chevy454]

It also depends on the offer. Where you "selected" for the offer or was it a blanket policy for anybody X old + Y years of service? If selected vs. blanket, the writing is on the wall and the focus on you is going to get tighter. If you stay I'd start looking elsewhere immediately, treating staying on as 100% unemployment until you find something new.

I think this information is key to determining if you should take the lesser position. If you can verify that you were selected, then it might be best to take the severance and use that time to look for a new position. Agree that it is tougher once over 50, unfortunately age discrimination is a real thing you will have to deal with. If you were just included in a wide sweeping blanket, then you have a good chance to go with the lesser position, forget any raises for those 4 years, and survive until 55.

 

[Brat]

If this is the first round of a RIF you have a better chance at finding a new job than those who wait although, I agree with others, their severance package stinks. If a lot of RIF employees reject the offer is there a chance they could sweeten the deal?

Take a long hard look at your employer's business. Is their market/margins shrinking? Check it out as if you were Warren Buffett.

What are your skills? Start networking now to find a better situation.

 

[firesoon]

Thank you everyone for your thoughtful replies!

Additional details (instead of replying individually, I am adding more details here):
-- this is not a wide RIF but elimination of roles for me and 4 of my peers (in a division of 800 in the megacorp), so it is a targeted removal of position or people
-- the company/division is otherwise doing fine and is hugely profitable
-- the new role would be working as an individual contributor instead of being a supervisor
-- I enjoy working here and would be able to find meaningful things to do
-- the bonuses are given to all fulltimers based on division profits and not related to performance but a flat n-weeks of pay so it's unlikely that they would take it away from me
-- 3 to 4 years away from a comfortable FIRE but can do it in 2 to 3 with belt-tightening now and reducing needs in retirement. Had planned to work till 55 to be on the safe side.
-- not new to FIRE planning (lurker in the forums for the last 10 years) and have been mentally and financially preparing for it
-- I can probably find a new job with similar pay but it may take time (3 months or so). Also, the benefits may not match: options, bonuses, 6-wk vacation time. Also it is relatively stress free because of my familiarity with people and process for having been there for 20 years.


I am inclined to stay and look for other opportunities and time my exit for when I have a bit more control via a better job or when I reach my financial goal. I have one week to decide which option to pick. If you have additional thoughts and advice please reply. Your rational replies and questions have helped me quickly navigate through denial, anger, bargaining, depression and acceptance and made me think more objectively.

 

[timemoveson]

Thank you everyone for your thoughtful replies!

Additional details (instead of replying individually, I am adding more details here):
-- this is not a wide RIF but elimination of roles for me and 4 of my peers (in a division of 800 in the megacorp), so it is a targeted removal of position or people
-- the company/division is otherwise doing fine and is hugely profitable
-- the new role would be working as an individual contributor instead of being a supervisor
-- I enjoy working here and would be able to find meaningful things to do
-- the bonuses are given to all fulltimers based on division profits and not related to performance but a flat n-weeks of pay so it's unlikely that they would take it away from me
-- 3 to 4 years away from a comfortable FIRE but can do it in 2 to 3 with belt-tightening now and reducing needs in retirement. Had planned to work till 55 to be on the safe side.
-- not new to FIRE planning (lurker in the forums for the last 10 years) and have been mentally and financially preparing for it
-- I can probably find a new job with similar pay but it may take time (3 months or so). Also, the benefits may not match: options, bonuses, 6-wk vacation time. Also it is relatively stress free because of my familiarity with people and process for having been there for 20 years.


I am inclined to stay and look for other opportunities and time my exit for when I have a bit more control via a better job or when I reach my financial goal. I have one week to decide which option to pick. If you have additional thoughts and advice please reply. Your rational replies and questions have helped me quickly navigate through denial, anger, bargaining, depression and acceptance and made me think more objectively.

Good for you OP. As a one-off data point,I gave similar advice to a friend (in virtually the same situation as yours) and he also decided to stay. It has turned into the best job he’s ever had and he is now in fuller control of his time line and the narrative.

 

[Franklin]

Thank you everyone for your thoughtful replies!

Additional details (instead of replying individually, I am adding more details here):
-- this is not a wide RIF but elimination of roles for me and 4 of my peers (in a division of 800 in the megacorp), so it is a targeted removal of position or people
-- the company/division is otherwise doing fine and is hugely profitable
-- the new role would be working as an individual contributor instead of being a supervisor
-- I enjoy working here and would be able to find meaningful things to do
-- the bonuses are given to all fulltimers based on division profits and not related to performance but a flat n-weeks of pay so it's unlikely that they would take it away from me
-- 3 to 4 years away from a comfortable FIRE but can do it in 2 to 3 with belt-tightening now and reducing needs in retirement. Had planned to work till 55 to be on the safe side.
-- not new to FIRE planning (lurker in the forums for the last 10 years) and have been mentally and financially preparing for it
-- I can probably find a new job with similar pay but it may take time (3 months or so). Also, the benefits may not match: options, bonuses, 6-wk vacation time. Also it is relatively stress free because of my familiarity with people and process for having been there for 20 years.


I am inclined to stay and look for other opportunities and time my exit for when I have a bit more control via a better job or when I reach my financial goal. I have one week to decide which option to pick. If you have additional thoughts and advice please reply. Your rational replies and questions have helped me quickly navigate through denial, anger, bargaining, depression and acceptance and made me think more objectively.

I would do exactly as u described. Stay till 55 if that is your number. You have received great advice

 

[Humbooster]

for what it is worth

For what it is worth, I would say sit tight and look for a job without making it too obvious that you have already checked out, but it depends on a couple of things ….
Did you enjoy being a supervisor, and will you be able to make the transition to now having a supervisor tell you what to do and how to do it? You need to look carefully at who your next boss will be and decide if you can tolerate his/her style. If your next boss is a micromanager then take the money and run, unless you enjoy that.
Your health and wellbeing are also very important and if you will be going to work every day feeling miserable it will not be good for you and your wife.