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Thinking about a OMY calc..
Old 11-02-2015, 05:32 PM   #1
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Thinking about a OMY calc..

50% joking. But I've been wrestling with OMY for over a year now and am not that much closer .

Since I'm a programmer turned manager I crave a direct project so I was thinking about making a calculator that evaluates to cost/benefit of OMY taking into account financial and non financial data.

That's about as far as I've gotten.. But since we all seem to love OMY and we all love calculators it seemed like something funny and at least potentially mildly useful.

At most jobs this would start with a PowerPoint presentation with costs and benefits, market studies, work estimates and green light process... But since it's just me I'll just throw it out there .

Mostly looking for free ideas/suggestions at gut feedback... I.e. let me steal your ideas

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Old 11-02-2015, 06:50 PM   #2
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The financial part is easy: One year of extra savings, return on investments, increases in Social Security, pensions and any other time sensitive job benefits are readily calculated.

And best of all, having one less year of retired life to spend your savings over makes for a nice jump in your projected withdrawal rate.

You have to decide how to quantify all the myriad personal tortures (and possible satisfactions) another year on the hamster wheel would engender if you wish to include these in your calculator as well.
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Old 11-02-2015, 07:37 PM   #3
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Can you really do it properly without including a tax calculator? I have built one into my own spreadsheet, and let me tell you, it was pretty complicated even though (a) I simplified it by disregarding a bunch of benefits for low income people and higher taxes for high income people (since they won't affect us), (b) I could focus on my own province, and wasn't worried about all of those different state tax regimes (how many states do you have now anyway? Isn't it like 40 or 45? Has anyone counted them all recently?), and (c) we don't have joint filing in Canada (well, not really). Good luck to you, but I think leaving out the tax equation is a pretty big gap.
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Old 11-02-2015, 07:37 PM   #4
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The non-financial side should look at the following:

- traffic/commute
- benefits
- good boss/bad boss
- good project/bad project
- boredom factor
- stress factor
- outside interests? (Does the calculator operator get bored on weekends or vacations? OMY forever... )
- family commitments (aging parents, kids, in-laws.)
- health and family history of health.

Perhaps have a 1-5 scale for weighting on these questions...

Those are my ideas - feel free to steal them.
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Old 11-02-2015, 10:24 PM   #5
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Good ideas! I thought about taxes and I think you're right. I might take the lazy way out and just make it a manual input initially =

I haven't actually DONE anything so we'll see.

For me its 50% helping me answer the question and explore it more methodically than randomly on my way home thinking "hmm... Maybe I should quit now... Oh wait maybe I shouldn't... Oh wait maybe I should."

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Old 11-03-2015, 08:42 AM   #6
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Good ideas!
Don't forget this one: one more year to do whatever you want with your day.
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Old 11-03-2015, 08:52 AM   #7
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My thought is that this would only be useful if there is a way to somehow quantify the non-financial aspects. I daresay "99%" of OMY syndrome has nothing to do with the financial aspect.
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Old 11-03-2015, 08:58 AM   #8
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For financial: You'd have to define the income/expense benefit to get the net difference. Meaning, the income obviously adds to your savings, but also increases your taxes and other work-related costs (commuting, dry cleaning, parking, whatever). So you'd want to compare expenses before and after the OMY.

I like the scale of 1-5 on questions. In addition to the practical questions, you could make some kind of "feelings test", with different scenarios.

1) If you had a mandatory two-week vacation, but couldn't travel, how would you feel? 5 - excited by the possibilities; 1 - know I would sit around and watch TV...
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Old 11-03-2015, 04:18 PM   #9
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I use my own C program for my retirement projections, including taxes. It maximizes my yearly spending given a portfolio end value or portfolio maximum percentage withdrawal after all income kicks in. I had it output a table of what my annual spending was, depending on the year we retired. It was easy to see the spending delta, and it decreased for each additional year worked. Especially important when we had stock options to consider, giving us some bigger spending bumps early on.

Obviously subject to garbage in garbage out, but it was useful to see what we were likely buying with one more year of our lives.
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Old 11-03-2015, 06:51 PM   #10
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Originally Posted by stepford View Post
The financial part is easy: One year of extra savings, return on investments, increases in Social Security, pensions and any other time sensitive job benefits are readily calculated.

And best of all, having one less year of retired life to spend your savings over makes for a nice jump in your projected withdrawal rate.

You have to decide how to quantify all the myriad personal tortures (and possible satisfactions) another year on the hamster wheel would engender if you wish to include these in your calculator as well.

Your post reminded me of my friend who called this weekend. He told me he was considering working an extra 2 years to qualify for "Rule of 86" which means he could get a slightly lesser pension, but a lump sum too. He seemed to think it was free money.
I had to remind him he is paying into system 2 more years and will be dying 2 years quicker after retirement. There is no free money...He acted surprised and said....I did think about it that way...


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Old 11-03-2015, 07:55 PM   #11
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Time with loving spouse= priceless.

DW tried to give her notice today. Her boss is trying to talk her into staying longer...telling her whatever it takes...
I'm trying to be supportive husband willing to accept whatever she wants to do. Inside it's tearing me up because I want to spend some healthy years with her. How do you quantify that in an app?


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Old 11-03-2015, 11:00 PM   #12
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Time with loving spouse= priceless.

DW tried to give her notice today. Her boss is trying to talk her into staying longer...telling her whatever it takes...
I'm trying to be supportive husband willing to accept whatever she wants to do. Inside it's tearing me up because I want to spend some healthy years with her. How do you quantify that in an app?


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That's a great question and I don't think you really can.

However at SOME level there is quantification going on. By that I mean if her boss said... we want to keep you, but will only pay you half, take it or leave it... she'd probably walk away. If he said; "I'll give you 1M$/year and you can work half time" she might take that. Now that is an unrealistic and trivialized example, but from your perspective it'd probably be "better" if she wasn't offered anything.

These are very serious decisions and they impact relationships, families, etc in deep ways so I really care about it for myself and others. My goal is not to trivialize it at all... quite the opposite. And for full disclosure I'm biased to wanting to "talk myself" into FIREing. I thought the hard part was the FI... and it is hard for sure... but I though the RE part would be easy and it isn't... at least for me .

I'm 40 with 2 young kids, have enough net worth that at a 3% WR I am 100% firecalc. I want to spend more time with family, I sort of like my job, but not "do it for free" like. If work halved my salary I'd quit right now... if they doubled it, it wouldn't make a huge difference financially. I largely OMY because of momentum. Taking no action means I keep doing what I'm doing now. My DW is supportive of "whatever I decide" but also harbors anxiety as well.

So imagine if I DIDN'T have a job and I was FIREd right now... then I was OFFERED my current job... would I take it? Probably not. The momentum would be on NOT working, so I'd just keep doing that. I think many of us on this forum are WIRED to be conservative and thoughtful savers. So I can OMY myself for a long time because... well... it adds security, helps my savings go up and so on.

I think trying to represent that irrationality is what I'm honing in on. Is it possible? No idea. I actually think making the program is a way that I can help solve my own problem. Programmer therapy maybe? The motivation is completely selfish .
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Old 11-04-2015, 05:31 AM   #13
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That's a great question and I don't think you really can.



However at SOME level there is quantification going on. By that I mean if her boss said... we want to keep you, but will only pay you half, take it or leave it... she'd probably walk away. If he said; "I'll give you 1M$/year and you can work half time" she might take that. Now that is an unrealistic and trivialized example, but from your perspective it'd probably be "better" if she wasn't offered anything.



These are very serious decisions and they impact relationships, families, etc in deep ways so I really care about it for myself and others. My goal is not to trivialize it at all... quite the opposite. And for full disclosure I'm biased to wanting to "talk myself" into FIREing. I thought the hard part was the FI... and it is hard for sure... but I though the RE part would be easy and it isn't... at least for me .



I'm 40 with 2 young kids, have enough net worth that at a 3% WR I am 100% firecalc. I want to spend more time with family, I sort of like my job, but not "do it for free" like. If work halved my salary I'd quit right now... if they doubled it, it wouldn't make a huge difference financially. I largely OMY because of momentum. Taking no action means I keep doing what I'm doing now. My DW is supportive of "whatever I decide" but also harbors anxiety as well.



So imagine if I DIDN'T have a job and I was FIREd right now... then I was OFFERED my current job... would I take it? Probably not. The momentum would be on NOT working, so I'd just keep doing that. I think many of us on this forum are WIRED to be conservative and thoughtful savers. So I can OMY myself for a long time because... well... it adds security, helps my savings go up and so on.



I think trying to represent that irrationality is what I'm honing in on. Is it possible? No idea. I actually think making the program is a way that I can help solve my own problem. Programmer therapy maybe? The motivation is completely selfish .

We're a bit older than you at 59, so you likely have s lot of good years left and are fortunate to have choices at such a young age. We talked last night about options and she is concerned she's not a good negotiator, but is well aware oh her value to the company. She knows another full year is out of the question , but even six months would bring in significant monetary benefit because of a forthcoming stock grant and some options vesting. We don't need it, but she always has s burning need to be certain she can take care of her son, her parents and her sisters if needed and who haven't been as fortunate...but often from bad decisions. So, the grant, options and salary are a given if she sticks around into February. If she stays until summer she might negotiate paid Cobra for 18 months. When summer comes she's getting close to the bonus cutoff in September. They call them golden handcuffs for s reason...whenever she leaves there will be money left on the table. It always seems like a lot until the government gets their share.
Your calculator can quantify many of these things, but when your expenses in retirement are less that what you've already saved can provide, the time you give up to bring in extra income for added security is s big price to pay for less time with your family.
I'm just venting because yesterday when she went to work, Dec 4 was to be her last day. Working longer may in fact result in close to a million more before taxes...but it's one year less we have together. I guess I'll smile and be supportive and see what happens.


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Old 11-04-2015, 06:53 AM   #14
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That's a very hard situation . And you're right.. I'm SUPER lucky and the perspective I get from people like yourself really helps a ton. I really appreciate the openness and I hope everything turns out well.

It's humbling that she's thinking of others so much and its so great that you want to spend so much time with her... So many people these days don't feel like that. Personally I'm still relatively young but I'd rather spend time with my wife than anyone on the planet.

I am lucky in so many ways.

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Old 11-04-2015, 07:25 PM   #15
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My thought is that this would only be useful if there is a way to somehow quantify the non-financial aspects. I daresay "99%" of OMY syndrome has nothing to do with the financial aspect.

Wut?

I'd say for most on this forum it is usually padding the coffers for financial peace of mind, nothing else.


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Old 11-04-2015, 08:42 PM   #16
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Wut?

I'd say for most on this forum it is usually padding the coffers for financial peace of mind, nothing else.


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I guess I should clarify my 99% comment. From what I've seen, my impression is that for "99%" the numbers are already there and the person is good to go, but the OMY'er isn't convinced.
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Old 11-05-2015, 12:11 AM   #17
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Yup. It's probably very perrsonal but I see lots of people who have the financial means but have a hard time pulling the trigger although part of that is being financially sure but not really, really, REALLY super sure... But that might be a different problem masquerading as a financial problem

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Old 11-05-2015, 10:17 AM   #18
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Years ago I would have been interested in a package that teases out exactly what should go into an ultimatum letter to my employer, whether it involves schedule, location, nature of work, etc, once I reached FI. I'd have been curious what people in my situation typically ask for-- and what they end up with. Not everyone has a position that can be made flexible, but I imagine that most ER candidates are higher-earning and didn't change jobs much, so they may carry a lot of intangible value in the eyes of their employers. And we can afford to take a pay cut in exchange for doing just our favorite bits on our own terms.

You'll want to keep the raw data because eventually HRs will approach you about a retention edition to get ahead of the curve on these cases. We're a totally different negotiating regime that while small in number should be growing over time as the pendulum swings and people start waking up, so it seems to me timing is good here. Come to think of it, if you want to maximize your value-add, the dark side is probably where you should start. I think for collecting data your notion of "something funny and at least potentially mildly useful" is the best approach.
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Old 11-05-2015, 10:26 AM   #19
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Yup. It's probably very personal but I see lots of people who have the financial means but have a hard time pulling the trigger although part of that is being financially sure but not really, really, REALLY super sure... But that might be a different problem masquerading as a financial problem
The problem is that FI is rarely achieved at a clear cut net worth. Assumptions about returns, inflation, health, etc. can be so variable that there is often a very wide grey area - sometimes 100% wide or more. In my case I achieved some definition of FI a number of years ago, but could envision negative scenarios in which that wasn't really true. So I OMY'd several times until those circumstances were largely covered. One could argue that this reflected a psychological issue on my part, but I would contend it was just prudent financial planning.

I think any OMY calculator would need to account for the risk tolerance of the user - kind of like FIREcalc or Fidelity RIP; test under many circumstances and let the user determine the failure rate with which they're comfortable.
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Old 11-05-2015, 10:50 AM   #20
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you know that you could cure this OMY syndrome by properly programming the calculate to make it appear not beneficial to work OMY. That might cure the disease.
The topic is really rather broad. OMY may make one defer a roth conversion which in the long run could effect RMD taxes. You almost need to follow all the trickle down effects or OMY
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