Unexpected ER

[growing_older]

I've been working my plan towards FIRE and probably have a just a few more years until I'm ready to retire (early). Maybe with the markets so down 5-6 years to go.

My employer has been in trouble with the economy and has been letting people go. I hoped to stay with them until FIRE, but have prudently been piling up cash just in case I got the axe myself. The work has been stressful and the watching people go while wondering am I next has been stressful. In fact, my recent experience with this job has been pretty unhealthy and I know I've gained weight and let myself go while picking up several bad (unhealthy) habits.

I got notice today that I will be laid off in 60 days. Poof - job gone. Many people who were laid off in previous rounds have yet to find employment and from what I'm seeing the job market is still pretty thin around here.

So I need to decide what to do. I think I have three options:

1. Start a job search asap. I've looked in tough markets before and my experience can be adapted to fit many different kinds of jobs. I also have a pretty good network of people I've worked with in the past to draw on. If I go this route I likely take something of a drop in pay, but my plan to FIRE stays close to on track and I've only got a few more years to go.

2. Start ER sooner than I expected - like now. With a tighter budget and a plan to sell my current (too large) house after last kid leaves for college I think I can squeak by, or better if Mr Market cooperates. Kids keep the continuity that the house represents at least through High School. I get an early start on ER. Finances are tight, but I can bail and go back to work if they get too horrible.

3. Take a break. My company will subsidize COBRA. I can collect unemployment while I look for a really good job. I can enjoy the summer (mostly) off and get an early taste of ER lifestyle, without committing to having no more than modest means for the rest of my life. By the end of the year, I can decide whether to ramp up the job search and revive my plan to ER in a couple years (maybe plus 1 or 2 to account for the time off), or decide to commit to staying ER and just scrap the idea of finding a new job.

I probably need some time to mull these over and make a good choice, but for now I'm leaning to #3. It will be hard for me not to launch an immediate job search. I've been unemployed for short stretches in the past when companies failed or closed divisions, but I've always moved quickly to find employment and I can feel myself starting that process in my head. I'm a little bit surprised I'm writing this before I've updated my resume and done an initial job search. Very uncharacteristic.

Anyone faced similar choices: possible ER sooner than you planned, or going back to work? Things to consider or watch out for? Pitfalls?

 

[W2R]

Frank is being laid off at the end of June, and plans to take option 3 (take a break, and then reassess). Probably he can get his house on the market during that time.

You mention that you don't want to sell the house until your children are out of high school - - will that be long? That is something to consider if the extra income from downsizing is part of your ER nestegg.

 

[freebird5825]

I'm sorry to hear about this. But your post almost seems to have an element of relief between the lines.
What was unknown is now concrete.

# 3 looks best if it is affordable, i.e. stay debt free.
Relax, Recoup, Resume...

If you land something now, and that becomes a layoff , how does this affect your unemployent benefits ? Is it more prudent to do a more careful j*b search ?

"last kid leaves for college..." - does this goal still fit in with your layoff? Tough question, but it needs to be answered. Kids may have to delay entry or self finance their tuition.

"sell the house" - cost cutting exercise, will you be taking a loss at the wrong time, what is Plan B for roof over your heads ?

 

[bbbamI]

I probably need some time to mull these over and make a good choice, but for now I'm leaning to #3.

It sounds like you have already answered your question and have found the right answer for you. FWIW, I vote for this option as well.

Anyone faced similar choices: possible ER sooner than you planned, or going back to work? Things to consider or watch out for? Pitfalls?

DH wanted to feather the nest a bit more after he became retirement eligible, but it was not to be. People were getting laid off right and left...when he finally hit his magic number, he volunteered to be cut. We had to trim the budget somewhat, but we're definitely not hurting.

We figured if we REALLY wanted/needed something that was not in the budget, we could get a part time job to make a purchase.

I left mega corp in 1998. Since then I have been doing volunteer work. If I had to go back to work, I could show my prospective employer that I had been involved in my community and my skills are still up to date.

I wish you well.

 

[LOL!]

I think you should take a break while looking for a new job and practicing early retirement.

 

[growing_older]

You mention that you don't want to sell the house until your children are out of high school - - will that be long?

So if I've figured correctly, I can afford to keep the mortgage current for the six years until my youngest starts college - but I'll have to give up on the idea of paying off the balance. If that's right, then I sell and buy something smaller with the proceeds after that. It also fits nicely with option #3 take it easy and see how things develop. Can't predict house prices that far out, but since I know I'll be selling a big house and buying a small one, the ratio should still work in my favor.

But your post almost seems to have an element of relief between the lines.
What was unknown is now concrete.

Perceptive, and certainly true. While I loved my work and I used to love working at this employer, working conditions have been terrible for a long time. The end of the waiting for the seemingly inevitable axe to fall is a relief. The "no longer have to put up with this place" is also a big relief.

Kids may have to delay entry or self finance their tuition.

Everyone has their own ideas about how much to contribute to kids education. This may be one of the oddest side effects of the whole situation. I do have resources set aside to fund at least part of college costs and planned to pay the rest out of job income. If instead I am on my frugal ER budget with much lower income, I start to qualify for all kinds of college financial aid I didn't qualify for before. I think I have enough set aside to make this possible without overburdening kids. In any case, this is important enough to me that if the plan doesn't work out, I could take a future job just to pay these costs. Personal quirk I guess.

Because of the way this layoff works, I'm going to be working for a while until it takes effect. Will be strange for the folks who aren't laid off, but will also be strange for me. I want to do right by the people still there, but the notion that the work is important enough to give up nights and weekends is no longer a part of my reality. Am looking forward to taking time to redevelop some healthy habits (exercise, good food) that I let lapse in the "fog of work" and hopefully that also makes it easier to sort out my #1, #2, #3 options.

 

[unclemick]

Well - I took option 3 - Jan 1, 1993. This summer I will be 66 - old enough for regular retirement.

heh heh heh -

 

[Delawaredave5]

I don't know what you do, but I would consider freelance / contractor / consulting work - you'd get a part time break, you'd stay engaged in your industry, you build contacts.

Full time ER sounds scary to me with kid still in school.

Full time job hunting sounds futile given the economy - gotta wait until some of this blows over.

 

[DangerMouse]

For me, I would not FIRE now if I thought there was an real potential of having to go back to work. I pulled the plug on full time work in July last year, and consulted at my former company until Feb. I'm now looking to go back to work and have to say have zero enthusiasm for the task.

If you can get something part time or contract I would take it so when you do reach the point you believe you are FIRED you will never have to go back.

 

[dex]

I would lean towards #3 for the reasons you gave but more importantly:
1. to get your head together - if you are not excited about getting back to work it will show in the interview and you will have burned some options
2. Health - get check ups now; lose weight and get rid of those bad habits - people like to hire healthy fit people
3. If you decide to go back to work you will be focused, mentally and physically fit.

If you do #3 don't waste the opportunity by sitting in front of the TV eatting bon bons and wathing Oprha.

 

[bubba]

For me, I would not FIRE now if I thought there was an real potential of having to go back to work. I pulled the plug on full time work in July last year, and consulted at my former company until Feb. I'm now looking to go back to work and have to say have zero enthusiasm for the task.

This is stuff of my nightmares. If I ever get to retire, I pray I'll never need to go back to work. Hopefully DangerMouse, this won't be as bad as it sounds.

 

[REWahoo]

If you do #3 don't waste the opportunity by sitting in front of the TV eatting bon bons and wathing Oprha.

One man's "waste of opportunity" is another woman's "died and gone to heaven"...

 

[freebird5825]

One man's "waste of opportunity" is another woman's "died and gone to heaven"...

Hey, I heard that!
I would go back to w*rk before I turned on daytime TV.
However, I will confess to mid-day chocolate snacking. Just a half of a plain chocolate candy bar. Honest!

 

[mickeyd]

Anyone faced similar choices: possible ER sooner than you planned, or going back to work? Things to consider or watch out for? Pitfalls?

Hey g o.

I dare say that a significant number of those who post here are among the ER group because of being laid off/let go/unfairly discriminated because of age/fired. I count myself in that group. If you have an ER plan already, this would be an excellent time to test it out, and if after a few months, it looks like it will work for you in the long run, your decision will be easier to make.

After being cut loose of my job a few years ago, I sent off about a thousand copies of my resume and finally realized that it was not going to happen and I was living pretty darn well on my ER plan without realizing it.

After giving up on full time work possibilities, I was swamped with many temp and part time opportunities that I can pick over and w**k or not w**k as I see fit to decide.

 

[growing_older]

I would lean towards #3 for the reasons you gave but more importantly:
1. to get your head together - if you are not excited about getting back to work it will show in the interview and you will have burned some options
2. Health - get check ups now; lose weight and get rid of those bad habits - people like to hire healthy fit people
3. If you decide to go back to work you will be focused, mentally and physically fit.

If you do #3 don't waste the opportunity by sitting in front of the TV eating bon bons and watching Oprah.

This is sounding like pretty convincing advice. Only 2 years ago I was happy with my physical conditioning. It's amazing how quickly the work stress and resulting bad habits piled up into downright unhealthy. It would be very gratifying to get that back - plus the mental benefits of being in better shape as well.

I've done a quick search for jobs and often there are things I could do, but only every month or two are there jobs listed which are exactly a fit with what I've been doing. I'm considering waiting for one of these "perfect fit" opportunities before doing much applying. Frustratingly, there is one available right now. Do I jump on it, because who knows how long before another might pop up? Do I want to risk further deterioration in the job market? Do I want to give up on my opportunity to decompress for a few months?

I just checked the unemployment benefits website and it looks like I'm entitled to a benefit very nearly as big as my monthly expenses. If that's true - maybe I can afford to be extra particular for six months or so and only entertain work if the situation is really really good. Otherwise I can take my sabbatical and see how ER suits me with less of a nest egg than my planning had me shooting for.

I don't want to be gaming the system, but I'm gradually talking myself into believing that this is a legitimate use of unemployment benefits. Am I fooling myself?

 

[Spanky]

I don't want to be gaming the system, but I'm gradually talking myself into believing that this is a legitimate use of unemployment benefits. Am I fooling myself?

It's your entitlement -- you have earned it. Take a break and recoup. You will see the light and know exactly what to do next.

 

[mickeyd]

I don't want to be gaming the system, but I'm gradually talking myself into believing that this is a legitimate use of unemployment benefits. Am I fooling myself?

No or course not, unless you consider using your employer provided health benefits as gaming the system, or accepting your employer's 401(k) match as gaming the system.

All benefits, including unemployment comp, should be considered by employees as part of their compensation package. If unemployment comp were not available to you, you would be receiving a higher salary from the employer.

 

[cardude]

I would pick door number three after having a similiar experience. I had been trying to ER for years but could never pull the plug. The economy pulled the plug for me recently and it has been pretty good. We are having to make some of the same adjustments you are (like selling the big house we bought two years ago), but it looks like it is going to be OK. I was freaking out at first, but I'm freaking out less now.

I am also running every other day and working out on my crazy paddling machine-- trying to get back into some kind of surfing shape so I can resume that activity (which I put off the last couple of years while my business went down the tubes).

 

[Lsbcal]

...
Everyone has their own ideas about how much to contribute to kids education. This may be one of the oddest side effects of the whole situation. I do have resources set aside to fund at least part of college costs and planned to pay the rest out of job income. If instead I am on my frugal ER budget with much lower income, I start to qualify for all kinds of college financial aid I didn't qualify for before. I think I have enough set aside to make this possible without overburdening kids. In any case, this is important enough to me that if the plan doesn't work out, I could take a future job just to pay these costs. Personal quirk I guess.
....

I chose to focus on this aspect of your situation. Hopefully your kids are hard workers and resourceful, bright, and cheerful. Why not discuss the situation with them and determine how much they can contribute to their own education. They could start with summer jobs. They could push to enhance their college resume in order to qualify for more educational assistance. They could read up more on college scholarship offerings and target many of these. They could pester the school counselor for ideas on financing college and the best colleges to consider. There are probably more ideas out there I don't know about.

Our son delayed college because he was not motivated. Now he is highly motivated and taking courses at the local JC. He will be transferring to a state college. Because he is 24 he qualifies for more scholarships then if he had to report our income and net worth. Just an upside to living with a kid's quirks until he gets his act together .

 

[Delawaredave5]

I don't think I could voluntarily ER with kids in high school - three reasons:

1. Role Model: kids gotta see adults working. When I was a kid, adults left house early and came home dirty and tired. Now-a-days, kids see everyone dressed casually and coming home relaxed. I may sound like an "old fart" - but I think it impacts kids attitudes towards work.

2. "Paying your own way" through college ain't what it used to be. College costs have risen much greater than unskilled wages. 20 years ago I knew a lot of kids who had manufacturing and/or technician jobs that paid 2-3x minimum wage - and you could work your way through school with no support from Mom and Dad. I don't see how anyone can work for $7/hour at Home Depot and make it these days - let alone pay for school.

3. College is the "new high school". Like it or not, I think a college degree is becoming a requirement like a high school degree used to be. I am amazed at the customer service reps I talk to on the phone with college degrees.

Re-reading above, my wife is right -- I am like my father more and more as I get older.....

 

[DangerMouse]

This is stuff of my nightmares. If I ever get to retire, I pray I'll never need to go back to work. Hopefully DangerMouse, this won't be as bad as it sounds.

I should clarify, strictly speaking I don't have to go back to work, but am thinking about it to feather the nest with a few extra dollars. We found with the recent market declines plus the fall in interest rates on savings and dividend being cut, we weren't as comfortable with our projections as we thought we were. DH has just started a new job and is enjoying it, so we may not FIRE for 2-4 years. I am thinking about looking for something to make my own financial contribution to the household.

Growing_older, one thing you have not taken into consideration, is even you will even be successful in getting one of the positions you have seen advertised. I have only submitted 2 resumes for positions that have been 100% aligned with my skill set and a perfect match for my last position and I did not even receive a call for interview. So don't be assuming that you can apply and get a job. I am finding maybe one job a day that matches my skill set on Craigslist. I know of talented people who have been looking for 6+ months and can't get a sniff of a job. So if I was you, anything that looks as if it would be a good match, I would apply. If it gets to the stage where they offer you the job you could make your decision at that time. However, in the meantime I would be structuring my budget and living as if you were never going to return to the workforce.

 

[freebird5825]

...I just checked the unemployment benefits website and it looks like I'm entitled to a benefit very nearly as big as my monthly expenses. If that's true - maybe I can afford to be extra particular for six months or so and only entertain work if the situation is really really good. Otherwise I can take my sabbatical and see how ER suits me with less of a nest egg than my planning had me shooting for.

I don't want to be gaming the system, but I'm gradually talking myself into believing that this is a legitimate use of unemployment benefits. Am I fooling myself?

A lot of hard-w*rking folks seem to have a dilemma in their heads about unemployment. I collected unemployment when I was laid off from my very first post-college j*b during the screaming recession of the early 1980s.
I had only been there 1 year, but I had zero guilt about applying for benefits. I didn't choose not to w*rk, the small company did that for me.
I luckily found a j*b within 6 months of the layoff, in my field, sort of.

Please consider this as a contrast... I live in one of the biggest "welfare states" in the union. If you want to see how the system is gamed, come here for some training. W*rk a little, collect a lot, rinse and repeat.
We are talking about multi-generational, multi-seasonal pros all milking the UI system to the max.

You obviously don't fit that pattern.
I vote to apply and collect the benefts while you regroup and see what looks best for continued w*rking or early FIRE.

 

[bubba]

I can't resist. One of my best friends is milking unemployment. Due to various extensions on the benefits, she is roughly at 18 months of unemployment benefits and is actively avoiding looking for work. This is just wrong and I struggle to keep my mouth shut about it. But, for 6 months or whatever, I think it's your due since you did not choose to be out of work.

 

[hakuna matata]

Wow--reads like my story. I am 50, plan on retiring at 55.

I opted for #3.
I have worked as an Architect for 29 years, with 14 of them at my last office and right now--banks aren't lending money, which means developers aren't developing, which means I am not designing for them So things are slow to say the least.

So my firm offered me a 'temporary layoff' until August. At that time they will either lay me off permanently and give me a severance, or I will be back at work. They are paying my medical while I am off and I can also collect unemployment. I should add that I am also 'looking' for work, but there really isn't any work in my field right now. My best option is to get back to my old firm.

I am using the time though to get an idea of what my retirement might be like and also am taking full advantage of the time to get back in shape. So each morning I drop my lovely wife off at the ferry and then head to the gym for about 1 to 2 hours of gym work. I am in the best shape of my life and by the time August rolls around I will be in great shape!

So enjoy the summer would be my advice.

 

[growing_older]

Thanks everyone for the helpful suggestions and perspective. Not sure I'm fully ready to commit, but taking time off to decide seems like a good choice... mostly. I did get a call today from a friend who is out of work and has only found 2 short temporary jobs in the last two years of looking. He's desperate for leads and has consumed all his savings. Next stop is giving up his apartment to move in with a friend or move back home to his Mom. While I know I am in much better shape than this, I still have a tendency to take it as a cautionary tale and it makes an immediate job search seem much more prudent. Okay, holding that thought for now.

I'm trying to put together my list of what to do asap, assuming for the time being I am going to try option #3 (take a short break from employment and see what develops). So far, I think I need to:

Shop for medial coverage so I'll know if I want to accept COBRA or not
(what do I do when COBRA runs out is also an issue I'll need to consider)
vision checkup
colonoscopy (recommended for my age, even though I've been putting it off)
get all my stock option papers ready to decide if I need to exercise or abandon
get severance agreement in writing
update resume (if I am going to look for work)
decide on plan #1, #2 or #3
get word out to friends and network what my plan is
make my "what to do around the house list"
start my exercise and healthy eating program
tell family what's going on - reassure kids we are fine financially
smile and smell the fresh spring air