Force Severance / Struggling

[ERasap]

Folks,

I was force separated this month, will have a severance for most of a year. I am telling myself I don't have to work again, I hated it and spouse has been telling me to quit for quite some time. I may want to work again, but right now I feel relief and frustration and fear and pissed off...I know this was a good thing for us. But I also know it wasn't, I needed OMY and maybe OMY after and after. My first time I posted here I think my goal was $2.1 or $2.4M. Blew threw that some time ago.

All the calcs I have done for retirement look good (Firecalc and NewRetirement), but this is really hard to feel good about. Especially with 3 kids going to school.

Our goal has been to get them through school with no debt (I lived at home and went to a Small but very good engineering school graduated with no debt, great start to a career) but we won't pay for an expensive school. If they want that they will need scholarships and/or loans.

Situation: 51 years old / spouse 44
Spouse is working fulltime at a relatively low pay job, gets summers off, but it will have full healthcare for the family when my severance runs out.

3 children, one in trade school, two in high school.
The oldest in trade school we have it covered with a 529.
The two in high school we have saved about 40k each in a 529 as well. The middle child should get a lot of scholarships, hoping will be a full ride at a good school. This may free up that 529 to use on the youngest.
The youngest is really smart too and plans to go to college, but no idea of where yet we have several years to go.

We have always saved, and the idea of spending is killing me, wondering if our investments will be enough and also leading to a very conservative allocation.

We have about $4M in cash + investments. Our house and cars are all paid for.

House: $600k no mortgage
Cars: 3 + we bought one for oldest, so have 4 cars on insurance.
Investments:
$1.76M in tax advantaged accounts
$1.45M across 401ks
$220k Roth IRAs
$80k HSA
$2.25M in after tax brokerage & Savings accounts.

I have ~$1.1M allocated to cash (~5% interest rate)
$900k bonds ( I have some bond funds, also some Savings Bonds, and TIPS)
$1.8M in stocks, 99% US.

I have been buying more TIPS recently as the rates have increased, really some attractive 2.2-2.3% real rates on TIPS this week. Gained another 5 basis points today pretty much across the curve.

We have been spending about $120k per year, but I have put together a budget at about $95k that I think is doable. Its crazy to think $95k is a cut down budget, but about $30k is house taxes + vehicle ins + house ins + utilities. Also $10k of income taxes is included.

After the youngest graduates high school we want to move to a lower cost area and a smaller house.

As I mentioned, I get a 100% on firecalc and a 99% on New Retirement. This is a 2.375% withdrawal rate. But I am really struggling with this from an emotional standpoint, I have read on here lots of others posting on this, but now its real. It got real when I turned off my automatic transfers to brokerage for each paycheck. I don't have to work again? And I have to spend my savings? It just seems wrong. What if we have more inflation... what if we have another great depression... just lots of risk that doesn't seem captured. I wonder if our comparison periods are just a great period of returns and low risk...and it could get a lot worse.

Before this event, I was aiming for $5M in savings and $125-130k budget. That seemed safer.

My engineer brain says I have it right and don't need to work if I don't want to. My other side says wtf are you doing?

 

[COcheesehead]

Let it settle, it’s raw. Old saying, you can only see the bottom in calm waters or something like that.
Personally, I would rather go out on my own terms and with my own financial goals met. Could you make it work, sure. Will it gnaw on you, yes.
Maybe find a transition job that helps you reach your goals and retire in 5-7 years.
Figure out what you want to retire to, not just from.
You are still young.

 

[Katiek]

I'm sure it's stressful and emotional now, but I bet you end up thinking this is a good thing. Most people have problems transitioning and starting to spend - at least I hope most people do because i certainly do! There's a reason OMY is a thing.



But you are well positioned and could make it work. But you may decide you want to do something later. Luckily, you are not in a position of having to do anything drastic or make any decisions now. Take some time, see how you like having more free time and then decide. The fact that this is so sudden makes it seem more dramatic, but you have planned for years and can handle this.

 

[38Chevy454]

I agree, give a little time to let the shock dissipate. You've done great getting to the point where you can consider retirement. Being an engineer you understand the logical part of what the numbers say. You just need to work on the emotional part.

 

[aaronc879]

Looks like you don't have to work if you don't want to. You get paid for not working for the next year so let things simmer for a while then you the severance is almost done if you want to go out and find another job then go ahead. Not needing to work doesn't mean you can't work. Do consulting/contract work rather than full time if you think that would work for you but know that you don't need to financially. Good luck.

 

[REWahoo]

...you are not in a position of having to do anything drastic or make any decisions now.

^ This. As others have said, give it some time.

You are in the enviable position of getting to decide whether or not you need to keep working (for psychological, not economic reasons as your numbers look very good) and having someone pay you for a full year while you make that decision. My guess is you'll have a pretty good idea of which way to go by early next year.

 

[Exchme]

Financially you seem ok, your severance will cover you for almost another year and you have enough saved beyond that. Your pride is bleeding and it will take time to get your equilibrium back.

If your spouse has been telling you to quit for quite some time, then realize you have been bringing home your stress and frustration at doing a job you hate. That wasn't healthy, use this opportunity to reconnect with your spouse and kids on a more healthy level. It's also quite possible that your dislike for your job spilled over into a negative vibe at work - we are never able to mask our emotions as well as we think.

Take some time off, see where your interests lead you. Once you are better grounded emotionally, then maybe a new job/business opportunity will present itself or maybe you will decide that you are glad that the working phase of life is over. You have reached the FI part, you have the freedom to decide on the RE part.

 

[marko]

Problem or opportunity?

I too was in an "unplanned early retirement" situation at age 52 when my company was acquired. It was the best thing to happen to me. After 34 years, I wanted to leave but didn't know how.

You seem in a good place financially, I'd guess this is more about the suddenness of it coupled to a bit of pride. Your head, not your wallet is the problem.

I would only caution you that at age 51, even with a stellar professional resume, finding another big job will be pretty unlikely. Ageism is very real...at least in my case it was. A year's pay will lead to the question "why have you not worked for the past year?" My three year severance/non-compete became my albatross in that regard.

I'd let it all settle in for a bit. Easier said than done, but turn the negative into a positive. Enjoy the free time, lack of pressure, sleep late. It can be disorienting but it becomes normal after awhile. You're luckier than you realize.

 

[DrRoy]

Of course it is upsetting to have it imposed on you, but you are in fine shape $ wise, and I hope you can turn to the good here.

 

[freedom2022]

You have received a lot of excellent feed back from successful and wise people.
From one engineer to another, I only want to say: Don't worry, be happy with your family with what you have. Take care.

 

[FLSUnFIRE]

I'd take it one day at a time, ride the emotional wave and don't make any big decisions. You'll get used to your new circumstances and more comfortable with time. Hedonic adaptation seems to be a real phenomenon.


2 years in and I'm still getting used to it -wasn't forced other than BS hit a crescendo and I jumped. Overall life is very good on this side. I'm still a bit reluctant to take on excessive expenses but I know I could arguably afford but I know I'll loosen the purse strings with time -eventually probably even reaching BTD status.


Also, focus some one self-care/love. Give yourself permission to just feel what you feel and time to do nothing. Use the newly free time to maintain or improve physical and mental health. Exercise is amazing at boosting mood and reducing stress.



Good luck and try to enjoy it.

 

[Time2]

If your $4M earns 8% for 3 years, you will have your $5M. If you are both working, you should be able to earn a considerable portion of the $95k budget for those few years. Keep in mind, if you spend less than your portfolio generates, it will still be growing. I see it as Marko, it is a new opportunity, you have enough to have fun with it.

I think you already have enough, although, my property taxes are only $1,750 a year. Add to that, the move after the kids are out, lowering your property taxes and kid expenses. (maybe?) At 68, I started paying tuition cost for one my kids second degree! Chemistry wasn't enough, now he wants a mechanical degree. Good for him, I'm happy to do it.
Take it from Alfred E. Neuman.

 

[DJRR]

51/44 is young, so you are wise to be cautious. The algebra says you will be OK, but life ain't algebra. Sounds like you had a rough go at work, so some decompress time and some regular exercise/meditation will do wonders for your outlook. After you get your balance back I would start working on your biggest problems 1 x 1:

1. Healthcare - sounds like you have this covered by your wife with a job she is happy with. That is awesome and my biggest fear for the future.

2. College - you are generous, but your savings are light for cash flowing that without an income. Know that, depending on the trade, there are a lot of options for trade school. You can check out the Mike Rowe foundation, or in my area the IBEW has trained apprenticeships, etc. For the others it is much cheaper to do your first 2 at community college and then transfer for last 2. VA has guaranteed transfer to a State school and my daughter plans to use that. Not as awesome socially but you get your degree without debt.

3. W*rk - if you decide you want to go back I think you should. I got laid off at 53 and ended up with a better job in 4 months. Ageism is real, but you also have more contacts at different companies that know your work. I ended up getting recommended by my network so focusing on that now will help you if you decide to go back.

Sorry that happened to you, but you are in a great position for the next phase of your life.

 

[Aerides]

I may want to work again, but right now I feel relief and frustration and fear and pissed off...

Financially you are absolutely fine. I'd suggest you wait out the next few months and work on all those emotions. No one hires much in 4Q anyways outside of retail holiday stuff. Almost all budgets get frozen and open positions get queued up for the new year or a bit after.

Spend the next few months in vacation/holiday mode. Absolutely do not apply for anything new while the frustration/fear/anger are in front. They will pass, but you might also consider ways to address them in the interim.

 

[old medic]

Its like skydiving... Jump and enjoy the view.. You got nearly a year before you hit the ground.

 

[mystang52]

OP: As others mentioned you're feeling the sting, personally, of not leaving on your own terms. That initially happened to me, at 58. My plan was to go at 60 or so. It took a few weeks to get over that initial hurt, but then I realized I was OK financially and emotionally. I did find another j*b 5 months later. This position was one I would not have accepted if I was voluntarily looking......because it was too easy and also involved a pay cut. But I also realized that in a sense this would be a paid retirement doing career-related stuff without any stress; I stayed for a bit over 2 years.
After you decompress, consider looking for another position that likewise might be a good bridge for you until you are ready to confidently leave for good, on your own terms.

 

[brett]

View this as an opportunity to make some changes in your life, in your career.

Then move forward.

 

[LateToFIRE]

Echoing others, your financials look rock solid. I haven't been RIF'd (yet) but I've counseled many people thru it. You are in excellent shape financially - you should feel no pressure to turn around and find a new job [or any job for that matter]. Take a few months, let it sink in, often this is the best thing that could happen to someone [with your resources] because it forces you to step back, take stock, and rearrange priorities. I know it doesn't feel like it right now, but this is the universe's way of telling to to reassess.

 

[pacergal]

As others have stated, you look pretty good financially.
Take a deep breath and give yourself time to de-stress.
You are fairly young, and if you desire to continue to work, start putting feelers out in a few months. Forced severance (layoff?) happens, it won't be a negative on your resume.

There are ways to help with decreasing college costs, such as attending community college the first two years, then transfer to university.

The emotional part of "spend vs save" is, I think, one of the hardest adjustments to retirement!

Positives right now is that you have the ability to be home and spend time with your kids, who are growing up quickly and will soon be out on their own. Enjoy this part of your opportunity.

 

[bloom2708]

OP is in great shape.

Take this paid year. Develop new health and exercise routines. Go to more kid events. Walk 10k steps per day. Read some books for fun.

I am 52. It will take 4-5 months to decompress and get past the trauma.

Just exist for a while. Don't schedule huge projects. Watch less news. Get outside.

There is another job out there. Maybe the pay is a bit less. Who cares? If you tread water for 5-7 years, you are even more golden.

You could easily spend down $500k from taxable and still be completely fine.

This will turn out to be a great opportunity if you don't get all locked up in your head and feel like you have to find a job immediately.

 

[ERasap]

Thank you for all the responses, appreciate all the advice. I have a lot to think about, and I wont be seeking any employment in the near future while I process everything.

 

[pb4uski]

I think you are all set. Plan to trial ER for 12-18 months and I think you will get increasingly comfortable with the idea of never going back to work.

 

[Aerides]

Thank you for all the responses, appreciate all the advice. I have a lot to think about, and I wont be seeking any employment in the near future while I process everything.

You mentioned your severance lasts about a year? You might want to check how that reports from your HR group re employment date. Mine was serial severance, and for the purposes of confirming employment it was the last day of severance.

Had I wanted to, I could have put that end date on my resume, and therefore there was no gap if I wanted to take the year to decide. Not that gaps are terrible, or that I was remotely ever considering looking for a new job, but it was a nice extra thing to know.

 

[MarieIG]

It seems as if the stress is emotional - rather than financial. You are in better shape than most of the country - but the layoff did not correspond with your plans (which is a stressor.) Your house is paid off, your heath care is covered, you have severance, you have savings. You will be fine and you will have options (you just need time to breath and process this).

 

[captain3d]

Same thing happened to me. It has nothing to do with money. I understand the emotional frustration.

Just have to wait until you are bored thinking about it over and over. Could be weeks could be years.

In the meantime enjoy your financial success and notice how feel less and less excited about future full time employment