Layoffs.

[Ed_The_Gypsy]

Savings is all we have, SS for wife at 66 would be 15k, myself at 70 is 39k. And yes, it does drop a lot waiting to take SS at 70. The only way I know around it is to spend less. The figures I use are what Firecalc and Quicken say I can spend at have a 95% chance or better of success. Do I have 20% extra to handle such a loss in the market? No, but I have no need to spend it all of it at any given time. I am susceptible to market sequence issues but there's not much I can do about it.

Grab the deal and learn to spend less. You will have to adjust sooner or later. It does not matter if you are a postman or a PhD. Your time is up. Grab the damn brass ring.

 

[Ed_The_Gypsy]

This is a really serious thread, but to go majorly off-topic, how many here know what 'grab the brass ring' refers to? Have you ever done that? It is one of the unique bits of Americana that is almost gone from our common experience. (Brat, you know! Oaks Park?)

 

[REWahoo]

This is a really serious thread, but to go majorly off-topic, how many here know what 'grab the brass ring' refers to? Have you ever done that? It is one of the unique bits of Americana that is almost gone from our common experience. (Brat, you know! Oaks Park?)

I tried as a kid but you needed arms the length of an NBA center to reach it....

 

[eytonxav]

I took a deal like that when I was 54 with only 26 years of service. The environment sucked and I got sick of having to layoff perfectly good subordinates year after year. That said, I did go back to work and found a lower paying although more enjoyable company to work for with much less stress.

 

[Bestwifeever]

This is a really serious thread, but to go majorly off-topic, how many here know what 'grab the brass ring' refers to? Have you ever done that? It is one of the unique bits of Americana that is almost gone from our common experience. (Brat, you know! Oaks Park?)

Yes. But they made me give it back.

 

[pb4uski]

The concern that I would have is unless your 401k plan allows penalty-free withdrawals for employees terminating service after age 55, what will you live on between ER and 59 1/2? Depending on when you made your Roth contributions you may be able to tap some of those funds penalty-free.

You're in a real dilemma. If your stay your work will go from bad to worse, but it may be challenging to ER. If I were in your shoes I think I would take the package and try to find some other part-time work doing something enjoyable to ease the transition financially and psychologically.

Taking SS before you are 70 could be a bail out if the markets go to hell and it forces you to reduce your nestegg more than is comfortable.

 

[Ed_The_Gypsy]

The concern that I would have is unless your 401k plan allows penalty-free withdrawals for employees terminating service after age 55, what will you live on between ER and 59 1/2?

Pee, I believe that is federal law. He can withdraw at any time as far as the 401k is concerned. The penalties are federal. If the morons withhold 10%, he can protest. Regardless, he will get it back sooner or later (via income tax).

 

[pb4uski]

You are right that he can withdrawal at anytime, the question is whether or not there is a penalty.

My understanding is that the federal law is not totally clear and as a result some 401k plans report such withdrawals as subject to penalty and others would not. For example IIRC Vanguard reports such withdrawals as subject to penalty for 401k plans that it administers.

Even if the withdrawal is reported as subject to penalty, you could report it as otherwise on your tax return but then you are taking the tax risk that if the IRS challenges you that you would have to defend your position and you might lose. OTOH, if the plan reports the withdrawal as not subject to penalty your tax risk is less but there is still a chance that the IRS could challenge the plan's reporting as penalty-free and you could get caught up in their dispute.

 

[padlin00]

Short of passing up $100,000 and working full time for another 3.5 years under what you believe will be unpleasant circumstances, there is another solution: a part-time job. This has been suggested a number of times but I sense you don't think this is a viable option.

I have no problems with a part or even full time gig, just needs to be doing something else. Depends on what I find out about unemployment.

how many here know what 'grab the brass ring' refers to? Have you ever done that?

I know but have not personally tried one, just seen them in my travels.

The concern that I would have is unless your 401k plan allows penalty-free withdrawals for employees terminating service after age 55, what will you live on between ER and 59 1/2?

You're in a real dilemma. If your stay your work will go from bad to worse, but it may be challenging to ER. If I were in your shoes I think I would take the package and try to find some other part-time work doing something enjoyable to ease the transition financially and psychologically.

Taking SS before you are 70 could be a bail out if the markets go to hell and it forces you to reduce your nestegg more than is comfortable.

We can take 72t withdrawals last I knew. I also heard from one that retired early that he transferred his funds to an IRA giving him full access to the $ and no longer held to the once a year requirement. It's another thing to look into. Has anyone else heard of such?
I agree with everything else you mention pb4uski, thanks all.

 

[Katsmeow]

We can take 72t withdrawals last I knew. I also heard from one that retired early that he transferred his funds to an IRA giving him full access to the $ and no longer held to the once a year requirement. It's another thing to look into. Has anyone else heard of such?

There are several issues, which sometimes get combined.

(1) You mentioned 72t which is one option based upon periodic payments
(2) Another option - for some - is that if you separate from service and retire in the year you turn 55 or older, the law allows in certain circumstances withdrawal from a 401(k) without paying the 10% penalty (you do have to pay taxes). I don't what limitations there are on this. Note that for this option, the money must be in the 401(k) plan and you can't do this if you have rolled over to an IRA.
(3) Note that apart from whatever limitations exist on (2) many company 401(k) plans limit how you can take withdrawals from it. For example, when DH retired (he was in his early 60s) once he was retired he had to either take out all of his 401(k) at once (bad for taxes obviously) or had to take it out in equal periodic payments. He couldn't take $X amount one year and then take $Y amount the next. So check to see what your plan provides.
(4) 401(k) plans can be rolled over to an IRA and stay tax-deferred. Once in the IRA you can invest them in your choice of investments at wherever you send it and you can withdraw whenever you like. You do have to pay a 10% penalty under 59 1/2 unless you do SEPP.

There might be other options that I don't know about.

 

[Independent]

We can take 72t withdrawals last I knew. I also heard from one that retired early that he transferred his funds to an IRA giving him full access to the $ and no longer held to the once a year requirement. It's another thing to look into. Has anyone else heard of such?
I agree with everything else you mention pb4uski, thanks all.

Many people here rolled their 401k money into IRAs when they retired. More fund choices, potentially lower fees, want to cut ties with former employer, etc.

If you roll into the IRA, then make "substantially equal periodic payments", you still have to withdraw a specific amount every year. It can be one or more payments, but it can't be zero.

The little I know about this suggests that those payments won't cover all your expenses. They might be $25k compared to your $65k target. Worse, once you start the SEPP, you are stuck with exactly that amount for 5 years.

That means you'd need ($65k - $25k) x 5 = $200k in other income, more than your Roth and I-bonds.

I don't know if it's possible to split the 401k withdrawal when you leave. e.g. roll $600k to an IRA and take $200k in cash (paying regular income tax, but not a penalty on the $200k), and plan to do SEPPs on the $600k (for about $21k annually) and use the after-tax remainder of the $200k for the rest of your expenses.

Another approach would be to commit the $150 in Roth and I-bonds to cover your 2.5 year gap. This will put you in a very low (aka zero) marginal tax bracket. Then make IRA withdrawals in any pattern you like during that time period, figuring that the 10% penalty is a modest tax. This gives you more flexibility when you hit 59 1/2.

I'd like to see some better ideas, I hope other people have some.

 

[almost there]

I was in the same boat on the news, thinking I had to figure out everything in advance.
Then I found out, there is no rush. The 401k & pension can be rolled over any time.
So, am just going to leave it where it is for a while. My mega corp is in great shape overall. With almost no chance of going under.
Just a thought. I have a full 8 1/2 yr bridge to 59 1/2. Will see if the hobby can kick in a few bucks or maybe look into the 72t. Either way, I have a yr or two to work out the details.........
Am just now starting to relax. Got the news 3 weeks ago & have 3 weeks to go.
Tax wise, 2014 would be nice. But I didn't get to vote.

 

[padlin00]

I was in the same boat on the news, thinking I had to figure out everything in advance.

I'm still trying to decide weather to RE or loose a years paid vacation and work another 3.5 yrs. I agree there is plenty of time to figure out the withdrawals but I do thank all for the suggestions and info provided.

So far not a soul has suggested I keep working.

 

[Ed_The_Gypsy]

(4) 401(k) plans can be rolled over to an IRA and stay tax-deferred. Once in the IRA you can invest them in your choice of investments at wherever you send it and you can withdraw whenever you like. You do have to pay a 10% penalty under 59 1/2 unless you do SEPP.

That is why I kept my 401k until I reached 59 1/2.

 

[almost there]

This is not the 1st round for me. Its much more work for the "winners" trust me. Plus these shake ups can put you in another area, new boss etc. Not worth rolling the dice. I cant trade a "known" for an "unknown"
You know what you have and what you will get. You don't know what things will be like over the next 3 1/2 yrs. (for 2 1/2 yrs pay)
With the knowledge that these deals do not get better with age also helps make up ones mind.
We just plan to live on less for a while. No big deal as there is plenty of fluff to cut back on in our case. (Dinner out 2-3 nights a week, buying crap we really don't need etc)
And most of the things we like to do are free or next to free. Going fishing tomorrow morning. Something to do, plus something to eat. LOL LOL

 

[REWahoo]

So far not a soul has suggested I keep working.

Not true!

Don't retire, continue paying into social security and medicare to help the rest of us retired folks. Heck I don't think you should ever retire there is no greater glory than dying in the office and being taken out feet first.

I'm beginning to waiver. I think Clifp might be right. Maybe you should keep working and 'take one for the team' - we'll really appreciate your hard work and sacrifice.

 

[heirloom]

It allowed him to postpone starting his pension for those 2 yrs, increasing it about 15%, which pushed him over the edge into FIRE.

I didn't look into that when I lost my job, I just took pension so I could continue with company insurance. THEN when I signed up for UC, it was cut in half because I also was receiving pension. But I won't complain because Obama extended EUC so that kind of took care of it..

In Penna. you can't receive UC if you took unemp voluntarily.

My severance....I couldn't take it as a lump sum because of ERISA rules. But it may be different for you since you make more.

You still sound unsure...so I would stay. It sounds like you blast, set up computers and repair them. You shouldn't have a hard time finding a job in that area with experience. ORR you can always spread word around and open your own business when you do retire. People are always getting worms, viruses, Trojan horses.

Just remember, every year makes such a big difference in your pension. Start adding more into your 401K now, this way you will even closer to being ready if another layoff comes....that's what I did because we knew the time was coming a year b4 it did.

 

[heirloom]

Don't retire continue paying into social security and medicare to help the rest of us retired folks.

LOL!! Don't count on this. Some congressmen are already talking about cutting some SS and Medicare froim people who collect pensions.

 

[almost there]

Yet another reason to take the lump sum.........

 

[shotgunner]

My mother was a school teacher and she looked forward to retiring at age 62. At 61 she was diagnosed with stage 4 breast cancer and underwent a radical masectomy that left her right arm slightly crippled, she died just shy of her 63rd birthday.

The man I carpooled to work with each day for 3 years was looking forward to retiring at age 60 after earning a small state penison to be added to his federal pension. He turned 60 on Sept 25th 2008, retired on Oct 1st of the same year. On MLK Day, January 2009, his wife called me and said I needed to get to the ER right away if I wanted to say goodbye as he had a stroke. He lived but has double vision, slurs his words, uses a walker and can't drive.

Only you can make the decision to leave or stay but when it comes to retirement we are all gambling on both our money and our time.

My late father used to say to me "You can always get more money but you can never get more time." It's your choice on how you want to spend your time essentially. Good luck either way.

 

[HFWR]

That is why I kept my 401k until I reached 59 1/2.

I kept mine in the old 401k for that reason, but in eight months it will be a moot point...

Luckily, the plan has some decent investment choices, including a self-directed brokerage option.

 

[Brett_Cameron]

That is why I kept my 401k until I reached 59 1/2.

This is my plan.

I started withdrawals from my 401k when I retired from megacorp at age 55. Megacorp's policy was if I wanted to keep the 401k and not roll over into an IRA AND wanted to withdraw money, I had to specify a duration over which to withdraw the money. I specified a 15 year period and the first payment was 1/180th the balance, second payment was 1/179th the balance and so forth. I chose the 15 year period to ensure I could bridge the gap to 59 1/2.

At 59 1/2 I plan to roll over to IRA and withdraw as needed for expenses instead of this distribution plan I am sort of locked into. I will also move to smaller expense ratios (currently 0.57% with T. Rowe Price).

 

[jime444]

One more vote for getting the hell outta Dodge

Congratulations on your ability to have a choice. You've already had plenty of feedback to help you make a good, logical decision.
Not to reiterate, but my work at MegaCorp is similar. So similar, it's scary, Ten years in, I've got about 2.5 years left, as well. Unless something like your situation happens.
Here's my two cents.
1. You'll never get this time back. If you have background health issues or family medical issues, you need to go, now.
2. The next two years of work will be absolute hell, guaranteed. "we will break you", I just lived the last year through this situation, it's been awful, destructive, demotivating, in my opinion, almost disabling. 60 hours per week is discussed, I won't work it, life is too short. The pressure is immense. I'm trying for a package like yours, hint, hint.
3. The package is as good as it gets, nowadays. So far, our offers have been only two weeks/year max, 12 weeks. Heard through the grape vine another 150 guys in a couple of weeks, because they can. No other good reason(s). This will make a bad situation, worse.
4. UI will make the transition much more palatable. Retraining benefits are great fun, btw.
5. You can always find part-time work, if you need something to fill the void. Employers don't want to hire full-time employees, but, part-time jobs are always available. Personally, I'd spend the time on your health and demand side budgeting.

Bottom Line: If I had your situation, or even close to it, I wouldn't let the door hit me in the butt. If you are anything like me, I know for a fact, you won't miss it a minute. Cheers...................

 

[MRG]

Run to the exit.

 

[Unpaintedhuffhines]

Like you need more people piling on, but here goes... so much of what has said is true.
1. The first RIF is always the most lucrative financially.
2. You have been given a years paid vacation - take it! Another way to look at it is this: for the next 12 months, you will be working for free. Only after that 12 months will you be getting paid more than you would with this offer.
3. As someone who has been through RIFs, that first few weeks back after everyone has left is pretty depressing. I mean, the reason for the layoffs is that a company struggling to get healthy again. More surgeries may be required.

And I know a lot of people are suggesting that you negotiate things as part of the deal (timing, payment now versus 2014, including UI or not). That's a good thought, but in my experience, you either take the package or you don't take the package. Companies aren't really interested in a bunch of separately negotiated separations. And to that bean counter, you are a bean, not a 35 year veteran of the company.