52 & RIF'd - not sure I'm ready to retire from big bucks career

[Andromeda]

Hi, I'm Andie

I'm 52, live in Manhattan with my husband (same age). Our only dependants are cats.

It wasn't a complete surprise (because the company was making cuts), but I was a little bit surprised to get RIF'd a few weeks ago. I got a generous package (52 weeks salary continuance, prorated bonus eligibility, etc), so it's not panic stations yet. But I was the primary breadwinner in the family (my substantial salary was double my husband's).

Now I'm trying to decide what to do. This is the first time I've been unemployed in 25+ years, and for many of those years, I worked 50-80 hours a week in a career (financial services law - although in non-traditional roles) that I really enjoyed, and there wasn't a lot of time to do much else.

In the past few years, however, I have spent a lot of my spare time developing my skills as an artist and using those skills to support the work done by volunteer groups in my community. So I've got something else - not my "career" that provides a great deal of satisfaction and that feels really meaningful.

And so, there was a part of me that did the Snoopy dance when I got RIF'd. BUT - there is another part of me that isn't sure if I'm ready to leave behind that traditional job, and I'm also not sure we're financially ready for me to stop working completely and be able to live at the (high) standard to which we've become accustomed.

Our situation is also somewhat complex because we're expat Canadians with our assets in both Canada and the US.

I'm not ready to share numbers yet here, but I'll say for now that:

1. If we both stopped working tomorrow and moved back to Canada, we'd be fine. We'd be able to live a comfortable life outside a major city, but we wouldn't be able to support my husband's mother and spend the way we'd hoped on experiences (like travel, hobbies, etc).

2. If we managed to keep working (part-time or full-time) after my salary continuation runs out and earn enough to leave our retirement assets alone for 5 years, and leave our pensions alone until normal retirement age (65 for employer pensions, 67 for government pensions), we would have almost 2x the annual income in scenario 2 above. But that still wouldn't fully fund the life we were hoping to have.

3. I could seek out a similar role, although the odds are I won't be paid nearly as much. And I think I'd probably have to work a lot harder than I've worked for the past couple of years. There would be a lot less time for my hobby/volunteer work. Not to mention the fact that I'd end up spending a lot of this prime time (at age 52) hunting for a job instead of enjoying being paid to not work. But I do like my day job career, so this wouldn't be a complete hardship. Maybe it would be worth it for a few more years.

I really don't know what to do. There is a part of me that just says - "Go for it! Go help make the world a better place, and pursue your passions." It would be great to spend more time with my husband and our families, and he's also got passions (writing) he'd like to pursue.

But I have NEVER been frugal (although my husband has been frugal, and has good habits). His only weak point is that he craves space - I could live in a shoebox, but he wants a detached home with 3+ bedrooms.

So, I suppose I'd like to hear in particular from the formerly non-frugal who have managed the transition to "moderate spenders".

And a more particular question I have is whether anyone has suggestions for resources that help us navigate the US/Canada assets issue.

 

[Sunset]

Have you each worked in the US for 10 years minimum to meet the social security qualification ?

If you worked in Canada, then you are eligible for CPP. But here is the rub, your SS will be subject to WEP which is where the US Social security is reduced by a % of your CPP (supposedly the max reduction is 1/2 of your CPP value).

Depending upon your pensions, you may/may not be eligible for SS.
You can go to each site to see what you would be entitled to receive.

 

[ivinsfan]

I don't know what your husband does, but my advice if you truly want to ER is to leave Manhattan and look for another job. I don't know what you mean when you say you are not "frugal" but it probably means there are more then a few areas where you could cut your spending. If you'd rather spend then ER, you are probably posting on the wrong board.


Just because you have "never" been frugal doesn't mean things can't change if you want them to.

I'm not sure what your last job entailed but believe me when you work 50-80 hours a week you have no spare time to speak of.

 

[DrRoy]

Reality has played you an unexpected card, so whatever happens things are not going to be what you had been planning for. That will take some time to absorb, so give yourself that time. My thought is that you will need to pull in your expectations to some degree, but that has advantages too, so factor in the upside. From the options you presented above, my thought is to shoot for #2, as that is a middle road and may be the closest you will get to a soft landing from the initial shock. Good luck.

 

[2017ish]

At the basic level, you raise a very common topic/dilemma: how much $$ is enough and how much more work is too much? Sure, you can cut spending--but would you rather not, in exchange for a few more years slaving away when you could be smelling the wildflowers? Solely an individual/couple decision, but darn difficult.

Although we never addressed it in the context of a job loss, DW and I weighed the tradeoff long and hard. In the end, our decision was to continue not seeing much of each other for several more years to achieve, hopefully, higher discretionary spending in retirement than we've engaged in during our careers. We think that will turn out best for us--but we won't be retiring that early (57/56), especially for this forum!

As for your expatriate specific question, have you searched the site? "canadian expat" has a good number of hits, some of which could be helpful. In addition, this discussion forum for canadians has had some discussions on interaction between canada/USA laws/policies for retirement planning: Financial Wisdom Forum - Index page Finally, if you were to search the bogleheads forums, there have been a number of discussions over the years.

 

[Katiek]

You might consider looking for a job and then deciding. If you don't find anything suitable, that may answer the question. But you may find something that challenges you and gives you a little more cushion for luxuries. Or you may find a completely different sort of job, not the high pressure/long hours type that can be a good transition.

Whatever happens, it's nice to know that you'll be ok and that there are positives to each possible outcome.

 

[daylatedollarshort]

With not having to work full time we found a lot of ways to lower our expenses that did not involve lowering our standard of living - time to shop for air fares, travel off season, not having to always fly for vacations because of limited vacation time, using Groupons for going out, buying annual memberships for museums / gardens / wineries / seat filler subscriptions, cooking from scratch more, getting rid of the landline, etc. It all really added up.

 

[rodi]

We have a healthy number of Canadian active members on this site - so they should be able to help you with that aspect.

Here are my thoughts on your current, NYC, state.

- If you want to stay in Manhattan you probably need to get a decent paying job unless you have some fabulous rent controlled deal or have a paid off home.

- You have the luxury of 1 year of pay continuation - but I would not take the full year before starting a job search... but you have the luxury of seeking the "perfect job"... You don't need to grab the first job offer you get, if it's a bad fit. So get the resume tuned up, do some market research on firms you'd like to work for, and figure out how to approach them. Spend at least 10 hours a week on this... You can enjoy your temporary ER state the rest of the week.

- You may not be ready to share numbers here - I get that... but you can analyse them for yourself. Take a hard look at spending. For the quick fast dirt spending number take your gross annual pay(s), subtract out what you and DH have been putting into savings and retirement savings.... The balance is what you have been spending. The more fine tuned approach is to look at specific areas you've been spending - chances are you'll find things there that you can cut back on without much effort...

- Once you have your spending numbers - you know your savings numbers.... run Firecalc (link at bottom of page. Input your spending and your investable assets and savings... Make sure you fill out the tabs - including expected amounts and ages for SS, Canadian pension, and work pensions. That will tell you if you have enough to sustain your current spending. Spend some time getting to know the firecalc tool.

- Once you've played around with firecalc try lowering your annual spending to what you think you'd need in Canada. Or lower the spending by the amount you might bring in with your hobby/passion job.

You've got the luxury of time that many who are rif'd don't... take advantage of it to make a plan and then work the plan.

 

[kcowan]

What kind of Visa are you working under?
Have you checked Resident Alien status?
What are you planning for health insurance?
Would living to a budget be considered a hardship?

 

[Andromeda]

Thanks everyone for the welcome and the feedback.
I will try to address some of the questions you’ve posed in responding to my original post.

Each of us has worked at least 10 years in the US, so we’ll qualify for some SS. I do know about the WEP, and so I’m estimating (on FIRECALC) that we’ll each end up with about $12K (US) annually [note: corrected earlier typo where I said "monthly") if we start collecting at typical retirement age for our age group. I have run a number of scenarios through FIRECALC and have been maintaining for several years my own spreadsheet with retirement assets data and projections.

The stay/leave Manhattan thing is one of our biggest short-term challenges. Currently, we have an expensive but rent-stabilized apartment in a terrific location that helps us minimize transportation costs and commute time. My husband is a 3-minute walk from his office and there’s a good chance I’ll end up working in this neighborhood, too, if I get a new job in my field. Our apartment is large, we have en suite laundry, we get free cable, there’s a good gym in our building, and we’re within a couple of minutes’ walk of most subway lines. My preliminary research suggests that we’d have to move fairly far outside the city to get this much space with similar amenities for a large enough discount to our current rent that it would be worthwhile to move. Rent stabilization and minimal commute time/cost are significant pluses for staying put. I could live in a shoebox, but my husband strongly prefers more space (and his mother visits us frequently so we need the extra room).

My husband also strongly prefers to stay in New York for another couple of years, although he’s willing to move back to Toronto if we need to.
One other major challenge for us when it comes to deciding where to live is the fact that I can’t see well enough to drive (and therefore don’t have a driver’s license). So we need to live somewhere that is within walking distance of public transit to my job, and also within walking distance to essential shops and services (or to an easy public transit option that will get me to shops and services). I also want to be able to get to the places where I volunteer via public transit (or public transit plus a short taxi or Uber).

I am looking closely at most of our spending – most of our credit cards are joint (and in my name) – and I’m tracking on Good Budget the categories of discretionary spending that are the biggest and ripest for cutting back, as well as all of our recurring subscription-type expenses (e.g., newspapers, financial services fees). We are cutting back already on some of those big expense categories (e.g., restaurant meals, upgrading technology, clothing, my hobby etc), so I’ll see how we do. I figure that this is a good year to figure out which aspects of our budget are more or less painful, and more or less liveable, to shrink – that will give me a better feeling of what a realistic retirement budget would look like.

As for authorization to work in the US, we were both on TNs (free trade “visas”). Now I’m a dependant on his TN. As long as I get another job in my profession, I can work in the US (and we’re not subject to the quotas or timing restrictions that apply to H1-Bs etc). But I can’t earn money in the US at my hobby or turn it into a full-time job (not that I’d want to).

We’ve shifted to my husband’s employer’s health insurance plan, so that’s not an issue.

 

[ivinsfan]

12K monthly that's got to be a typo as it is 144K annual which is way more then full SS pays.

 

[Hermit]

Welcome to the board, Andromeda!

A couple of more serious things you might want to consider -

If a parent has serious health problems, would you want to be the major care giver? How would that type of situation change your carer plans if you found another job?

The time you and your husband have together and in good health is unknown. Consider carefully the opportunity for more time to enjoy a closer relationship while you can do more physically demanding things you both enjoy.

 

[Andromeda]

12K monthly that's got to be a typo as it is 144K annual which is way more then full SS pays.

Haha yes. Wouldn't that be nice? We'd all retire right now if the numbers were like that. I meant $12K per year per person.

Thanks for catching the error.

 

[Andromeda]

Welcome to the board, Andromeda!

A couple of more serious things you might want to consider -

If a parent has serious health problems, would you want to be the major care giver? How would that type of situation change your carer plans if you found another job?

The time you and your husband have together and in good health is unknown. Consider carefully the opportunity for more time to enjoy a closer relationship while you can do more physically demanding things you both enjoy.

My mother died after a short and brutal illness (lung cancer) 10 years ago, and her premature death is certainly one of the things that motivates me to retire, or semi-retire, early enough to enjoy time with my husband, father and sister. My sister is retiring in a few months at age 55 after a 30-year career as an intensive care nurse.

My sister and I divide current and potential "parent care" responsibilities for my dad (who is also very well cared for by my stepmother). My sister, who lives 20 minutes away from my dad and is a nurse, is tapped to deal with health and personal care. I'm on tap for financial, legal and similar matters. My husband supplements our skill set with technology and handyman skills.

On my husband's side of the family, his older sister and her husband (who live in the same city as his mother) likely would take on day-to-day care if there was a need, because his sister has flexible hours as an entrepreneur. To date, we have provided financial support and also advice on financial, legal and similar matters. And one of the reasons we keep a larger apartment in this convenient location in NYC is because she spends 7-10 days with us every 6-8 weeks, and this location is convenient for her (with limited mobility) as well as us.

But if his mom took a turn for the worse, that probably would prompt us to move home to be closer and help out - possibly even have her move in with us. I grew up into young adulthood with one, and then another, grandparent living in our home and I have a sense of what it takes to physically care for an aging parent - both the privileges and burdens. Of course, when a crisis occurs, all planning goes to hell, but at least among our parents' children we have a number of responsible adult children with the skills, commitment and resources to help out.

 

[Brat]

Work is both an economic and a social activity. Based on what you've written I recommend finding work in your field that maintains your visa status in Manhattan until you and your husband are ready to step back.

Stay in Manhattan or move back to Canada?? Yes you need to push the numbers around that decision but perhaps even more important... where is your social network? As a westcoastie I would choose Victoria or Vancouver over Toronto any day but then I don't have friends in any of those cities. Social networks are dynamic, often you really can't go home again .. it won't be the same. What might be important are the community activities that are important to you.

 

[kcowan]

It sounds like you should maintain the status quo. Mom seems to enjoy her visits to the city. Sis looks after her at home. If I were you, I would seek employment and stay steady as she goes. We have been in a rent-controlled penthouse for 19 years. It beats ownership any day.

And you might find that a move south might be in the cards in 10 years rather than north.

 

[StuckinCT]

Hello from slightly less expensive Fairfield County CT. I think many people in other parts of the country look at $300k+ household budgets and think, you must be extravagant. My answer is, come to the Northeast where your property taxes are 32k, and 25k for nursery school. Just to get to and from work is expensive!

I feel like I am frugal spending $21k per month, and I mean that. We shop at Costco, buy things on sale and have a few extravagances like a country club and a German car but truthfully, we are not terribly flashy.

I would guess in Manhatten, you would need even more than this just to get by with a family of three and take vacation or two and do the things your peers at doing.

One comfort I have is knowing I could pull up stakes, sell the expensive house and move some place less expensive. I just bought a vacation house in VT and I hope to transition to a quasi VT lifestyle over time with burgers instead of filet mignon, but with three kids firmly planted in the schools and programs, that 32k property tax bill and 23k in inflated health insurance costs courtesy of Obamcare will keep me well above what most would consider a frugal spending level. It doesn't bother me though because there are only a few places in this country or the world where it costs so much just to leave the house!

 

[Potstickers]

I'd be hesitant to move anyplace without robust public transportation given that you can't drive. Manhattan is excellent in that respect.

Cutting back on expenses leading up to retirement sounds like a good idea overall -- lowers your current run rate, and starts to bring spending in line with retirement income.

Given everything you've written, I'd probably look for another job -- even at lower pay -- in your line of work and start aggressively piling up cash. You'd be in a really different position if you did that for three or four years.

 

[harley]

One other major challenge for us when it comes to deciding where to live is the fact that I can’t see well enough to drive (and therefore don’t have a driver’s license).

I don't know if FL is a possibility for you if you move, but not being able to see well wouldn't stop you from getting a driver's license (or driving) down there. When DW and I got our FL licenses, we did the standard eye test. While we were waiting for our licenses to get printed we watched another woman take her eye test on the same machine. When she couldn't pass the vision test after 3 tries they took her to a different machine, and voila! FL drivers license.

 

[Walt34]

When she couldn't pass the vision test after 3 tries they took her to a different machine, and voila! FL drivers license.

This could explain a lot.