Engineer just laid off at 57 and trying to sort it all out

[caprica]

Hi,

I am a longtime lurker who just got laid off at age 57 from my engineering job. This is my 3rd layoff of my career, and now that I am older, I am trying to decide if I need to go back to work, or not. It is so stressful to worry about layoffs all the time.

Here is my situation:

1. female, single, no kids
2. I just sold my home and bought an old mobile home in anticipation of the layoff. I am remodelling it now.
3. I have $715K in my 401k (Vanguard Target Date Fund 2025) VRIVX with 65% equities.
4. I have a Vanguard TIRA with $82K in it, in a balanced fund VBIAX. (40% equities)
5. I have a brokerage account at Vanguard with the proceeds from the sale of my house that I plan to invest in a balanced fund. The amount it $758K
6. Total ER assets are $1.55M
7. I don't think I'll live extra long due to being a heavy user of healthcare (arthritis and coronary artery disease)
8. I plan to take SS at FRA; their website says I'll get $32K annually (unless it gets reduced by the predicted 23% in 2035)
9. tiny pension non-COLA of 2K annually, starting at 65
10. I will get 18 months of COBRA plus 18 months of Cal-COBRA.
11. There will be a 5 year gap between age 60 and 65 where I don't have any healthcare coverage. I plan to work for Costco, or someplace like that to get HC benefits if necessary.
12. ER living expenses are around 70K after taxes, with about 5K of that as discretionary.
13. FIRECALC says I'm able to spend $79K before taxes at 95% confidence, using a constant 50% in equities. (no glide path)
14. FIDO's planner says I am good to go at 75K in a below average market, and run out of $ at 88 yrs. old in a significantly below average market. It appears to be a pre-tax number.
15. I-ORP gave me 70K post-tax until 2 weeks ago, when something seems to have changed in the program, and now it is giving me $56K post-tax with the same inputs.
16. I went to an FA at Ameriprise this week, and he told me I was find with a budget of 70K post tax, and that I wouldn't even need all the cash I got from my house for my plan to succeed. ($260K of it was not needed!) I am really skeptical about this.

Anyways, with all these different results, I wonder if I have to go back to work or not. Of course I will try! It is getting harder and harder to get re-employed in Silicon Valley as I've aged.

Anyone care to look over my situation and give their thoughts? It would be much appreciated!

thanks,
Caprica

 

[Walt34]

Off the top of my head it looks like you're golden to stop working now. Lots of people retire with spending less than $70k+ a year. Folks with better analytical abilities than mine will be along shortly.

In the meantime, here is a list of questions you will want to have solid answers to before making a firm decision:

http://www.early-retirement.org/for...re-asking-can-i-retire-69999.html#post1399715

 

[Fishingmn]

Number look pretty good to me on a glance over but others can give you more detailed analysis. Couple questions -

- Are you set on staying in Silicon Valley area if retiring? Expenses a lot higher.
- You may qualify for a subsidized ACA plan so you might want to check that vs. the cost of doing Cobra
- Apply for unemployment anyway even if you don't plan to look very hard? Your call on that one.

I've been laid off twice and both times worked out for the better!

 

[ivinsfan]

As far as your health expenses think hard about leaving some of that Vanguard money in a cash fund.

You'll have gains from the sale of your house for 2017. But for 2018 and beyond as long as ACA continues the more you can live on after tax money the better. Of course that depends on the amount of dividends your Vanguard balanced fund will throw off yearly. You can literally get free good health care if you work the numbers correctly.

 

[Huston55]

OP-

Some quick thoughts.

1. Good use of tools ( I use the same ones), and they give you a pretty consistent answer that you’ll probably be OK.
2. Since you do have some risk of portfolio failure, develop backup plans; I suggest these: Develop a fall-back budget; Evaluate when you might consider SPIAs (use Fullmer ‘Annuity hurdle’ or Otar ‘Zone’ approaches); have a healthcare backup.
3. Find a lower cost of living location that suits you; especially if you’re not going back to a Silicon Valley job.
4. Others here likely know more than me but, I’d look for a way to avoid the cap gains on your residence sale, if at all possible.

 

[flintnational]

Welcome to the forum. Sorry to hear about your layoff. It looks like you have a good plan and enough to retire now. It would provide a margin of safety if you can move to a lower cost of living area.

Also, many on the forum have been able to improve their health once retired, lower stress, improved diet, time to read up on health and make changes.

FN

 

[Sunset]

OP - your SS estimate is probably too high as it normally considers you working at your last wage they know about until FRA. Unless you did the manual calculator at the SS site.
You don't state if you just read their statement, or did your own calculations.

Be sure to collect unemployment, and personally I'd rather work 1 more year as an engineer than 3 more years at Walmart or some other low paying job.

Be aware the competition for those low pay jobs is high as there are lots of non-engineers wanting those jobs.

HealthCare is the big question for most early retirement folks.

 

[street]

I see that you are in very good shape to ER. On the other hand it comes down to what is more important to you. You could always find a job/part time or something in the field of your career.

Good luck and if you decide to stop working have a plan and retire to something. I learned that golden rule right here from these great people. Keep asking questions and good advise will be given.

 

[ShokWaveRider]

I think you are Golden, so break out some Champagne and you will still have plenty more to live on. Review your budget, and you will be surprised on how much you REALLY need to have a great retired life.

Oh! and Congratulations on being FIRE'd!!!!!

 

[pb4uski]

At $75k in expenses your WR is about 3.8%.... carving out 10 years of the gap between $75k and $32k of SS is $430k....leaving $1,125k... and your gap of $43k in relation to $1,125k is 3.8%.

At $70k the WR is 3.2%.... so I think you are fine.

You can make your situation better by spending some of your new found time scrbbing your expenses and seeing if you can dial them down without sacrificing too much... $70-75k seems a bit high for one.... but perhaps you are in a HCOL area.

 

[Red Badger]

Like others, I think you are about golden.
You are, by US standards, in an insanely HCOL area, so I'm assuming you plan om staying. Otherwise, a relo to even a moderate COL place would keep you golden until St. Peter sends the Big Text Message.

Maybe look to trim expenses 5-10%? Most folks can (I know we could, if needed) without giving up too much.

Best wishes on your journey!

 

[Big_Hitter]

best wishes!

 

[Another Reader]

I also live in the San Jose area and I do not understand why you would buy an old mobile home, presumably in a park. Most of the parks are land looking for a new use, as soon as buying out the residents and paying off the local governments for removing affordable housing makes financial sense. Staying there for 10 or 20 years may not be possible.

Is there a good reason to stay here without a high paying job, given the traffic, crowding, air pollution and growing general unpleasantness of the area? Do you have family or friends here? If not, in your shoes, I would at least consider lower cost of living locations that would meet my needs and wants.

I would also consider how realistic it is to expect to be employed at Costco or Starbucks with health issues. I can't recall many 60 year old folks with health issues working at either company. And there are no guarantees these companies will continue to offer health insurance.

In short, in your shoes, I would start the job hunt right away. Bulk up your savings and reconsider the mobile home as a long term solution.

 

[REWahoo]

16. I went to an FA at Ameriprise this week, and he told me I was find with a budget of 70K post tax, and that I wouldn't even need all the cash I got from my house for my plan to succeed. ($260K of it was not needed!) I am really skeptical about this.

He may be correct but you are wise to be VERY skeptical of anything an Ameriprise advisor tells or tries to sell you. Likely he is far more concerned about his financial well-being than yours.

Walt linked it earlier and I will second his recommendation that you take a close look at this: http://www.early-retirement.org/for...re-asking-can-i-retire-69999.html#post1399715

 

[O2Bfree]

Sorry to hear about the layoff. Good thing you've been saving and are in good enough shape financially to have some choices!

Should you decide to look for a job, maybe think about teaching opportunities. Community colleges and voc tech schools in your area may have engineering or other classes you could teach. Might come with benefits for part time work, too. I taught part time at a CC some years ago, about 20 contact hours/week, and got healthcare plus a bit of a pension as well.

 

[Aerides]

I'm guessing from your user name you're a BSG fan?

As a single woman 70k expenses seems a little high. But then your COL, and area taxes might be much more than I know. Moving sounds like the easy solution, but if you have family and friends locally, then it makes sense. But a mobile home is going to prove harder to maintain as you age, single, so maybe a nice condo a bit outside of town would be an idea a few years down the road?

All that aside, you are fine to RE. Maybe after a year or two once you have real retirement expenses as actuals and relax a little. 3 year of cobra is v. nice! And after that perhaps ACA will have settled so you can do that vs. costco.

Good luck!

 

[Curmudgeon]

Sorry about the layoff. This always hurts when you've given a part of yourself to a company.

Looking at your list, a couple things come to mind:

1) Looking for a way to reduce your cost of living could give you a bigger safety margin. Maybe look for a lower COL area, especially a more tax-friendly one?
2) Healthcare is the big question mark - with the future of ACA, and the treatment of pre-existing conditions, up in the air, healthcare could either 'no big deal' or a budget-breaker for you. Keeping yourself open to working a few more years is a good idea. I can certainly understand not wanting to go back into the high-stress, ageist environment you were probably experiencing in engineering, but there might be something more suited to your skills and expertise - and still low-stress - than a Costco position. Spend some time in exploration to see if you can find something you will love, and that will still pay the HC bill.
Welcome to the group!

 

[mh]

OP - your SS estimate is probably too high as it normally considers you working at your last wage they know about until FRA. Unless you did the manual calculator at the SS site.
You don't state if you just read their statement, or did your own calculations.

Be sure to collect unemployment, and personally I'd rather work 1 more year as an engineer than 3 more years at Walmart or some other low paying job.

Be aware the competition for those low pay jobs is high as there are lots of non-engineers wanting those jobs.

HealthCare is the big question for most early retirement folks.

+1 on the SS estimate. It seems too high unless you had some way above average circumstances during your working career.

 

[gayl]

OP-

Some quick thoughts.

1. Good use of tools ( I use the same ones), and they give you a pretty consistent answer that you’ll probably be OK.
2. Since you do have some risk of portfolio failure, develop backup plans; I suggest these: Develop a fall-back budget; Evaluate when you might consider SPIAs (use Fullmer ‘Annuity hurdle’ or Otar ‘Zone’ approaches); have a healthcare backup.
3. Find a lower cost of living location that suits you; especially if you’re not going back to a Silicon Valley job.
4. Others here likely know more than me but, I’d look for a way to avoid the cap gains on your residence sale, if at all possible.

+1

Even if it means moving towards Morgan Hill or Walnut Creek .... both cheaper than Silicon Valley / Peninsula. IMHO you're fine if you cap your housing expense but I don't think a mobile home works esp how we're turning those parks into SFHs

If you apply for UIB, check out Experience Unlimited

 

[Erbragg1]

OP - your SS estimate is probably too high as it normally considers you working at your last wage they know about until FRA. Unless you did the manual calculator at the SS site.
You don't state if you just read their statement, or did your own calculations.

Question about SS estimates from SSA.gov..... when they say your estimated benefit at FRA is $XXXX, is that in today's dollars or in future dollars at the time of reaching FRA?

 

[braumeister]

Question about SS estimates from SSA.gov..... when they say your estimated benefit at FRA is $XXXX, is that in today's dollars or in future dollars at the time of reaching FRA?

Today's dollars. They don't know what future inflation will be any more than we do.

 

[dunkelblau]

I think you're probably OK to ER, but if it were me, I'd be looking for some margin, so I'd try to find something maybe contract or part-time to cover the next few years. Cost flexibility is one advantage we have over new grads half our age in the eyes of local employers (some of them anyway). I'd also try to shave expenses by ~10% or so.

I went to school and worked in the Bay Area for over three decades, and while I liked living there, I never put down roots (also single and no kids) so I moved to a cheaper area in Socal a few miles from the beach. I believe the lower payscales here make housing run about 2/3 what it costs in SJ. Family is what brought me here, but the financial advantages along with the comparable quality of life made my move well worth the effort.

 

[NW-Bound]

I think the OP is in good financial shape to retire. With $797K in before-tax accounts, and $758K in after-tax, she will do fine.

The $70K in annual expenses seems high, but perhaps the cost of living is high there, even with living in a mobile home. Still, this is sustainable with the assets she has.

Healthcare cost is the big unknown that we all face. However, the after-tax money allows her to reduce the IRA/401k withdrawal so that the lower income will qualify her for some ACA premium subsidy. She will have to work out the details, but still has 3 years of COBRA and has time to figure this out. Who knows what will replace Obamacare 3 years from now?

About the $32K of SS at FRA, yes, that assumes that she continued to work till 65. But depending on her work history, the retirement at 57 does not mean the reduction will be much. SS benefit is based on the highest 35 years of income, and then the last 25% of income gets you a lot less than the first 25%.

I retired at 55, but with most of my working years maxing out on the SS tax limits. Working longer means replacing some of my lower years with higher years, and that brings diminishing returns. Still, to be sure I downloaded SS calculator, and computed my benefits to be reasonably close to the max.

 

[tmm99]

At $75k in expenses your WR is about 3.8%.... carving out 10 years of the gap between $75k and $32k of SS is $430k....leaving $1,125k... and your gap of $43k in relation to $1,125k is 3.8%.

At $70k the WR is 3.2%.... so I think you are fine.

I thought she said her total ER assets were $1.55M?

 

[Rianne]

Sorry about your layoff, were you secretly hoping that would happen or were you happy working? You are single, no kids and control your destiny. I sometimes think if I lost DH and I would be crushed emotionally, I would get a roommate to share expenses. Of course, someone I knew well and trusted, even consider a family member like my niece who is at university here. This idea might be a stretch but you may be able to rent a nice house.

Your numbers look fine and HI is a concern for everyone. Are you allowed to get ACA if you're offered COBRA? Have you really considered your expenses? There are 2 of us and we comfortably live on @ $70K including nice vacations twice/year. We watch spending but enjoy the fruits of FIRE for sure.