Update: Pulling the Plug

[DustyL]

Update. I pulled the plug. My last day is a month away. Negotiated a year's severance with health benefits (through early July 2018 when I will be 57) and a pro-rated (1/2) bonus payable in early 2018.

56, with 54 DW. DS out of college and working (although contemplating grad school), DD just finished her freshman year of college.

Finances: $3.9M with $2.6M in taxable and $1.3M in retirement accounts. Asset allocation of 50-50 stocks and bonds.

House: Valued at about $950K, with $56K left on the mortgage. Paying extra every month so it will be fully paid when my severance runs out.

DD college funds: $122K (not counted in the $3.9M). Small stock grant in a few weeks plus savings (in 529 and taxable account) during severance will pay for another year and my pro-rated bonus could cover most of the third. So the $122K is available to pay for the remainder of year 3, plus year four and allow me to provide some help to DS with grad school.

Small gov. pension of about $9K COLA starting at 62.

$1.3M in retirement includes lump sum present value of corp. pension ($198K, which increases each month up to $306K in 2026 when I turn 65).

SS: $2042 (62), 2908 (67), 3610 (70); DW: 773 (62), 1098 (67), 1361 (70).

May still work again at something I'm more interested in (and for health care) but not depending on it.

Key will obviously be expenses. I think I am fine at $125K, $130K, even $140K. Becomes a little more nerve wracking at $150K (at least until SS, pension kicks in). Big expenses will be health care and property taxes (unless we move at some point).

Thoughts?

 

[euro]

Certainly looks fine to me! Congrats on extracting a very nice severance! I was hoping for that too, but megacorp wouldn't comply. I finally just had to walk away without

 

[Which Roger]

Certainly looks fine to me! Congrats on extracting a very nice severance! I was hoping for that too, but megacorp wouldn't comply. I finally just had to walk.

Me too. Every few months, they would lay off a bunch of people who were desperately trying to hold on to their jobs. I was desperately trying to be shown the door, and asked to be laid off 3 different times, but they wouldn't bite because they wanted to "keep my department intact" or something to that effect.

 

[DustyL]

Thanks re: the severance. I had a serious case of OMY for the last few years but the opportunity to get the severance helped get past that.

 

[Blue Collar Guy]

did i read that right? Your pension is 198 THOUSAND a year? and goes up to 306 thousand a year? If i did read that correct, what did you do? Man if i read that right, congrats you rocked it.

 

[DustyL]

No, that is lump sum. Not per year. Sorry for the confusion. If the pension (which the company stopping funding years ago) was $198K per year, I would have been gone a long time ago.

 

[DustyL]

I negotiated the severance -- one year salary and benefits, 1/2 bonus (prorated for working from January-early early).

 

[W2R]

Congratulations on your upcoming retirement!

 

[Blue Collar Guy]

I negotiated the severance -- one year salary and benefits, 1/2 bonus (prorated for working from January-early early).

ok, ty. What do you spend now? If its less than the 125 or even the 140 u mentioned your good. The house payment is going bye bye soon. I cant imagine you moving up in house if you move , so i think your golden. Enjoy, you earned it

 

[freedomatlast]

I negotiated the severance -- one year salary and benefits, 1/2 bonus (prorated for working from January-early early).

Congratulations on the negotiated severance. I keep hoping for the same and then I am out of here.

 

[DustyL]

Thank you. Doesn't feel real yet.

 

[Cassius King]

Sounds like you have everything covered. Congrats and enjoy your upcoming retirement.

 

[DustyL]

Thanks Cassius King. I wish I was as confident. Perhaps just last minute jitters. I need to get a firmer grasp on spending, including how to structure my withdrawals after the severance stops (assuming I am not working at another job) to minimize taxes. And of course I will need to figure out healthcare.

 

[gerntz]

SS: $2042 (62), 2908 (67), 3610 (70); DW: 773 (62), 1098 (67), 1361 (70).

Thoughts?

Can't DW's SS be 1/2 of your 2908 when she's 67, spousal benefit?

 

[DustyL]

Gerntz: That is beyond my knowledge. I haven't focused on the ins and outs of SS because it is still at least 6, and likely more, years away for me.

Also, I have been using the 4% rule, which I still believe in despite the criticism, and think (or am hoping?) I will be ok if I keep our spending at or below $140K even without SS or the small gov. pension. But I do have SS and the pension in the back of my mind in case my spending is higher than expected or the 4% rule needs to revisited.

 

[exnavynuke]

As long as your spending is at/below that $140k, I'd say you look golden. Enjoy the retirement!

 

[DustyL]

I have been avoiding the word "retirement" in discussions with friends, family. I don't want to seem like I'm bragging about having saved about enough to be able to stop. Do others have that feeling. And I may want to work, but only at something I will find satisfying. Unless, of course, I have to work again for financial reasons.

 

[timemoveson]

Fantastic shape

Congratulations, you are in fantastic shape by any standards I would apply at that expense and asset level. With some care in the early years on the spending side and focusing on your overall risk management profile, you will have a very strong financial base that will give you a lot of flexibility. Very well done!

 

[Whisper66]

You are in excellent shape.

FYI - you are undervaluing what your assets can support. Take some time to learn and run FIRECalc: A different kind of retirement calculator to get a better feel for what yearly expenses your assets can really support. For example:

The Vanguard Longevity Calculator linked from the first page of Firecalc suggests you and your wife have:
5.1% chance of living a total of 35 yrs
0.6% chance of living a total of 40 yrs

Running a firecalc case for:
40 yrs of longevity
3.9 M assets
50/50 asset allocation
taking pension + your SS + wifes SS (1/2 of yours) at 62 yrs old
Have 95% success rate if spend $167k / yr

If run a more realistic case for only 35 yrs
Have 95% success rate if spend up to $175k/yr

The above are quick runs with my interpretation of your input and what I'd consider conservative basis. Run your own numbers as many ways as you want. I think it will make you much more relaxed about your situation.

 

[DustyL]

Thanks for the responses, timemoveson and whisper 66. It feels like it has been a long haul of living below our means for 30+ years, regardless of what I was making. But I need to re-run FIRECalc. I have also used the Ultimate Retirement Calculator, but not recently so I will re-run the numbers there as well. https://financialmentor.com/calculator/best-retirement-calculator

 

[evilanne]

Congrats on your upcoming retirement! I found myself smiling a lot more during my last month of work & you are way better off financially than me. Embrace it, make some plans & enjoy the count down

 

[Breedlove]

167 K a year , cut that back to 150 K a year and you will be at 100% good

 

[Sycamore]

Dusty, First congratulations on the position you've put yourself in, impressive.

I'm curious about your negotiated severance, was your company downsizing?

Like other posters have mentioned you negotiated great severance terms, especially around healthcare for the next year.

Good Luck and keep the forum posted as to how things go for you and your family.

 

[DustyL]

Thanks Sycamore. At the time I negotiated the severance, the company was not downsizing but it was (and has been) struggling and looking to cut costs. So, after years of being unhappy, earlier in the year during a meeting with my boss, on the spot and without any real planning, I indicated I was amenable to leaving, with a package, and that I would be willing to stay to transition my successor. I think I got up the courage to do so because I was close to landing another job and so I didn't care what the reaction would be to raising my hand and offering to leave. Coincidentally, I actually got the job offer from the other company later that day but eventually turned it down because I would have had to start too soon to get the severance.

 

[Luck_Club]

I have been avoiding the word "retirement" in discussions with friends, family. I don't want to seem like I'm bragging about having saved about enough to be able to stop. Do others have that feeling. And I may want to work, but only at something I will find satisfying. Unless, of course, I have to work again for financial reasons.

I think this is common and has been discussed before. I've been floating my end plan around "friends", cautiously for a couple of years now. I have sensed that none of them are in a position to consider the end plan. As a result I think I may just down play the retirement thing, and pretend to keep working.