RunningBum
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
- Joined
- Jun 18, 2007
- Messages
- 13,236
ER is less than a year away from me. I'm a planner and a list maker and I'm not sure I've got everything covered. I'd like to put together a list of things I have to do, and when I need to get cracking on them. Here's a start, with some questions and some assumptions that may be incorrect. In my case, I'm single, 45, no pension from this job (but I do have a small one from a previous job), stock options, ESPP and a 401K. Assume the obvious that I've run the numbers and am confident I can retire. This is about the mechanics of what I need to do. If there has already been a thread for this, please let me know, I wasn't sure what to search for.
0) Pick a retirement date. Along with personal factors, it doesn't make sense to leave the week before bonuses come out, for example. Other things to consider is to finish an ESPP period, stock option vesting dates, etc. Unfortunately this can lead to "one more year" or "one more month" but it does make sense to consider events like this within or a month or so of a planned date. Use accrued vacation to bridge to such a date rather than just cashing out vacation.
1) Health insurance. This is the biggie. When do I need to apply? Should I make it effective on my retirement date, or bleed out my COBRA insurance? Should I get a final checkup before I leave my current plan, or should I hold off and get one as soon as I get my new policy to make sure I don't find something that would disqualify me? I've seen some recent and past threads about where to look for insurance, but I'm still nervous about this. I see people talking about $1000/month policies (for couples), but then I go to ehealthinsurance and see BCBS policies in the $100-$250 range for me. Maybe that's due to age differences. I guess figuring out which policy to get is a separate topic and I'm sure there's already a lot of good info out there, so for this thread let's leave it with when I need to be applying and putting it in effect.
2) Decide what to do about my 401K, either leave it where it is or move it to my IRA account. Plan in advance, but it cannot be executed until I leave.
3) Untie myself from my work computer. Move any personal information, bookmarks, etc, off my laptop, and change any accounts that use my work email address, make sure all of my contacts have my alternate email address, and make a copy of all of my personal contacts. I should've been more careful about this in the past but I didn't even have my own computer for awhile, and some things can't be avoided. So I'm doing as much as I can now and I'll need to make a final sweep before I leave.
4) Exercise stock options. In my case, which is probably pretty standard, I get 3 months after I leave to exercise any remaining vested options. I'm also liquidating much of it now to guard against a drop I won't have time to recover from, but mine vests monthly after the first year so there should still be some when I leave.
5) ESPP. To get favorable tax treatment (qualifying disposition), I need to hold the stock a day and 2 years from the offering date (for some plans you made need to use a day and a year from the purchase date if that is longer), so I assume I'll still need to hold onto those newer shares even after I stop working. Or does that rule change after you leave? In any case, I don't see that there's anything special to do here, except that I might as well stop my ESPP contribution if I'm not going to finish as ESPP period, because they will just refund what I've contributed in that period.
6) Max out benefits especially if leaving mid year. My current 401K deduction is planned to try to max out my 401K deduction in late December. Next year I may take out more early to max it out by my planned end date, and certainly to try to max out the employer match. Take advantage any dental, vision, FSA, (what others?) benefits while I have them. Need to plan this by Jan 1 of the year of retirement.
7) Set up an income stream or bucket to replace salary. I'm starting to do this now, by stopping my dividend and cap gains reinvestment and putting that in a money market to build up a reserve and flow.
8 ) Stop automatic investments. There's no sense in withdrawing money from one savings source to put it in another. Might want to do this a bit early and put that money in cash reserve instead, depending on how I've done in step 7.
9) Taxes. I usually withhold extra from each check to cover my investment income. I either need to increase this withholding next year since I won't have as many pay checks, or plan to start filing quarterly estimated payments. I found the EFTPS site thanks to a recent post. Is the best way to start doing quarterly payments after I leave, or from the start of the year even while I'm working, or what? This is another area I don't have a good handle on.
What am I missing or could be doing better?
0) Pick a retirement date. Along with personal factors, it doesn't make sense to leave the week before bonuses come out, for example. Other things to consider is to finish an ESPP period, stock option vesting dates, etc. Unfortunately this can lead to "one more year" or "one more month" but it does make sense to consider events like this within or a month or so of a planned date. Use accrued vacation to bridge to such a date rather than just cashing out vacation.
1) Health insurance. This is the biggie. When do I need to apply? Should I make it effective on my retirement date, or bleed out my COBRA insurance? Should I get a final checkup before I leave my current plan, or should I hold off and get one as soon as I get my new policy to make sure I don't find something that would disqualify me? I've seen some recent and past threads about where to look for insurance, but I'm still nervous about this. I see people talking about $1000/month policies (for couples), but then I go to ehealthinsurance and see BCBS policies in the $100-$250 range for me. Maybe that's due to age differences. I guess figuring out which policy to get is a separate topic and I'm sure there's already a lot of good info out there, so for this thread let's leave it with when I need to be applying and putting it in effect.
2) Decide what to do about my 401K, either leave it where it is or move it to my IRA account. Plan in advance, but it cannot be executed until I leave.
3) Untie myself from my work computer. Move any personal information, bookmarks, etc, off my laptop, and change any accounts that use my work email address, make sure all of my contacts have my alternate email address, and make a copy of all of my personal contacts. I should've been more careful about this in the past but I didn't even have my own computer for awhile, and some things can't be avoided. So I'm doing as much as I can now and I'll need to make a final sweep before I leave.
4) Exercise stock options. In my case, which is probably pretty standard, I get 3 months after I leave to exercise any remaining vested options. I'm also liquidating much of it now to guard against a drop I won't have time to recover from, but mine vests monthly after the first year so there should still be some when I leave.
5) ESPP. To get favorable tax treatment (qualifying disposition), I need to hold the stock a day and 2 years from the offering date (for some plans you made need to use a day and a year from the purchase date if that is longer), so I assume I'll still need to hold onto those newer shares even after I stop working. Or does that rule change after you leave? In any case, I don't see that there's anything special to do here, except that I might as well stop my ESPP contribution if I'm not going to finish as ESPP period, because they will just refund what I've contributed in that period.
6) Max out benefits especially if leaving mid year. My current 401K deduction is planned to try to max out my 401K deduction in late December. Next year I may take out more early to max it out by my planned end date, and certainly to try to max out the employer match. Take advantage any dental, vision, FSA, (what others?) benefits while I have them. Need to plan this by Jan 1 of the year of retirement.
7) Set up an income stream or bucket to replace salary. I'm starting to do this now, by stopping my dividend and cap gains reinvestment and putting that in a money market to build up a reserve and flow.
8 ) Stop automatic investments. There's no sense in withdrawing money from one savings source to put it in another. Might want to do this a bit early and put that money in cash reserve instead, depending on how I've done in step 7.
9) Taxes. I usually withhold extra from each check to cover my investment income. I either need to increase this withholding next year since I won't have as many pay checks, or plan to start filing quarterly estimated payments. I found the EFTPS site thanks to a recent post. Is the best way to start doing quarterly payments after I leave, or from the start of the year even while I'm working, or what? This is another area I don't have a good handle on.
What am I missing or could be doing better?