|
|
Just found out I am losing my job
04-06-2010, 10:12 AM
|
#1
|
Dryer sheet wannabe
Join Date: Mar 2010
Location: groton
Posts: 13
|
Just found out I am losing my job
I am 55 and will be recieving an early retirement lump sum of 600,000. I need some help on what to do with it to recieve monthy income starting in the next year and the half. I can't be to risky with my choices. I am losing my job and not counting on finding one to soon.
Thanks, Paraman
|
|
|
|
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!
Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!
You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!
|
04-06-2010, 10:20 AM
|
#2
|
Thinks s/he gets paid by the post
Join Date: Apr 2007
Location: west bloomfield MI
Posts: 2,223
|
Quote:
Originally Posted by paraman
I am 55 and will be recieving an early retirement lump sum of 600,000. I need some help on what to do with it to recieve monthy income starting in the next year and the half. I can't be to risky with my choices. I am losing my job and not counting on finding one to soon.
Thanks, Paraman
|
Do some reading on this site and others, focus on two things.
1) Asset allocation
2) withdraw rate.
Asset allocation is how you define how much risk you take- usually expressed in terms of % stocks and % bonds. There is more than one type of risk, the asset allocation defines how you handle most of the risks, not just one risk in particular.
Withdraw rate is how fast you can tap the money. Usually expessed in terms of % of assets. A 4% withdraw rate is a good place to start (meaning 4% of 600k is 24k per year). If you use withdraw rate to express your expenses, the calculators on this site can help you establish how long the money will last for a given asset allocation.
For example you might see things like 4% withdraw rate and a 60-40 allocation has money lasting 35 years with an 80% success rate.
4% withdraw rate and 40-60 allocation has money lasting 40 years with a 85% success rate.
Or something like that.
How much are your annual expenses?
Do you have any other savings other than the 600k severance?
Are you looking to retire, or bridge the gap until you find more employment?
Can you work part time to supplement income?
What is your SS benefit and when can you start collecting it?
__________________
Light travels faster than sound. That is why some people appear bright until you hear them speak. One person's stupidity is another person's job security.
|
|
|
04-06-2010, 10:28 AM
|
#3
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2004
Location: SW Ohio
Posts: 14,404
|
You'll need to figure out your present monthly expenses, anticipated future expenses, and also look ahead to any other sources of income you may have coming later (Social Security, any other retirement or pension money from previous jobs, etc).
Look in the FAQs section of the board ( here) for topics that you can use.
As a rough guide, most people here count on withdrawing from 3-4% of their nest egg each year. If history is a guide, that will allow a portfolio to last 40+ years if the investments are diversified and if they are of appropriate risk. FIRECalc can be helpful in letting you test out various allocations and seeing how your portolio would have survived in previous markets.
Good luck.
|
|
|
04-06-2010, 10:33 AM
|
#4
|
Thinks s/he gets paid by the post
Join Date: Jun 2005
Posts: 4,391
|
Fidelity and Vanguard have some mutual funds designed for just what you describe. Fidelity offers their "Income replacement Funds" and Vanguard offers their Managed payout funds.
|
|
|
04-06-2010, 10:50 AM
|
#5
|
Dryer sheet wannabe
Join Date: Mar 2010
Location: groton
Posts: 13
|
retirement information
Thanks for the tips and please keep them coming. I have lots to learn in the next month or so before I get my severence.
paraman
|
|
|
04-06-2010, 11:16 AM
|
#6
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2005
Posts: 17,205
|
Wow.... I have not heard of anyone getting that kind of severence.... except for high level management...
Wonder if this is the auto industry Hope not since we own a lot of it...
|
|
|
04-06-2010, 12:31 PM
|
#7
|
Recycles dryer sheets
Join Date: Jan 2010
Posts: 190
|
Quote:
Originally Posted by paraman
I am 55 and will be recieving an early retirement lump sum of 600,000.
Thanks, Paraman
|
I assume the lump some is taxable?
|
|
|
04-06-2010, 12:49 PM
|
#8
|
Thinks s/he gets paid by the post
Join Date: Apr 2006
Posts: 1,684
|
paraman, You might consider posting an introduction Hi, I am... forum with some of your details.
Also if you surf through the forums you will likely see answers to some questions you may be having as well as other topics that have not yet occurred to you.
|
|
|
04-06-2010, 01:04 PM
|
#9
|
gone traveling
Join Date: Apr 2009
Location: Eastern PA
Posts: 3,851
|
Quote:
Originally Posted by Texas Proud
Wow.... I have not heard of anyone getting that kind of severence.... except for high level management...
Wonder if this is the auto industry Hope not since we own a lot of it...
|
It might include all sources (both private - IRA, plus company 401k, and termination benefits).
Hopefully the OP will tell us. The amount is not out of line for a lifetime of accumulation....
|
|
|
04-06-2010, 02:09 PM
|
#10
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2003
Location: Kansas City
Posts: 7,968
|
Well now - to be brutal and to the point - in deferance to the early days of this forum. 600k times 4% is 24k.
Do what it takes to get your expenses well under 24k/yr all in - AND meditate on: drum roll please - pssst Wellesley.
heh heh heh - easy peasy . Ah brings back fond memories of the early 90's when I was canned and sent out the door with maybe 250k net worth. Boy was I a cheap (and frugal) SOB - to use her words. She drew the line at no electricity or running water.
|
|
|
04-06-2010, 02:38 PM
|
#11
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Oct 2005
Location: North Oregon Coast
Posts: 16,483
|
Quote:
Originally Posted by Texas Proud
Wow.... I have not heard of anyone getting that kind of severence....
|
Sounds like it could include cashing out a DB pension with a lump sum, but I could obviously be wrong.
__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)
|
|
|
04-06-2010, 03:07 PM
|
#12
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2005
Posts: 17,205
|
Quote:
Originally Posted by ziggy29
Sounds like it could include cashing out a DB pension with a lump sum, but I could obviously be wrong.
|
OK... read the first post again.... and it does say an early retirement lump sum, not a severance lump sum... WHEW.... that makes more sense to me....
|
|
|
04-06-2010, 03:51 PM
|
#13
|
Dryer sheet wannabe
Join Date: Mar 2010
Location: groton
Posts: 13
|
I have worked at Pfizer for over 30 years. The 600,000 is my retirement and my severence is 2 years pay which I will use to reduce debt. My 401 is terrible at about 144,000 so I can add that to my retirement.
Thanks,
|
|
|
04-06-2010, 04:03 PM
|
#14
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2004
Location: SW Ohio
Posts: 14,404
|
Quote:
Originally Posted by paraman
. . . my severence is 2 years pay which I will use to reduce debt.
|
I recommend that you wait to pay off any debt until you've thought things through. Even that small 2 weeks of pay is "liquid" and you're probably going to need that liquidity in the short term, if nothing else than to pay the monthly bills while you figure out how to structure your finances. Paying off bills to save a few bucks in interest may not be a good idea right now.
|
|
|
04-06-2010, 04:52 PM
|
#15
|
Recycles dryer sheets
Join Date: Apr 2010
Location: Green Valley
Posts: 245
|
best of luck! must be very tough leaving after 30 years, a lot of that going around these days.
I've spent a lot of time watching Dave Ramsey as well as reading books by Joe Dominguez and Vicki Robin - they are good resources to help figure out how/what debt to pay off and how to figure a realistic budget.
jb
|
|
|
04-06-2010, 05:11 PM
|
#16
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Dec 2008
Posts: 12,598
|
Sorry, Paraman, it sounds like you weren't expecting this. I have 30 years in with my employer, too. If I had to go before my chosen time, I would be unhappy. If you've been reading this site, though, you've found a number of people who think 55 is way past time to retire
Meanwhile, I'm hoping the forum folks will give you advice about what to do with your 401K. It sure would be great if you are able to leave it alone, to grow/recover tax-deferred. Please read up on taxes and retirement accounts, and give a lot of thought to the best course for your particular situation.
Good luck,
Amethyst
__________________
If you understood everything I say, you'd be me ~ Miles Davis
'There is only one success – to be able to spend your life in your own way.’ Christopher Morley.
Even a blind clock finds an acorn twice a day.
|
|
|
04-06-2010, 07:55 PM
|
#17
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Feb 2005
Location: Central MS/Orange Beach, AL
Posts: 9,067
|
Quote:
Originally Posted by paraman
I have worked at Pfizer for over 30 years. The 600,000 is my retirement and my severence is 2 years pay which I will use to reduce debt. My 401 is terrible at about 144,000 so I can add that to my retirement.
Thanks,
|
A good buddy of mine just got canned with Wyeth(now Pfizer). He is in his early 50's and was a regional manager. I think he got an 18 month severance deal. Not happy though, he says he needed another 5 years to be where he wanted to be financially.
__________________
Retired 3/31/2007@52
Investing style: Full time wuss.
|
|
|
04-07-2010, 09:57 AM
|
#18
|
Thinks s/he gets paid by the post
Join Date: Apr 2007
Location: west bloomfield MI
Posts: 2,223
|
Quote:
Originally Posted by paraman
I have worked at Pfizer for over 30 years. The 600,000 is my retirement and my severence is 2 years pay which I will use to reduce debt. My 401 is terrible at about 144,000 so I can add that to my retirement.
Thanks,
|
Outline the following
1) total retirement account balance
$A
1a) value of severance
$x
1b) value of 401k
$y
1c) value of any IRAs
$z
include any other assets which you can use to invest for retirement and generate income (for example if you live in a 400k house, but do not plan to sell it, then don't include that for retirement income, if you plan to sell the same 400k house and buy something cheaper for 250k, add 150k (the cash out) to the total).
Where the money is, and whether its taxable can change withdraw rates in small amounts (for example if you have $750k in a Roth IRA, you have one set of problems, if you have $750k in a 401k or tax deferred plan, you have different problems, and if you have $375k in a Roth, $375k in a 401k that is a different set of problems).
2) Outline your expenses
a) monthly budget
b) annual budget
c) other expenses (kids college, kids weddings, once in a lifetime vacation..)
3) What is most important to you
a) maintaining current standard of living
b) not having to return to work
c) living stress free
d) something else
__________________
Light travels faster than sound. That is why some people appear bright until you hear them speak. One person's stupidity is another person's job security.
|
|
|
04-07-2010, 10:17 AM
|
#19
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2005
Posts: 17,205
|
Quote:
Originally Posted by paraman
I have worked at Pfizer for over 30 years. The 600,000 is my retirement and my severence is 2 years pay which I will use to reduce debt. My 401 is terrible at about 144,000 so I can add that to my retirement.
Thanks,
|
Are you sure you get your severance in a lump sum? I had 7 months and they kept paying me like I worked there.
|
|
|
04-07-2010, 01:04 PM
|
#20
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Oct 2005
Location: North Oregon Coast
Posts: 16,483
|
Quote:
Originally Posted by Amethyst
Sorry, Paraman, it sounds like you weren't expecting this. I have 30 years in with my employer, too. If I had to go before my chosen time, I would be unhappy.
|
Yeah. This is a big reason why I am an advocate of more than the usual "3-6 months" recommendation for an emergency fund and liquid savings/investments. Yes, current yields on savings suck, but they suck a lot less than getting a pink slip when you don't enough saved up. Frankly, I'm an advocate of 6-12 months in *good* times and 12-24 months in bad. It doesn't all have to be in 0.4% yielding cash; a CD ladder would work pretty well for providing a cushion of over 12 months as long as you had a chunk maturing every 3-6 months.
__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)
|
|
|
|
|
Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
|
|
Thread Tools |
|
Display Modes |
Linear Mode
|
Posting Rules
|
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts
HTML code is Off
|
|
|
|
» Recent Threads
|
|
|
|
|
|
|
|
|
|
|
|
|
» Quick Links
|
|
|