What is 6 months worth?

[second_act_at_42]

Greetings forum friends!

A while back we reached a milestone - and are essentially FI (barring anything crazy happening with some conservative real estate investments). Funny thing is - I'm still doing really well at mega-corp and am even likely to get a promotion soon (despite feeling like I've been slacking off). This comes with more financial incentives including company stock which vests every 6 months. As such I feel a bit confounded with re: to RE timing.

There are days that I can find ways to tolerate or even enjoy working for mega-corp; but those are few and far between. In discussion with a friend of mine - he asked me "What is 6 months worth to you?" - which I replied that I have no idea. Yet I've been pondering this a LOT the last few weeks. I can easily calculate my 6 month savings rate including stock incentive estimates from mega-corp. But I've interpreted the question to mean:

"What is 6 months of your time worth to you? And is giving that up for mega-corp incentives an equitable exchange?"

Would very much like to hear thoughts from the forum on this. Have any of you taken a crack at this calculation? Looking for perspective.

Cheers!

second_act_@_42

 

[Toocold]

I was FI long before I pulled the trigger. I think this is a very personal decision. A person who has $1M may stay for an opportunity to increase their net worth by $100k, but to a person who has 8 figures, a material change would be closer to $500k-750k. A person who has $100M may need something closer to $10m.

There also gets to be a point where money offers little incentive. That's where I am, and the only monetary value that would be meaningful to me is if it's multi-generational wealth (e.g. $100M+).

The question then becomes not about money but your life's energy. What would incentivize you to stay? I would work if I found a topic interesting and energizing, and socially impactful.

It seems like for you megacorp does that, so if you enjoy it, stay. You will find that over time there will be some inevitable changes where that is not the case, and it would be a good time to leave.

 

[RunningBum]

Stock grants and other incentives like that are there to keep hold of you. They could keep you forever if you let them.

Certainly you want to get to FI, probably with a buffer, if you don't hate your job. If you leave, and later find out you don't have enough, you probably won't make nearly as much in another job.

But at some point, you need to realize you're making more than you need for the retirement lifestyle you want. Then I think you can start asking yourself if another 6 months is worth buying a new high-end BMW than keep your two year old Honda. Or travel first class, and stay in the nicest hotels, etc. Coming up with things to buy and whether they are worth it seems more productive than thinking about walking away with money still on the table.

I pretty quickly figured out that I'd rather retire than splurge on extras that have little importance to me. And by the way, if the economy does pretty well in your first few years and you see that you aren't on a failure track, you'll probably be able to afford a lot of those things anyway.

Another perspective: for entertainment I've bought a few lottery tickets since ER. Then I thought about what I would do and buy if I hit the jackpot, and there's really not all that much I'm missing now. The downside would be getting hounded for money from others if I couldn't keep it anonymous, and that would outweigh the rest. So I don't buy lottery tickets at all anymore.

 

[second_act_at_42]

The question then becomes not about money but your life's energy. What would incentivize you to stay? I would work if I found a topic interesting and energizing, and socially impactful.

Some of the topics I definitely find energizing and interesting. It's the politics that comes with my level in mega-corp that drain the soul out of said topics.

Good perspective - thanks!

 

[second_act_at_42]

Another perspective: for entertainment I've bought a few lottery tickets since ER. Then I thought about what I would do and buy if I hit the jackpot, and there's really not all that much I'm missing now. The downside would be getting hounded for money from others if I couldn't keep it anonymous, and that would outweigh the rest. So I don't buy lottery tickets at all anymore.

That's fantastic!! Thanks! I've gone through a spell of lifestyle inflation (Audi was my preference, not BMW) and at the end of it DW and I have realized that the simpler the life for us - the better. I suppose we feel fortunate to have had those experiences for perspective.

 

[NgineER]

I think age place into this as well- I assume by your name that you are 42... This might seem harsh, but I think it place a role.

6 months at 42 - 50% life expectancy left, 6 months is 1/84 or 1% remaining life
6 months at 62 - 25% life expectancy left, 6 months is 1/44 or 2% remaining life
6 months at 82 - 2% life expectancy left, 6 months is 1/4 or 25% remaining life

 

[Rustic23]

As stated, a personal things. It depends on how FI you are, and how sure you are FI. If I were sure of my FI in the worst market I could think of, say the Great Depression, or huge medical bills, then I would the trigger.

 

[second_act_at_42]

I think age place into this as well- I assume by your name that you are 42... This might seem harsh, but I think it place a role.

6 months at 42 - 50% life expectancy left, 6 months is 1/84 or 1% remaining life
life

Interesting. I would then want to weight these %'s based on remaining potential opportunity cost somehow. Meaning: the younger I retire the more value I can expect to get out of life. Therefore I feel I'd rank order your results from lowest % Life Remainder to highest. Does that make sense?

 

[Lagniappe]

I think age place into this as well- I assume by your name that you are 42... This might seem harsh, but I think it place a role.

6 months at 42 - 50% life expectancy left, 6 months is 1/84 or 1% remaining life
6 months at 62 - 25% life expectancy left, 6 months is 1/44 or 2% remaining life
6 months at 82 - 2% life expectancy left, 6 months is 1/4 or 25% remaining life

I did a very similar calculation, but based it on "good years", that is years that I can travel, engage in active hobbies, etc.

Looking at my older relatives, in my family after about age 77 or 78 the good years are replaced by medical issues or just a lack of interest. So I assumed I has about 25 good years left.

The question became "Is the extra $$ worth one of my good years? Is increasing my spending by (for me) 10% worth 4% of my good years?

The answer was no. I retired at 53, two years ago, and even on days when I do absolutely nothing, I haven't regretted this trade-off.

 

[flyingaway]

I think I'm in a similar situation, which seems to be the case to find purposes to justify the One More Year (OMY) practice.
My teaching job is easy, I don't hate it, nor love it. I think I am financially independent (FI). But there is a question about FI at what level. I found that I can always increase my spending to make me need more money.
For example, I want to save some money so that I can support my children if they need. Since late last year, my wife and I found that we like to visit local casinos every week, which could increase our spending by $10~20k each year. I hate to be retired and find that we could not do that because of shortage of money.
So I keep working at the minimum capacity and have declined a few opportunities for more responsibilities for more money.
It is easy to make some easy money now than later to find that we want to do something, but don't have the financial means.

 

[harley]

and [-]even[/-] especially on days when I do absolutely nothing, I haven't regretted this trade-off.

I agree almost 100% with your process and conclusion, with one minor change.

 

[Montecfo]

It's just math

You can't retire without leaving money on the table.

But as you continue to work you are leaving your life on the table.

I was in a similar situation to you. I set a date and said by that date I will have have been fair to my future opportunity (a possible big work payoff with uncertain timing) and given it enough time.

For me it came down to the truth that every year you work is one less year of life untethered to work. Essentially, it is just math.

Note: a year and a half post retirement, the payoff I waited for but did not need has still not happened and appears to be less likely with each passing day.

 

[Navigator]

You ask a good question. I’ve been in a similar situation and I know how difficult it can feel having to make this decision. Certainly, getting a promotion is good for the ego and having more money is always good. But so is having more time, and money is only a means to an end. If I were in your position, the question I would ask is what will the extra money do for me? The extra time? If you picture yourself five years from now, which path feels like it would have been the better decision?

I’m sure you will do fine no matter what you decide. Best wishes to you.

 

[Bryan Barnfellow]

I love these responses by our group. I would add this: "You can add time to the beginning of your retirement, but not to the end."

-BB

 

[kgtest]

Greetings forum friends!

A while back we reached a milestone - and are essentially FI (barring anything crazy happening with some conservative real estate investments). Funny thing is - I'm still doing really well at mega-corp and am even likely to get a promotion soon (despite feeling like I've been slacking off). This comes with more financial incentives including company stock which vests every 6 months. As such I feel a bit confounded with re: to RE timing.

There are days that I can find ways to tolerate or even enjoy working for mega-corp; but those are few and far between. In discussion with a friend of mine - he asked me "What is 6 months worth to you?" - which I replied that I have no idea. Yet I've been pondering this a LOT the last few weeks. I can easily calculate my 6 month savings rate including stock incentive estimates from mega-corp. But I've interpreted the question to mean:

"What is 6 months of your time worth to you? And is giving that up for mega-corp incentives an equitable exchange?"

Would very much like to hear thoughts from the forum on this. Have any of you taken a crack at this calculation? Looking for perspective.

Cheers!

second_act_@_42

6months for me would be nothing but I dont mind my boss and work mostly independent with a few exceptions.

Talk to me when I have a terrible boss, bad co-workers and I am not challenged and it might be a different story. I've had that BS full plenty but I keep my eye on my prize.

The hardest part of my job is keeping up with the tech, terms and ideas...and dealing with recruiters. And that isn't really part of my job but in my best interest until the plug does get pulled. I stopped going to work socials a decade ago.


I also don't let work stuff bother me. Not everyone can do that. The proverbial building could be on fire and I'll find a way out calmly. Some take it serious. I don't have high stress and I think that went away with decades of experience in my trade. If I had stopped learning and not abreast with current trends, I could see how it would be similar to training for a marathon after stopping for a while. A LOT HARDER. 128 more months to go, but whose counting?

 

[Bikechuck]

This is an interesting discussion. At some point, and most of us know when, it is time to move on despite the opportunity to stack additional retirement savings.

The six month time frame mentioned in this thread is interesting because when I gave my notice 3 1/2 years ago my employer of 27 years (who had recently made significant changes to it's management team) asked if I would stay on an extra 6 months to help onboard some of the folks and to help prepare my successor for his additional responsibilities. I agreed to do so though as it turned out I was more of a security blanket than anything else and this was probably the most boring 6 months of my career.

 

[pacergal]

Some of the topics I definitely find energizing and interesting. It's the politics that comes with my level in mega-corp that drain the soul out of said topics.

Good perspective - thanks!

OP--How often are you dealing with these soul draining topics?

What does Firecalc say about your finances/budget?
If you are good to go now, your time may be more valuable.
42 is fairly young, but many here on this forum have done it successfully.

 

[sandlapper]

What is 6 months worth?

Your question reminds me of an old joke. A doctor is asked by a patient “If I gave up wine, women, and song would I live forever?” After some thought the doctor replied “No, but it may seemed like it.”

During my work career, I seen people retire at 40 after inheriting a half million dollars with no health insurance and others begrudgingly leaving at 70.

Everyone has their own answer to the question.

 

[second_act_at_42]

I love these responses by our group. I would add this: "You can add time to the beginning of your retirement, but not to the end."

-BB

I love that quote! Why isn't that taught in high school economics classes?

 

[Aerides]

In a lot of cases, depending how compensation is structured, it's the specific 6 months that matters. The key is to figure out your desired ER rate, and then optimize your compensation around it.. but not just keep kicking the ball down the road.

In my case, the 6 months of 4Q/1Q were infinitely more attractive than 2Q/3Q:

Despite the year end panic stuff (which was basically over by thanksgiving), December was a slide and a long holiday - even if I didn't take much time off everyone else did. And the first week of January no one expected much.

Reviews/Raises/Bonuses happened by the 2nd week of Feb. Annual Profit Sharing followed soon after. And 401k matches were always at the end of every quarter. I was also able to jack up my 401k contribution to cover a full years worth of taxable allotment within the first quarter.

So in my case it always made far more sense to retire in early April - vs. October.

 

[1242Vintage]

I just retired on May 1 and had several colleagues ask me the same question. In mega-Corp our pension is a simple equation based on age, salary and years in the corporation.

Simple math with what I knew at the time says an additional six months would have added an additional $500/month to my pension.

But here’s the thing. I was in a high stress position, working long hours, overweight and in general not living a healthy lifestyle. I figure every day I continued to work was ultimately shortening my life span.

Pulled the plug, retired on May 1 and am on the path towards recovery the fitness I had as a younger man and trimming down to a reasonable weight. Hopefully these changes adds back years to my life so will be drawing a pension for a very long time.

And a post script, right after I retired mega-Corp handed out 10% pay reductions to all execs and managers, increased employee contribution to health care and employee pension contributions. A whole bunch of my cohorts retired on that news. My take home salary if I kept working would have gone down by $2k a month with these reductions and not have increased my pension after all.

 

[second_act_at_42]

OP--How often are you dealing with these soul draining topics?

What does Firecalc say about your finances/budget?
If you are good to go now, your time may be more valuable.
42 is fairly young, but many here on this forum have done it successfully.

The topics aren't necessarily soul draining. Its more conversations and actions related to mega-corp's politics that I don't care for. Just don't have the energy or interest to suck up and put on a happy face for another rung up the ladder. I'd say 4 of 5 days per week I end the day feeling annoyed at how I spent my time.

Firecalc gives 100% using the "vanilla" default settings. 42 is young - which is amazing! But it's also the very peak of my earning potential. I think comparing each 6 month period with the # of good years left is going to help my perspective here.

 

[SecondCor521]

OP can make some reasonable guesses as to the value of the vesting stock and then divide that over six months to see what it adds to the hourly rate, then decide if the hourly rate feels worth it. Maybe it would.

Or to make it feel less significant, take the value of the vesting stock and divide by 300 (Rule of 25 times 12 months per year) to see if that increase in monthly income for the rest of one's life is worth it. Probably not worth it looking at it this way.

...

Another thing to look at is your language - both written here and in your head. I see sort of three states that people end up in:

1. Questioning state. This is where OP is now. Is it worth it? Should I stay or should I go? These people end up eventually in one of the other two states below. After a re-read of the OP, it seems like they're leaning towards state #2, but more info would be needed.

2. Want to retire state. People will write things like "I'm pretty sure I have enough. If things turn south, I could turn on my pension or SS. Or get a job. Or cut expenses. We could figure it out. The job now pretty much blows."

3. Not ready to retire state. People will write things like "What if the market drops? What if the ACA gets overturned? What if I'm bored? I really don't mind my job that much."

Sometimes I think it is simple as paying attention to the language one uses to figure out what the right decision for that person is.

...

Final suggestion: When you do decide to leave, I'd recommend throwing away any paperwork and calculations regarding any unvested stock or options that you left on the table. Once you make it to that point in your career, there will always be money left on the table, and I think doing those calculations after you leave can just lead to largely pointless second guessing and regret. I know I left money on the table but I can't tell you how much, and that's made it easier for me to be happy with where I'm at.

 

[NgineER]

The topics aren't necessarily soul draining. Its more conversations and actions related to mega-corp's politics that I don't care for. Just don't have the energy or interest to suck up and put on a happy face for another rung up the ladder. I'd say 4 of 5 days per week I end the day feeling annoyed at how I spent my time.

Firecalc gives 100% using the "vanilla" default settings. 42 is young - which is amazing! But it's also the very peak of my earning potential. I think comparing each 6 month period with the # of good years left is going to help my perspective here.

Be wary of using a time horizon in firecalc that is too long as well. If I remember correctly 30-35 years is required in order to include some lower performing periods in the more recent past.

 

[SecondCor521]

Be wary of using a time horizon in firecalc that is too long as well. If I remember correctly 30-35 years is required in order to include some lower performing periods in the more recent past.

Probably the worst starting year that could be included/excluded by time horizon would be 1973, which is well over 40 years ago now.

2000 or 2009 could conceivably be bad as well, but for a 42 year old looking at a 20 or 11 year timeframe is obviously too short.