Retired - They want me back - what to charge?

[mamadogmamacat]

In my old profession, engr, consulting firms, or "job shops" as they were called in the vernacular, often supplied contractors for short term projects, or if the particular specialty was in short supply, on a rather long term basis. I would check to see if there are such firms supplying consultants in a field such as yours. Whatever the individual consultant is being paid, the firm providing them is probably charging 2x that to your mega corp, perhaps with a 15 or 20% surcharge on top of that if it is a hard to find specialty. For example, depending on experience and specialty, a consulting firm in my field is currently paying from 60 to 100 per hour, and charging the mega corp 120 to 200 per hour, on a 2 yr contract I have some knowledge of from colleagues still employed. So, in that example, as someone working directly for your old megacorp, with the knowledge and familiarity you bring as a former employee, you would be selling yourself short at 100 per hour.

 

[gerntz]

Why did you retire? Why aren't you out of the house most days already?

 

[ChiliPepr]

Decent rule of thumb is to take you yearly salary and divide by 1000 and that should be your minimum hourly wage as a consultant.

So, if you were making $120k a year, you should charge at least $120 and hour as a consultant. This takes into account, vacations, sick days, extra taxes, extra work due to the job that is not paid, extra cost of working (driving, clothes, lunch...) and time on the beach looking for another contract...

 

[broadway]

In my old profession, engr, consulting firms, or "job shops" as they were called in the vernacular, often supplied contractors for short term projects, or if the particular specialty was in short supply, on a rather long term basis. I would check to see if there are such firms supplying consultants in a field such as yours. Whatever the individual consultant is being paid, the firm providing them is probably charging 2x that to your mega corp, perhaps with a 15 or 20% surcharge on top of that if it is a hard to find specialty. For example, depending on experience and specialty, a consulting firm in my field is currently paying from 60 to 100 per hour, and charging the mega corp 120 to 200 per hour, on a 2 yr contract I have some knowledge of from colleagues still employed. So, in that example, as someone working directly for your old megacorp, with the knowledge and familiarity you bring as a former employee, you would be selling yourself short at 100 per hour.

In first contract job, my employer was charging the client company 2x. A manager that I was reporting to at the client company was the source.

I am not sure whether the OP will be able to simply get on a payroll as a contractor at a mega-corp. Often times, their accounting department requires a B2B relationship.

At that first contract job, there was another engineer who was working contracting. He had his own LLC, but the rules were being changed and he was told he needed to go work for one of those job shops. I don't know what he ended up doing as I was laid off before then.

 

[Mdlerth]

To the OP: My own megacorp sometimes engages retirees as contractors at the same rate they earned before retiring. They get some takers. I won't be one of them.

I agree with other posters that you should demand twice that rate. Or even three times. They didn't invite you back for your health, they did so because they have a need and you have a particular skillset. If they thought they could get you for nothing that's what they would offer.

It's nothing personal. It's just business.

 

[RockyMtn]

typical consulting rate is 2x what your former hourly rate worked out to. I wouldn't get out of bed for anything less than 175% of my former rate!

 

[skipro33]

I was asked to return as a 'retired annuitant' after retiring. They only wanted to pay me the hourly rate I made when I had left. I countered with double the rate since no benefits were included. They balked at that! I asked 'em, why would I come back for the same pay if I retired from that amount in the first place? You want me back, pay the 'weighted' cost of wages and benefits; double the hourly rate I left from.

They waited 3 months, got REAL desperate and knuckled under. However, by that time, I was much more involved with retirement and I told them my price was now 2.5X my previous hourly wage. I never heard from 'em again. Whew! I dodged a bullet with that one!

 

[Freedom56]

Just got a call today from a former co-worker. This division of Mega-Mega corp is in a pinch. With a big merger about to happen, they cannot hire, but this group is short help due to a maternity leave. The contract position is not the same as my primary position, when I was there, but it was something I did sporadically, so it would be a no brainer. Stated time frame is 2-6 months.

Winter is approaching, DW would not mind me being out of the house a few days a week, so I am thinking about it.

They have already said part time is OK, but we have not discussed pay. It will be hourly.

My first thought is:

My last hourly rate, corrected for vacations and Holidays (which would not be paid as a contractor). Plus an adjustment for my new cost of retiree health care (since I am paying more, this is now an avoided cost for the company).

On top of this I think a nominal 10% to 20% surcharge is fair.

I think they might cringe at $100/hr, but that is what I think it will take to get me to do this.

Does this seem reasonable?

If you are under 65 and are collecting a pension from your former company, under IRS rules, your pension will be suspended if you work for your former company. If you don't have a pension, then it doesn't matter.

 

[Mdlerth]

If you are under 65 and are collecting a pension from your former company, under IRS rules, your pension will be suspended if you work for your former company. If you don't have a pension, then it doesn't matter.

I had seen this provision in our HR policy manual, but it was not made manifest that it stems from the IRS.

Does it still apply if your former employer is no longer the same company? For example, you w*rked in Z Division of XYZ Corporation. After you retired, Z was sold to ABC Corporation, who now asks you back temporarily. Does your pension pause?

And would it still apply if you are employed by BR549 Contracting Company for whom XYZ is a client?

 

[Freedom56]

I had seen this provision in our HR policy manual, but it was not made manifest that it stems from the IRS.

Does it still apply if your former employer is no longer the same company? For example, you w*rked in Z Division of XYZ Corporation. After you retired, Z was sold to ABC Corporation, who now asks you back temporarily. Does your pension pause?

And would it still apply if you are employed by BR549 Contracting Company for whom XYZ is a client?

It goes by tax id number. You can work for another company without any issues. After 65, t also does not matter. This is an IRS rule.

 

[Aerides]

I know what contractors were paid for far less than my skills, usually getting on-shored with no prior experience in my MC. You are in the range of a business analyst with a brand new visa from Bangalore at $100 per hour.

New Deloitte types with at least the matched background would be $200 per hour - that's your market and competition, and you still have a leg up. For your specific industry and MC expertise, ask for $200, settle at lowest at $175, but honestly they are taking advantage if they pay you less than that.

 

[HadEnuff]

Decide how much they would have to pay you to make you happy to do this.

Then let them make the first offer just in case it is more.

If it's short, give them your number. They need you, you don't need them.
I hope it works out for you.

 

[Whisper66]

What to charge them? I'd suggest charging with harassment. Maybe they'd leave you in peace then.

 

[HFWR]

It would take an outrageous amount of money...

 

[ERD50]

Asking 10-20% over your full time rate would be a gift tot he company. Like others have said, depending on your position, their total cost is probably 150% of your salary or more.

But you retired, why go back? Throw out 2x or 3x if you are on the fence, if they don't want you at that price they don't want you. As MichaelB says, you can go back to watching the snow flakes fly and watching all the cars stuck in traffic on the news, from the comfort of your home.

-ERD50

 

[Cobra9777]

I got a call about 2 years after leaving Megacorp. They wanted me to help with a specific aspect of a proposed acquisition. I had done something similar just before leaving. They said, "Don't worry about the pay rate; just name your number and we'll say yes." I never gave a number. I just politely declined, saying I was too busy in the woodworking shop.

 

[Texas Proud]

FICA is 15%.
You will also want to get liability insurance I found Hiscox was reasonable. This is for errors and omissions and is not covered by your home ins.

So here is my view, charge whatever you want, but realize contractors easily make 2x a staff salary, plus when they are hired via a contracting agency which is 90% of the time, the agency tacks on 25% -> 50% more, but they do pay the 7.5% fica.

If you have enough, then you should value your time a lot as you are not getting any more of it once it's gone.

When you ask for say $125 and they say why, just tell them, any less and you won't do it. That is your justification.

This is along the lines I was going to post....

When I worked for a temp company... they paid me a good hourly wage that was similar to what I was making before getting laid off.... they paid the FICA and all I did was show up and work... also got paid holidays and when I worked long enough got insurance....

THEY charged the company twice what I was being paid... so, let's say your 'hourly' rate when working was $75... you could easily charge $150 per hour.... any manager with any knowledge would think that is cheap....

 

[CardsFan]

What to charge them? I'd suggest charging with harassment. Maybe they'd leave you in peace then.

It would take an outrageous amount of money...

OP here. Upon further review; what the heck was I thinking even entertaining this idea . Nothing they could pay will impact my FI status.

I guess it felt nice to be wanted, but I really don't need any more of the daily stress and deadlines. To say nothing about being in the middle of all the angst going on with the Mega-Mega merger and layoffs. It is much more fun to view it from a distance and thank my luck stars I am out of there.

 

[omni550]

OP here. Upon further review; what the heck was I thinking even entertaining this idea . Nothing they could pay will impact my FI status.

I guess it felt nice to be wanted, but I really don't need any more of the daily stress and deadlines....... It is much more fun to view it from a distance and thank my luck stars I am out of there.

YAY you! Glad you recovered from your temporary bout of insanity.

----

FWIW, I was contacted twice by my former mega-motors employer (after I early-retired) to see if I'd be interested in coming back as a contractor to do the same work that I'd been doing as an employee. Basically, I told them I wasn't interested unless the places they'd be sending me would be as nice [not a chance!] as the places I've been traveling to on my own in retirement.

omni

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[Texas Proud]

OP here. Upon further review; what the heck was I thinking even entertaining this idea . Nothing they could pay will impact my FI status.

I guess it felt nice to be wanted, but I really don't need any more of the daily stress and deadlines. To say nothing about being in the middle of all the angst going on with the Mega-Mega merger and layoffs. It is much more fun to view it from a distance and thank my luck stars I am out of there.

But.... it might have been a little bit fun....


I did temp work a couple of times... and I would do it again if the work was anywhere near where I live.... as long as it is a known time period....

 

[ivinsfan]

IF you and your DW need a daily break from each other join the closest gym or YMCA...

 

[HadEnuff]

op here. Upon further review; what the heck was i thinking even entertaining this idea . Nothing they could pay will impact my fi status.

I guess it felt nice to be wanted, but i really don't need any more of the daily stress and deadlines. To say nothing about being in the middle of all the angst going on with the mega-mega merger and layoffs. It is much more fun to view it from a distance and thank my luck stars i am out of there.

bingo!!

 

[EastWest Gal]

I got double my salary the last two years. But I bought my own health insurance and had to pay self-employment tax. They covered my malpractice insurance. Don't forget if you are self employed your health care premiums are a line item write off on your 1040.

Over a 5 day Christmas holiday two years ago the medical director was desperate and paid me triple, also treating my on call hours as working hours.

If they need you they will pay a premium. Realize what the CEO makes. Realize without folks like you and me the CEO doesn't have a company. Since you don't need to work, don't lowball your offer. Aim high.

 

[broadway]

OP here. Upon further review; what the heck was I thinking even entertaining this idea . Nothing they could pay will impact my FI status.

I think you may be surprised by how different it will be with you working there now versus when you were working there and not FI.

I equate it with the feeling you have after you give your 2-weeks notice at your current job and before starting your new job. I call it the I-don't-give-hoot-mode.

 

[Texas Proud]

Just another thought.... when I was working at mega I got to know an EVP pretty well... worked for him even though I was low in the group...

Well, he left... but a year later he was back working contract... he was working for one of my accounts when he learned someone was coming from corporate that day.... he told me he was leaving and would see me when she left...

I asked him about this and he said "now that I am contract I do not have to put up with he BS and I do not want to see her"....


Yes, the BS meter can be turned way down when YOU have the ability to not deal with the worst of them... and if they are managing you, then you just leave...