Early out crossroads

[kch130]

Hello All,

52, DINK, always had an unwritten goal to FIRE in the 53-55 timeframe.

Due to COVID, my company just announced an early-out package. Three years at 2/3 pay plus two years of no-cost healthcare. I must decide in two weeks to apply for this or not.

After building a spreadsheet, the numbers are close to a wash whether I stay to 53 (and work hard) or go now. The greatest hit is in lost future savings; about $160K before growth. I made the "mistake" in also comparing the early-out to instead staying and working 2/3 the hours until age 56. That's over $400K in lost savings plus the value of not touching funds until later.

Our monthly expenses are $6500 and we have $3.4M across all accounts, mostly 401k and a mix of Roth & Traditional IRA. I have a small pension that will kick in immediately plus a USAF pension & TriCare that start at age 60.

My biggest concerns are with buying healthcare from age 54-59 (which adds aprox. $1200/mo to our budget), learning about tax strategy, and paying for pop-ups, like a kitchen remodel or a new roof. The other one is that simple, but human, desire to not screw up such an important decision.

All of my reading and FIREcalc trials indicate I'm good to go, yet, now that the moment is at hand I am mildly overwhelmed at the reality of the moment I've dreamed of actually being here. On the other hand, I feel mentally ready and do hope this proves to be the right choice.

I would appreciate any advice. While I thought I was prepared for this, I suddenly feel like there is so much I don't know.

 

[njhowie]

Take the package - don't over analyze. You will thank me 12 months from now.

Congrats!

 

[pacergal]

I would take it.
If you are good to go now, 3 years of 2/3 pay and paid health care for 2 of those, seems like the cherry on top!

 

[Montecfo]

It would be worth it to me to take the package. You are financially ready.

Key for me is you said you are mentally ready. That's important.

Let us know what you decide.

 

[tulak]

What are the odds the employer will eventually have forced layoffs?

Usually the first severance package is the best. It would be a bummer to stay and then be laid off later with a worse package.

Edit to add: your numbers look good. I would have been gone a long time ago!

 

[SumDay]

I'd be outta there. DH took a package at 54 and then went back as a consultant for a few hours a day for ~10 years. He was recovering from cancer, so the timing was perfect.

Good luck on your decision. It sounds like you're ready.

 

[street]

Wow, great package. Like some have commented they may offer this cut deeper with lay offs and you get nothing.

 

[stepford]

You probably realize that you are asking a group of people self-selected for having chosen earlier retirement than most. Of course we're going to tell you to go for it.

That said, the package you've been offered is much better than most of those I've seen. I first asked this question here at age 53, and even though my assets were significantly less than yours and my package included 9 months of pay rather than your 2 years I got similarly enthusiastic recommendations to bail.

and I hemmed and hawed and waited another 2 years before going... and now at 60 wish I had left when everyone said (or even earlier).

 

[Dragomira]

You should be just fine! If you are ready then go for it!!

 

[Toocold]

I would take the package. Another way to put this, if you were to continue to work, your incremental increase is 1/3 of your current salary.

 

[travelover]

In my case, the first year the employer offered generous buyouts, the second year, all they got was the boot. With 3.4M, I'd go now. There is a whole new world out there and you are young enough to have a whole second post working life.

 

[RetMD21]

I would appreciate any advice. While I thought I was prepared for this, I suddenly feel like there is so much I don't know.

Can you get another job in 2 years? Maybe with healthcare? If so, it could be a back up plan. I think it is a great package.

 

[mystang52]

My post is # 13 on this thread. Here's my suggestion: Read and heed Post #'s 2 -12.

 

[cnocmmz]

Hello All,

52, DINK, always had an unwritten goal to FIRE in the 53-55 timeframe.

Due to COVID, my company just announced an early-out package. Three years at 2/3 pay plus two years of no-cost healthcare. I must decide in two weeks to apply for this or not.

After building a spreadsheet, the numbers are close to a wash whether I stay to 53 (and work hard) or go now. The greatest hit is in lost future savings; about $160K before growth. I made the "mistake" in also comparing the early-out to instead staying and working 2/3 the hours until age 56. That's over $400K in lost savings plus the value of not touching funds until later.

Our monthly expenses are $6500 and we have $3.4M across all accounts, mostly 401k and a mix of Roth & Traditional IRA. I have a small pension that will kick in immediately plus a USAF pension & TriCare that start at age 60.

My biggest concerns are with buying healthcare from age 54-59 (which adds aprox. $1200/mo to our budget), learning about tax strategy, and paying for pop-ups, like a kitchen remodel or a new roof. The other one is that simple, but human, desire to not screw up such an important decision.

All of my reading and FIREcalc trials indicate I'm good to go, yet, now that the moment is at hand I am mildly overwhelmed at the reality of the moment I've dreamed of actually being here. On the other hand, I feel mentally ready and do hope this proves to be the right choice.

I would appreciate any advice. While I thought I was prepared for this, I suddenly feel like there is so much I don't know.

Reserves? Although relatively small USAF pension compared to active, you have seemed to amass a large investment portfolio. My recommendation wo
uld be to take take the offer and run and run fast. Congrats, you have already won my friend.

 

[pb4uski]

$1,200 per month for wealth insurance is simply the price of freedom to do what you want. That's a pretty good package and you have plenty of $$$$.. I'd take it.

Change is hard and you are veering outside of your comfort zone... that is perfectly normal.

 

[MBAustin]

Sounds like you've thought it through and, like many of us were, are just a bit hesitant to take such a definitive step. With the package plus your assets plus your plan to ER in the next couple of years anyway, sounds to me like it's time to put your name in the Class of 2020 thread!

 

[MRG]

Try not to scream YIPPEE on your way out the door. Those years of your life are worth way more than any amount of lost income.

 

[Rowej]

I would take the package, and don’t have nearly as much saved up. You never know if things really get worse, they may have layoffs and not be able to offer packages.

 

[AreWeThereYet0]

Just do it. Congrats.

 

[badatmath]

I'd take it in a heartbeat and have a lot less assets. Go!

 

[IMATERP]

I’d be clearing out the personal effects (from my office) as we speak. There is no question...here..

 

[kch130]

Thank you everyone for the kind responses.

To answer a couple questions, my work uses the seniority system and, while I won't be in danger of a layoff, there are others below me who are. In fact, one of the reasons behind the early-out package was supposedly to lessen the odds of furlough if enough senior people came off the top of the list.

It is funny, I have been following a work thread where various people chime in with their rationale. We have mandatory retirement at 65 and I'd estimate that only 10% of the respondents are leaving. The vast majority say they can't make the numbers work even 2-3 years early, the youngest commenter was 58; I am thankful to be in a different position.

The leading negative comments revolve around a lack of bankruptcy protection if our company goes Ch11 before the 3 years of payments are made. I'm willing to take the risk. While it would be a bummer, I'd still be okay.

Will be making the official decision soon. Thanks again for the kind comments.

 

[Rowej]

I don’t understand the logic of others worrying about lack of bankruptcy protection. If the company declares bankruptcy, they are probably out of a job as well.

Thank you everyone for the kind responses.

To answer a couple questions, my work uses the seniority system and, while I won't be in danger of a layoff, there are others below me who are. In fact, one of the reasons behind the early-out package was supposedly to lessen the odds of furlough if enough senior people came off the top of the list.

It is funny, I have been following a work thread where various people chime in with their rationale. We have mandatory retirement at 65 and I'd estimate that only 10% of the respondents are leaving. The vast majority say they can't make the numbers work even 2-3 years early, the youngest commenter was 58; I am thankful to be in a different position.

The leading negative comments revolve around a lack of bankruptcy protection if our company goes Ch11 before the 3 years of payments are made. I'm willing to take the risk. While it would be a bummer, I'd still be okay.

Will be making the official decision soon. Thanks again for the kind comments.

 

[aja8888]

I don’t understand the logic of others worrying about lack of bankruptcy protection. If the company declares bankruptcy, they are probably out of a job as well.

And probably with no special package.

 

[Gavin60]

A bird in hand is worth two in the bush. I would take it. Those who dont take it may eventually be targeted for layoff or termination. At this point you cant trust them anymore to be a soild employer till you decide to go on your own.