48, very nervous about coming retirement

[BackHometown]

Hi, I am going to be laid off from a mega corp. I am very nervous about my financial situation and don’t know whether I can handle the retirement.

Husband works in another mega corp with income a little less than 200k. My income is almost the same so half of the income will be gone. Without my income, he can take home $120k per year after tax, insurance and other things. Our expenditure is $50k mortgage +80k in living cost. So we are $10-20k short if I don’t work.

Around $2mm in both 401k, but I can’t withdraw it. Rent from 3 rental houses just cover the mortgages and all the repairs. So no income from rental houses. My own house +3 rentals =$1mm in asset.

$300k in Roth IRA and 200k in checking account.

Those numbers are for both of us. Hubby is fine that I don’t work, because he doesn’t care about money lol.

One child. I have put $80k in 529 so college tuition will not be an issue.

Before I can withdraw 401k at age 59, I have 11 years to go with the $200k cash. I have a lot of stress feeling that it is not enough.

Should I put half of the $200k in SPY and the rest in bond? Please let me know whether you feel too risky for me to retire. I got PTSD from this toxic workplace and really don’t have courage to look for another job. But please also let me know if I have to work. Thanks

 

[TheWizard]

Sounds like another job would be a good idea, courage or not...

 

[DJRR]

I know it is difficult, but I want to say congratulations. You have done a great job and have a lot of options.

If you want to continue to work then I think you are OK to bridge to your next job after taking 6 months off to recover. Maybe a less stressful situation that meets your needs without requiring the same commitment.

If you need access to your 401k you can roll it over to an IRA and set up SEPP periodic payments with no penalty. You have to maintain the same payment for some minimum time period up to 59, so choose wisely, but you could easily take $20k per year from your IRA if that is what you need.

 

[BackHometown]

Sounds like another job would be a good idea, courage or not...

There is no possibility to pass those 11 years with $200k saving? I know that it is risky but too stressed to look for another job. Thanks

 

[BackHometown]

I know it is difficult, but I want to say congratulations. You have done a great job and have a lot of options.

If you want to continue to work then I think you are OK to bridge to your next job after taking 6 months off to recover. Maybe a less stressful situation that meets your needs without requiring the same commitment.

If you need access to your 401k you can roll it over to an IRA and set up SEPP periodic payments with no penalty. You have to maintain the same payment for some minimum time period up to 59, so choose wisely, but you could easily take $20k per year from your IRA if that is what you need.

Thanks.
I have been burned out for a while and don’t want to work unless I have to.
SEPP is a good idea. I can withdraw somehow like $40k per year from 401k. Currently the gap is only $20k per year but if I have to withdraw, I can withdraw more.

 

[ivinsfan]

Take some time to decompress.you are set enough financially that you could take a lower stress,lower pay job. Hubby could lose his corp job,get burned out too. Some income from you is probably required for the next few years.

 

[DJRR]

Thanks.
I have been burned out for a while and don’t want to work unless I have to.
SEPP is a good idea. I can withdraw somehow like $40k per year from 401k

Right. It has been a while since I looked but you used to be able to get any amount you want by setting up a separate account, choosing a withdrawal method, and then rolling over the amount that you need to the new account. For ex: you may only need $750k to get $25k per year. It is not that difficult, but very restrictive and punitive if you mess up, so make sure you are comfortable or have an expert look it over.

That way you keep your $200k for emergencies or to fill in any future needs and still keep the maximum amount fully invested. Even the account you use for SEPP can still grow if your investments earn more than the withdrawal rate.

 

[imjustawarrior]

You could start a Roth conversion ladder. The $200k can cover the shortfall for 5 years until you can start pulling from the Roth conversion ladder.

Do you manage finances with your husband? If so, the ability to retire seems like it is a joint decision. What does he think? This is also important in determining what you should do with your $200k.

 

[AZsniper]

I would say take 3-6 months off and re-assess the situation. Maybe see what opportunities come your way.

 

[Aerides]

If your rentals aren't yielding income, consider selling them? The market is still very high. One less hassle to deal with and it will give you some cash to help make the other decisions.

10-20k a year is not a lot to make up with a part time or lower stress job.

 

[MarieIG]

Do you get a severance package? Have you figured in unemployment.

Does your budget for maintaining the home include repairs, i.e. new roof, new AC, inflation increases, emergencies, etc.

The 80k could be light for tuition and extra curricular activities / milestone events for the child.

There may be an option to see one of the rentals, but of course there is a trade-off for that, in particular if you have a great mortgage rate on it.

You don't have to leap to do anything. You can take a sabbatical and de-stress for a while. If you decide to seek employment in the future, you don't have to make the same income and take part-time or low stress work.

I would also suggest reviewing Frequently Asked Questions and FireCalc.

 

[BackHometown]

If your rentals aren't yielding income, consider selling them? The market is still very high. One less hassle to deal with and it will give you some cash to help make the other decisions.

10-20k a year is not a lot to make up with a part time or lower stress job.

Rentals covers the mortgage. It is also a big hassle to sell those rentals so we are keeping them for now.

The issue is that I am damaged by this job so much that I can’t even think about working….

 

[BackHometown]

Do you get a severance package? Have you figured in unemployment.

Does your budget for maintaining the home include repairs, i.e. new roof, new AC, inflation increases, emergencies, etc.

The 80k could be light for tuition and extra curricular activities / milestone events for the child.

There may be an option to see one of the rentals, but of course there is a trade-off for that, in particular if you have a great mortgage rate on it.

You don't have to leap to do anything. You can take a sabbatical and de-stress for a while. If you decide to seek employment in the future, you don't have to make the same income and take part-time or low stress work.

I would also suggest reviewing Frequently Asked Questions and FireCalc.

They are planning a big layoff and my boss already asked me to look for another job.

Nowadays, companies want to lay off without packages using the excuse of low performance. I have already seen multiple of coworkers gone without severance.

So, most likely there is no severance.

House repairs are unknown even though all the houses have new roof.

Tuition should be fine. My son still has 8 years to go to college. In state should be fine.

Based on everyone, it does seem that $200k can’t cover the expense of 10 years.

 

[TripleLindy]

As a couple of others have stated, congrats on the savings towards retirement! Given your position of not wanting to return to work, find a way to live on your remaining income. $80k of expenses may have opportunity to be trimmed, especially since some things, like health insurance and mortgage are already accounted for separately.

Go through your expenses in detail and set a budget that you can live with. You have safety nets with the $200k in cash and rental properties. Personally, I’d consider selling the rental properties, just for peace of mind. They’re expensive assets to liquidate and markets can change quickly. But I understand the desire to keep them.

We went through something similar, where I was faced with a decision at age 55. Main difference is that we didn’t have a mortgage, which is a big expense for you. I’m 7+ years in and just started tapping into retirement savings this year. It can be done, especially when you still have a working spouse with access to healthcare insurance.

 

[pb4uski]

...The issue is that I am damaged by this job so much that I can’t even think about working….

So at a minimum, take 6-12 months off and during that period you can decompress and assess your situation.

You have two critical questions. First, do we have enough so I don't have to work? (and within that, would my DH be ok working with me not working?). Second, if I don't work, do we have ways to withdraw what we need without onerous penalties?

On the first question, run your situation through FIRECalc, including SS and pensions and other things. Do not include you mortgage payment in spending because FIRECalc increases your spending each year for inflation for the entire time horizon and your mortgage payments are fixed and eventually end. So either include your property taxes and insurance in spending and your annual mortgage P&I payments as fixed off-chart spending on the Other Income/Spending tab, along with a pension of the same amount starting when your mortgage is paid off.... or just reduce your portfolio for your mortgage (as if you paid it off).

The second question is a closer call but your $200k in checking should cover a $10-20k gap for many years. If you need to you can withdraw Roth contributions if your taxable savings runs out and you can always do a SEPP/72t.

So don't fret about going back to work right away and noodle on the problem for 6-12 months. I think you'll find that you can pull it off if you want to.

Another option might be to work part-time as bridge. If you earned $200k while working then presumably you have skills that would be in demand.

 

[BackHometown]

So at a minimum, take 6-12 months off and during that period you can decompress and assess your situation.

You have two critical questions. First, do we have enough so I don't have to work? (and within that, would my DH be ok working with me not working?). Second, if I don't work, do we have ways to withdraw what we need without onerous penalties?

On the first question, run your situation through FIRECalc, including SS and pensions and other things. Do not include you mortgage payment in spending because FIRECalc increases your spending each year for inflation for the entire time horizon and your mortgage payments are fixed and eventually end. So either include your property taxes and insurance in spending and your annual mortgage P&I payments as fixed off-chart spending on the Other Income/Spending tab, along with a pension of the same amount starting when your mortgage is paid off.... or just reduce your portfolio for your mortgage (as if you paid it off).

The second question is a closer call but your $200k in checking should cover a $10-20k gap for many years. If you need to you can withdraw Roth contributions if your taxable savings runs out and you can always do a SEPP/72t.

So don't fret about going back to work right away and noodle on the problem for 6-12 months. I think you'll find that you can pull it off if you want to.

Another option might be to work part-time as bridge. If you earned $200k while working then presumably you have skills that would be in demand.

I will have to take at least half to one year to recover, and after that I am 50 and will be difficult to find a job in the field that will be replaced by AI.

My husband is fine with me not working, simply because he doesn’t care about money lol.

It is hard math. It seems that one can never retire.

 

[RetiredHappy]

If you run out of your cash pile of $200K, besides SEPP, another option is tap into ROTH. There is $300K sitting there as a backup.

 

[Aerides]

It is hard math. It seems that one can never retire.

Nope, not that hard. You've been a member here for a few years so hopefully you've read many stories from others that will give you some confidence.

And I don't believe that 200k salaried jobs are being replaced that quickly. Besides, you have said you only need 20k per year, there is no doubt something you can find if push comes to shove.

Make no plans for now, see how the next few months unfold, and go from there.

 

[Closet_Gamer]

As ever, @pb4uski gives very sound advice.

My quick reactions:
1 - I think the level of illiquidity you have creates difficulty. You have a great asset base but you can’t get to it easily. Selling a property would go a long way to getting you a little more liquid

2 - Really, really do the math on college. It’s a potentially huge expense, has a lot of emotion connected to it, and depending on where you’re are/what your child wants to pursue in state may or may not be a good fit

3 - Drill into your expenses. When one person stops working maybe there are things that used to be outsourced that you can do? Maybe the eating out line gets smaller? Regardless, a $1 of after tax spending cut is about $1.30 of income not needed.

4 - After exhaling, maybe pick up some work.

You’re in a great spot. Just needs to massage all the bits thru to completion.

 

[Morgan22]

Sell the rentals. You'll have less stress and you'll have plenty to live off of.

Or do a 72t on your rollover IRA (roll your 401k over to IRA). Take a look at 72tNET – Access Your IRA Penalty Free if you are interested in 72t (SEPP).

 

[BackHometown]

Thanks everyone!

All the recommendations are very helpful.

I was hoping to retire 50-55. By that time I would have a good cushion of cash ( we are saving almost $100k per year with my income). But things do happen, and I never thought about finishing my career with this hurry and pain.

based on all the suggestions, I would take a break for a year to explore. I will sell some properties if needed. And I can use Roth IRA and SEPP 401k as the last resort.

Thanks everyone for the encouragement. Everything happened suddenly and I was lost. This is a great place for people to learn

 

[imjustawarrior]

This is a great guide on your options to access retirement funds. You may want to start a Roth conversion ladder if your taxes are low enough after you stop working.

How to access funds early

 

[TickTock]

based on all the suggestions, I would take a break for a year to explore. I will sell some properties if needed. And I can use Roth IRA and SEPP 401k as the last resort.

All excellent actions! Especially, take time to heal from the damage/stress from your last j*b. Life looks better when you get enough sleep and aren't stressed 24/7. I know.

Thought: Your mortgage (including taxes??) is 50k and all your other (after-tax) spending is 80k. That's a lot of spend tied up in the house. Would selling all the properties give you enough to pay off or significantly reduce the mortgage cost?

 

[BackHometown]

All excellent actions! Especially, take time to heal from the damage/stress from your last j*b. Life looks better when you get enough sleep and aren't stressed 24/7. I know.

Thought: Your mortgage (including taxes??) is 50k and all your other (after-tax) spending is 80k. That's a lot of spend tied up in the house. Would selling all the properties give you enough to pay off or significantly reduce the mortgage cost?

Mortgage is only for my primary house which includes property tax. The house will be paid off in 10 years.

Selling investment properties can pay off the mortgage but I am thinking about downsize. My son is going to college in 7 years so probably downsize by that time. I am not sure.

 

[pb4uski]

I recall that after I retired that I then had time to scrutinize and rationalize our expenses, and that saved some. A good mini-project for the first 6-12 months would be to do a deep dive analysis of your spending so that you know you spending forwards and backwards.

Your new job is family chief financial officer and real estate operations manager. Over time look at everything. Are the rent that you are charging for your rentals at market?