Back for a second opinion

[WasToldThereWouldBeNoMath]

I was here months ago and appreciate all the advice. Slightly different question this time.

I have an opportunity to take a buyout at Megacorp that would give me 18 months salary plus payout all my deferred, unused, and accrued vacation. I will be 52 but can retire with a pension and have health care in retirement. No debt. No college expense for kids. I keep detailed, "real" expense records and have forecast for major purchases such as cars, roofs, etc. down the road.

The numbers are...
FIRECalc: 95.7% (using manual expense entry, total market and CPI)
Flexible Retirement Calculator: 98%
Fidelity: 105

I know that the vast majority here subscribe to the 100% or bust theory, but factoring in the buyout opportunity, is this a time where you would accept these numbers? 3 more years, I can hit 100% on FIRECalc. But, 3 more years.

 

[njhowie]

Take the buyout.

Congrats.

 

[aja8888]

That's a great buyout package. Jump on it. You can still work part time somewhere if you feel you need to do something and make some money. Or....just retire!

 

[euro]

Take it, take it, take it!!!!!

 

[HI Bill]

Take the buyout if you're willing to be a little flexible in your spending (cutting discretionary spending in down market years).

 

[REWahoo]

Take the buyout.

That's a great buyout package. Jump on it.

Take it, take it, take it!!!!!

Take the buyout...

^ What they said.

 

[pb4uski]

.... I know that the vast majority here subscribe to the 100% or bust theory, but factoring in the buyout opportunity, is this a time where you would accept these numbers? 3 more years, I can hit 100% on FIRECalc. But, 3 more years.

Not sure that it is true that the "vast majority here subscribe to the 100% or bust theory"... I certainly do not. IMO 95% is plenty good.

Take the buyout.

 

[Lewis Clark]

No guarantee Megacorp will keep you around for the three years. I'd take the buyout.

 

[RunningBum]

I didn't read the past thread. The buyout sounds good. I'd be a little nervous right now with the stock market seeming to be so detached (and ahead) of the economy. You might have to weather a big drop at the start of your retirement. I'd have enough liquid assets to get you through that so you don't have to sell stocks at the bottom. Will it happen? Dunno. How much liquid assets? Dunno.

It also depends on whether you optimistically reduced your estimated expenses from last post to make this work. Your budget needs to be realistic. Hopefully the better odds are due to the buyout.

I don't like giving yes/no answers on this question because it's your future, not mine. Sounds like it's probably fine. You'll never get a 100% guarantee even if the calculators say 100%, because the future could be worse. So as long as you have some flexibility if things do get really bad, you're probably good to go.

 

[Go-NoGo]

Take the money and run. See if they are willing to defer the 18 months payout to 2021 - your 1040 will thank you!

 

[Red Badger]

That's 7 votes to hit the exit. Go now! Have fun!

 

[Aerides]

Yes, for sure take the payout. Will you be considered "employed" there for the duration of the serial severance? if so, even better, gives you more time to keep the door open to future employment if you want (hides the resume gap)

As far as ER, one of the things recommended from your earlier thread was to get a firmer grip on your expenses. You seemed to be close, but not 100%. This 18 months might have pushed you over, but if not, you have a plenty of time to work on the numbers now.

 

[Dtail]

Not sure that it is true that the "vast majority here subscribe to the 100% or bust theory"... I certainly do not. IMO 95% is plenty good.

Take the buyout.

Even though I personally subscribe to the 100% success rate, I agree with PB that it appears that the majority do accept a lower rate (more like 90-95%).

Especially, I would not work 3 more years to raise the number 5%.

 

[SecretlyFI]

Take it. If you factor in collecting unemployment, assuming you qualify, between that and the 18 month salary payout, you’re probably pretty close to your original 3 year plan. I’ve read often that the first buyout package is often the best. Take it!

 

[travelover]

No guarantee Megacorp will keep you around for the three years. I'd take the buyout.

And no guarantee of a severance package as nice, if at all.

 

[BrianB]

Why would you even consider working 18 months for free?

 

[WasToldThereWouldBeNoMath]

Take the money and run. See if they are willing to defer the 18 months payout to 2021 - your 1040 will thank you!

Spread over 24 months is an option.

 

[DrRoy]

You get half of your 3 years without working. That's a deal.

 

[ckelly78z]

No guarantee Megacorp will keep you around for the three years. I'd take the buyout.

MegaCorp may be trying to thin the herd/overhead, so I would take the buyout now, rather than being let go next year...sounds like a good deal.

 

[pb4uski]

Spread over 24 months is an option.

That sounds good to spread out the cash flow and tax bite.

You get half of your 3 years without working. That's a deal.

Great way to look at it.

 

[youbet]

I have an opportunity to take a buyout at Megacorp that would give me 18 months salary plus payout all my deferred, unused, and accrued vacation. I will be 52 but can retire with a pension and have health care in retirement. No debt. No college expense for kids. I keep detailed, "real" expense records and have forecast for major purchases such as cars, roofs, etc. down the road.

This seems to be about as good as it gets. Check to see if your employer will challenge you collecting unemployment benefits, likely not. That would give you another few months (maybe longer depending on COVID-19) of some income and make your success rate a tad higher.

I left Mega 14 yrs ago with a situation similar to yours except I didn't have a choice. It's been great!

 

[OldShooter]

... I know that the vast majority here subscribe to the 100% or bust theory ...

I come at this from a little different angle than most.

Whatever number you get reflects a specific set of parameters evaluated against history. Here is what the FireCalc page says about the future: [FAQ] "How can FIRECalc predict future returns from past performance?" [Answer] "It can't."

So my apostate view is that 90%, 95%, and 100% are all the same number as far as looking forward is concerned.

There is an old joke about economists: "How do you know economists have a sense of humor?" "They use decimal points."

I would suggest a similar joke for retirement calculators: "How do you know that retirement calculator designers have a sense of humor?" "They deliver exact percentages."

If I were to design a calculator, my most optimistic conclusion might be delivered as "You're looking pretty good, but be prepared to adapt as your world changes." and my least optimistic might be something like: "Buddy, you're only looking good in the best of best-case future scenarios. Keep working."

 

[Chuckanut]

Your buyout is more proof I worked for the wrong people....

Take the money and run.

 

[Katiek]

You mention you have a pension as well. The more your pension covers your expenses, the more certain I would be and the less concerned about market volatility over the next few years.


But since you were set for 3 years and are getting such a good severance (that may well not be included if there is a round of layoffs), I would say "Bye and Out"

 

[imnontrad]

Since the healthcare is covered, if you have something you'd rather do, take the leap. You have the opportunity to retire, travel, or if you want, start your own business.

If you have company stock in your 401K, you can also remove that completely as a NUA. You will pay income tax on the cost basis only. You do not pay tax on the appreciated value until you sell the stock - and at the capitol gains rate. This may save you thousands over keeping it in the 401K/rolling over to an IRA.