Layoff Time Blues....

[armor99]

Hello everyone,
So sadly, like so many others, I have been recently laid off. Or will be. Got one of those WARN notices, and more than likely will not be able to get into another position at the same company. So the search continues (WARN expires in around 2 weeks). I have been through this twice in my career so far, and was very much hoping to avoid it, but just a few years short. I am 51, and was targeting 55 (so I can use the rule of 55).

1. I currently have 1.7 million in cash, and investments. I have been 100% equities for a very long time. But due to being this close to the end, and loosing my job, and the market being on fire for a very long time, I thought it would be the right time, and safer to go to 60/40 equities/cash (especially since VG settlement account is over 5% at the moment). I will probably not get to that magical 2.5 million number, but I would rather coast slowly (and fairly certainly) over the 2Mil mark, than have some huge market downturn catch me at the very end.

2. I currently have a small Roth 401k at my current employer. And a large IRA, and ROTH IRA with Vanguard. The thought of paying a 10% penalty trying to access that IRA at 55 is awful. But in theory, I should be able to do a reverse roll over back into my next employers 401k plan. And then avoid the penalty altogether (with the rule of 55). The only catch, only around 70% of plans offer this. Spoke a bit to the Vanguard folks, and they said mid to large companies from what they have seen should not be an issue. Still a bit of a dice roll. Not like I can ask the employer about it while I am interviewing, that would be a flag!!!

3. And here is where it gets wierd, and I am truly grateful. I currently have no debt. My house, car, everything is paid for. So my bills are very low. However much I might contribute (or not) to my retirement accounts at this point, really does not move the needle very much, in terms of how much money will be there after 4 years. I will make considerably more on the percent gain of the portfolio than anything I would add at this point. So what I am thinking is, the amount of salary that I make at this point, is sort of irrelevant? As in, as long as I can make enough to pay my bills for the next 4 years, that is fine. As I do not neccesarily need what my typical salary was (100k+), because none of that extra money (past needed for bills), needs to be contributed to retirement accounts anymore. It was a strange realization to come to. Maybe time to look for a "fun job". Not even sure what that might be, or if an HR person would allow it, as I do not have a decade of experience in whatever they claim to be looking for.


Thanks for letting me vent a bit, and also am I missing anything important that anyone can think of? Thanks so much...

 

[chris2008]

I cannot help with answers to your financial questions. But I wish you all the best for the decision taking process and a good outcome.
Do not underestimate the importance of the right mindset. My Dad was let go too early and without his fault and he never got over it. Thus he couldn't enjoy his retirement years - even though my parents never were in financial problems.
Take care!

 

[Dtail]

A fun job could work, but also could be hard to obtain. It depends if it is a truly fun job, or a lesser paying version of your current job. Many employers won't accept that you would accept being happy with a lesser paying job and can be wary of hiring a 50+ person.

 

[ShadowBloom]

I think my situation was similar to yours when I was laid off at 49 ten years ago, a few years before my anticipated early retirement. At the time, firecalc gave me 80-90% success depending on assumptions. I chose not to look for another job in my field but instead did freelance writing for a few years. This brought in some income, though only a fraction of my final salary. Nevertheless, it's worked out for me. Firecalc now shows 100% and as I'm closer to collecting social security I'm starting to add some BTD spending. Have you played with firecalc and other retirement calculators?

 

[Surewhitey]

I think asset allocation is on the risky side as well based on your possible future needs. At least having a year in cash until you finalize the future j*b would be my peace of mind place.

But then I'd be nervous & excited for this too, so I am a little weird... 1.7 is not nuthin'. Nice war chest to have.

 

[tulak]

Is it possible to find contract work?

My plan b if I lose my job and can’t find another is to look for 3-6 month contracts. I’m in a similar situation, where adding more to my investments doesn’t do as much as letting the portfolio grow over time, so I’d only need income to pay the bills. The other part of plan b is to setup a 72t for income from retirement accounts, but I would only do this for when I retire, likely after 55.

That’s my rough sketch for plan b. Plan a is rule of 55 and if I lose my job, hopefully find another job that offers rule of 55 and rollover my current 401k.

I wish you the best of luck! And it’s great that you have no debt.

 

[DayDreaming]

I was laid off at the age of 48, with a bit less than $1 million in savings. Like you, I had no debit. When I crunched the numbers, and got a LOT of help from this forum, I realized I could call it early retirement. My job was killing me (mentally) the last few years, so being laid off turned out to be the best thing for me. I had a pretty good pension that I could start collecting at age 60, and I lived off of my savings from age 48 to 60. Now I'm a few years past 60, and my savings have grown to be 3x what I had when I was laid off. I never imagined I would be this well off financially, but it's worth mentioning that the stock market did very well for most of the time I was living off of my investments. Also worth mentioning - after COBRA ended for me, I've been buying my own health insurance through the ACA.

Without knowing more details about your situation, I can't give much advice, but my gut feeling is that you're in a good spot and might be able to call it early retirement. Good luck with whatever decisions you make!

 

[Aerides]

Your next path should be a position that allows you to save outside of your retirement accounts, so you can comfortably get to 59.5.

Look for a normal good salary job, and make it fun by knowing it's only a few years. Oh, and since you are 51, perhaps invest in a few clothes and stuff to look 45? Ask a woman you trust to be honest, and shave a few years off, can open up a few options (and yes I'd say this to anyone, man or woman. There is real ageism in employment after 50).

 

[target2019]

Thanks for letting me vent a bit, and also am I missing anything important that anyone can think of? Thanks so much...

Much in your post is similar to what happened to me in my late fifties. Was laid off twice, and the second was the final axe from megacorp.

I was 61 and we were driving back to NJ after visiting my brother in FL. A few phone calls came in, one left a message. At a rest stop I listened to the message, which came from a small company I thought I had a chance of a job. The recruiter, an old guy like me, apologized, and asked if I might have the time to interpret the requirements of a requisition he was looking at. I had good experience with the entire technical process, so I helped him out. That's point one. Later in the year he called me, and asked me to drive down for an interview. By the end of the day I was happily sitting on a yearly salary offer for more than i had ever made.

Point two is that some detail from your past may get your resume through computer screening. I had two resumes. One went back just 10 years (rookie recruiters like that) and the other was my entire career, with a keyword section. My CV (the long one) was what I posted to job boards, linkedin, etc.

Point two got me a job with megacorp. I made it to the hiring manager because of an obscure acronym. It also made it clear that I had a ton of broad technical experience in several fields.

Point three is that it may help if you describe your self as being more of a generalist, rather than a specialist in one field. Hiring managers on the other side of the table may be looking for flexibility as well as maturity. That was true of my last two hirings.

Good luck with things.

 

[whatnot]

Health insurance is a big issue. Will you have retiree insurance or will you have to go through open market? If you do get a new job, will you be eligible for health insurance coverage?

 

[athena53]

Do not underestimate the importance of the right mindset. My Dad was let go too early and without his fault and he never got over it. Thus he couldn't enjoy his retirement years - even though my parents never were in financial problems.
Take care!

Totally agreed on this. My Dad was "demoted" in his mid-50s when he was running the Chicago district of a major steel company. He and Mom moved to Myrtle Beach (Mom once said that was the only place they'd been able to vacation when we lived in Ohio and they sometimes had 3 kids in college at one time). Dad tried his hand at being a stockbroker, Mom worked at a Hallmark store and they played a lot of golf. Eventually both retired for good. They're gone now (and Dad, the last to go) left an estate far larger than I expected) but it was a heck of a lesson to me. I ER'd at 61 after the politics got toxic. Life is good.

Just remember it's not you, it's Them.

Fun jobs can be something totally different form whatever you're doing now. One friend is a hostess at a dinner theatre where she meets many celebrities coming through. I'm sure some of the people handing out samples at Costco do it for the socialization. Open your mind to stuff you like to do that isn't necessarily lucrative. I do a lot of volunteer work for my church and the Garden Club. Both keep me engaged without being committed to a 9-to-5 schedule.

 

[EastWest Gal]

Hello everyone,
So sadly, like so many others, I have been recently laid off. Or will be. Got one of those WARN notices, and more than likely will not be able to get into another position at the same company. So the search continues (WARN expires in around 2 weeks). I have been through this twice in my career so far, and was very much hoping to avoid it, but just a few years short. I am 51, and was targeting 55 (so I can use the rule of 55).

1. I currently have 1.7 million in cash, and investments. I have been 100% equities for a very long time. But due to being this close to the end, and loosing my job, and the market being on fire for a very long time, I thought it would be the right time, and safer to go to 60/40 equities/cash (especially since VG settlement account is over 5% at the moment). I will probably not get to that magical 2.5 million number, but I would rather coast slowly (and fairly certainly) over the 2Mil mark, than have some huge market downturn catch me at the very end.

2. I currently have a small Roth 401k at my current employer. And a large IRA, and ROTH IRA with Vanguard. The thought of paying a 10% penalty trying to access that IRA at 55 is awful. But in theory, I should be able to do a reverse roll over back into my next employers 401k plan. And then avoid the penalty altogether (with the rule of 55). The only catch, only around 70% of plans offer this. Spoke a bit to the Vanguard folks, and they said mid to large companies from what they have seen should not be an issue. Still a bit of a dice roll. Not like I can ask the employer about it while I am interviewing, that would be a flag!!!

3. And here is where it gets wierd, and I am truly grateful. I currently have no debt. My house, car, everything is paid for. So my bills are very low. However much I might contribute (or not) to my retirement accounts at this point, really does not move the needle very much, in terms of how much money will be there after 4 years. I will make considerably more on the percent gain of the portfolio than anything I would add at this point. So what I am thinking is, the amount of salary that I make at this point, is sort of irrelevant? As in, as long as I can make enough to pay my bills for the next 4 years, that is fine. As I do not neccesarily need what my typical salary was (100k+), because none of that extra money (past needed for bills), needs to be contributed to retirement accounts anymore. It was a strange realization to come to. Maybe time to look for a "fun job". Not even sure what that might be, or if an HR person would allow it, as I do not have a decade of experience in whatever they claim to be looking for.


Thanks for letting me vent a bit, and also am I missing anything important that anyone can think of? Thanks so much...

You can pull the money you invested in a ROTH out without penalty, but you cannot pull out any earnings, if you need cash. And a fun job might, well, be fun.

 

[armor99]

Is it possible to find contract work?

My plan b if I lose my job and can’t find another is to look for 3-6 month contracts. I’m in a similar situation, where adding more to my investments doesn’t do as much as letting the portfolio grow over time, so I’d only need income to pay the bills. The other part of plan b is to setup a 72t for income from retirement accounts, but I would only do this for when I retire, likely after 55.

That’s my rough sketch for plan b. Plan a is rule of 55 and if I lose my job, hopefully find another job that offers rule of 55 and rollover my current 401k.

I wish you the best of luck! And it’s great that you have no debt.

Thanks.... to my understanding ALL retirement plans will allow you to roll over previous 401k's to you current one.

 

[Exchme]

Sorry to hear about the layoff, the company I work for is very cyclical and has had several layoffs of over 50% of staff over the decades that I've been there. Folks get by somehow, switching to other firms or less attractive jobs in the industry or even switching industries. Some return to the "mother ship" after the bad times pass.

If you decide to retire, you can use a 72t to set up a withdrawal plan from your IRA without the 10% tax penalty. These cannot be changed once set up, so if you go back to work, you could have undesired taxable income.

Do not assume that the average market return is something you can count on, there have been times in history when the market was very bad for a very long time. Instead, get an understanding of your spending, your future Social Security benefits and don't forget health insurance costs. Then use a calculator like FireCalc (which uses historical market returns and historical inflation) to help you understand if you could retire now.

If that looks good, then you can investigate in more detail with a high fidelity calculator. My favorite is at PralanaRetirementCalculator.com, it costs a few $ but is the most thorough and powerful I know of. That can help you understand your future cash flows, investigate ways to get the required cash flow while optimizing ACA premium credits (like spending down your Roth), investigate Roth Conversions once you hit Medicare age, etc.

 

[armor99]

Thanks to everyone for their suggestions and thoughts. I forgot to mention that I have around 125k in a non retirement bank account. So I will be fine for a very long time. Not quite to 55. Then again... maybe I can. Like I said it is a very wierd place to be. My biggest problem will be mental not financial. Need to find things to do with myself during the day. So many jobs are going completly virtual too... cannot do it... I miss faces... and I hate talking to a screen.

 

[Koolau]

Have you determined your spending needs? IOW have you determined what % you would need to take from your savings to meet your yearly needs?

FIRECalc is a good place to start. Best luck as you decide what is next for you.

 

[pb4uski]

+1 Depending on how much you need to live, you may be able to ease into retirement with a job that you enjoy for the next 4 years that reduces your withdrawal needs. When you run FIRECalc, use the Investigate tab and select the bottom option to solve for the amount of sustainable spending at 95% confidence.

Have you considered a 72t/SEPP withdrawal plan to avoid the 10% penalty? You can also withdraw Roth contributions without penalty at any time. You might also consider building a Roth ladder for 5 years and then tapping into that to get penalty free access to your retirement savings.

 

[target2019]

For 4 years or so I would stare at a screen if that is what's available. There is ageism after all.

You might find that walking into a new office, the faces are all much younger. I suppose if you're a manager that is to your advantage. But I encountered many younger employees who were not interested in new faces, to say the least.

 

[armor99]

+1 Depending on how much you need to live, you may be able to ease into retirement with a job that you enjoy for the next 4 years that reduces your withdrawal needs. When you run FIRECalc, use the Investigate tab and select the bottom option to solve for the amount of sustainable spending at 95% confidence.

Have you considered a 72t/SEPP withdrawal plan to avoid the 10% penalty? You can also withdraw Roth contributions without penalty at any time. You might also consider building a Roth ladder for 5 years and then tapping into that to get penalty free access to your retirement savings.

That is a good idea. I also decided to crunch some numbers tonight, that made me feel a bit better. So:

1. My expenses are pretty low (being debt free). So after I am paid severance and accrued vacation time, I should have around 6 months of pay. That is a LONG time looking for employment before I need to actually use my "own money".

2. I went into Vanguard (sort of a pain they do not make it easy), but I was able to put a spreadsheet together of all of my personal contributions to my ROTH IRA over the years. Looks like that could easily bridge the gap of 55-59.5 if I needed to do that. So nice to know I have options. (Because I can use my own contribution at any age no tax or penalty)

 

[Gumby]

Your next path should be a position that allows you to save outside of your retirement accounts, so you can comfortably get to 59.5.

Look for a normal good salary job, and make it fun by knowing it's only a few years. Oh, and since you are 51, perhaps invest in a few clothes and stuff to look 45? Ask a woman you trust to be honest, and shave a few years off, can open up a few options (and yes I'd say this to anyone, man or woman. There is real ageism in employment after 50).

Along these lines, you also may want to scrub your resume of dates that can easily show your age, such as dates of graduation from schools.

 

[Koolau]

Your next path should be a position that allows you to save outside of your retirement accounts, so you can comfortably get to 59.5.

Look for a normal good salary job, and make it fun by knowing it's only a few years. Oh, and since you are 51, perhaps invest in a few clothes and stuff to look 45? Ask a woman you trust to be honest, and shave a few years off, can open up a few options (and yes I'd say this to anyone, man or woman. There is real ageism in employment after 50).

Age 50 did seem a "magic number" at Megacorp. You could likely stay and get a paycheck but promotion and even raises were scarce. My boss (my age of early 50s at the time) had to move to another location to get a promotion. Not worth it to me.

Since I was "stuck" doing something I liked, I stayed - until my assignment changed. There were a few advantages to being ignored.

 

[Aerides]

Along these lines, you also may want to scrub your resume of dates that can easily show your age, such as dates of graduation from schools.

And learn to avoid dates in discussions. At my MC, it was customary to have roundtables and everyone would introduce themselves with how long they'd been there, or when they started.

The last time I said out loud that I'd been there for 20 years, my then-boss gave me a look that showed he instantly clocked I was then at least 40. I never made that mistake again.

I was hired there in 1990. I realized it was better to say I started "in the 90s" if asked, and avoided ages and numbers completely wherever possible.

 

[Diogenes]

...I have been through this twice in my career so far, and was very much hoping to avoid it, but just a few years short. I am 51, and was targeting 55 (so I can use the rule of 55).


...However much I might contribute (or not) to my retirement accounts at this point, really does not move the needle very much, in terms of how much money will be there after 4 years. I will make considerably more on the percent gain of the portfolio than anything I would add at this point. So what I am thinking is, the amount of salary that I make at this point, is sort of irrelevant? As in, as long as I can make enough to pay my bills for the next 4 years, that is fine. ...

Fellow traveler here... almost identical story, almost identical self-remonstrations.

First, the shock and disappointment of layoff, cloud our judgment. Mine is still clouded. Second, as others have noted, it's likely that years or decades later, we'll reminisce about the present, realizing, that we were excessively stressed, that the money-situation evolved just fine... but pondering that now, in the present, doesn't entirely assuage our fears. The exhortation to "hang in there", is trite.

What's particularly caustic, is the sense of having gotten almost-there, and then getting sidelined... of completing 22 or 23 miles of a 26.2 mile marathon, and having to quit from an injury. While financially it's doubtless better to lose one's job now, than 5 or 10 years ago, psychologically it feels worse, because we were oh-so-close, almost there, almost done, almost an unblemished record... but not quite. Financially, the loss is small. Psychologically, it is enormous!

But the true emollient of our worries, is right-there, in your post. Whether we're at the 22nd mile or approaching 26.2, the ratio of portfolio, to gross annual W2, is large. Additional savings, even if aggressive, is dwarfed by organic progress (not always upwards!) in the portfolio. Our task becomes, seeing how long we can hold a withdrawal rate of 0%. That's all that a new job needs to provide!

 

[Global Wizzo]

Thanks to everyone for their suggestions and thoughts. I forgot to mention that I have around 125k in a non retirement bank account. So I will be fine for a very long time. Not quite to 55. Then again... maybe I can. Like I said it is a very wierd place to be. My biggest problem will be mental not financial. Need to find things to do with myself during the day. So many jobs are going completly virtual too... cannot do it... I miss faces... and I hate talking to a screen.

I’ve got a friend that was in a similar position in that he needed minimal income to meet expenses. He did a little consulting for a year and signed on full time with another company at a good salary.

He took all the extra and maximized the SS, dumped money into his IRAs and ROTH, matched company match and significantly built his wealth over a few years.

Hope you can find something fun with good benefits. If so, work it to the max advantage.

 

[orbops]

I had some similar financial savings. I decided to retire at 50 and had 1.7M with the split of 85/15. No debt, and was making over 100K when I retired. If you have enough cash and non-retirement investments to get you to 59.5, then you should be OK.

It's been 7.5 years, and now it is worth about 3.8M due to the recent dip. Retiring was the best thing I've ever done. I've changed my allocation to 70/30, and I do small Roth conversions each year (about $35K) to reduce RMDs when I hit 75. My wife and I get my health insurance through the Marketplace for about $30/month for a bronze plan.