Offered a Package at 57

[raven1]

I'm 57 and have been offered a package a little earlier than expected. Company usually offers a retirement package every five years and we are at four since the last. I have been there almost 30 years and have been offered 58 weeks of pay. Wife (56) works at the same company and is definitely going to take the package (she gets 20 weeks of pay). Her job is very stressful, where mine is pretty manageable and I work from home most of the time. The package also comes with 12 months of subsidized Cobra. One of our kids has graduated and looking for his first job (living with us) and second kid is a sophomore in college.

Assets:
$400K taxable
$1.2M 401K - me
$1.2M 401K - wife
$900K lump sum pension - me
$1M Home ($220k mortgage)
$700K vacation/future retirement house ($450k mortgage)

401Ks are light because we were too conservative and always expected a crash at some point. Pension lump sum is down about $300k from a few years ago due to high interest rates.

I'm sure most people would say take it, but I have been hit with a wave of fear and a little depression when thinking about walking away. We would need to sell our primary house we've had for more than 20 years, which frees up $700k and significantly lowers expenses. We would not be able to travel much immediately because my 87 year old parents, who are in bad health, refuse to move from their house for better care. I need to be around to help them. When they pass, I will probably inherit around $1M.

I don't think we would pay off the house we would be moving to as the mortgage rate is 3%. A guess at yearly expenses would be about $75k in retirement plus a couple more years of college expenses.

I definitely don't want to wait 5 years for the next package, but it's still hard to walk away from a good salary and a pension that would grow with more time and lower interest rates.

I have 2 months to decide for a late March 2024 departure date. Would you do it?

 

[Dash man]

Well, I left without a package a year younger than you with about the same assets. So you know my answer.

 

[pb4uski]

... I have 2 months to decide for a late March 2024 departure date. Would you do it?

Without hesitation.

Well, I left without a package a year younger than you with about the same assets. So you know my answer.

+1 I left without a package at 56 with less assets. You have all you will ever need given your described spending.

You'll have more time to help and appreciate your parents for whatever more time they have left and less stress in your life.

 

[DrRoy]

You are around a 2% WR. Go.

 

[chris2008]

A blessing in disguise.
We left paid work with 55/62, 10 years ago.

We were able to enjoy this time together. Priceless.


When my mom, high in her 80s, learned about some of our travel plans she argued that we could just wait till she would not be around any more. We replied "Would you like us to sit and wait in anticipation for you to be gone? " That was the end of such discussions. We made nice trips, organised her care in assisted living and she passed peacefully last August at 94.
As DH has developed some health scares and walking issues in future we cannot do trips like we did in the past but we adapt. We have more money than ever but it gets difficult to spend with joy.


Jump, the water is great!

 

[freedomatlast]

Your yearly expenses are estimated at $75,000/yr now. What do you expect them to be in retirement? I'd spend a little more time honing in on what your expenses are projected to be including the upcoming college expenses and if new vehicles will be needed including any other higher than normal upcoming expenses.

In my case, through the working and saving years, we lived relatively frugally spending about $75,000/yr. But in retirement we travel, don't skimp on what we want, allow ourselves occasional luxuries and this year expenses are going to total about $150,000/yr.

I think you are in good shape if your spending will remain consistent, but you probably don't want to be in a position where you have to feel you need to deny yourselves occasional luxuries in retirement if you go early, especially since your job doesn't sound very stressful.

Some things to think about........

What are your plans and expenses for upcoming healthcare insurance till Medicare age?

Are you going to remain invested in relatively safe, historically lower yielding investments as you have stated was the reason for current lower than optimal 401K balances?

Since you sound a little hesitant, are there any possibilities of consulting or part time work in your area of expertise to bridge the leap between full time work and full time retirement?

So, take another pass at evaluating your future potential spending and estimated future returns on investments.

I wish you all the best in whatever decision you make.

 

[Aerides]

Well, I left without a package a year younger than you with about the same assets. So you know my answer.

+1 I left without a package at 56 with less assets. You have all you will ever need given your described spending.

I retired at 46 on lesser assets. Similar savings, but no pension, no second house. Take the package. Don't rush to sell and move, take your time.

 

[Dtail]

Go for it.
I volunteered for a package at 55, did look for work, but calculated was good to go at 57.
Also had less assets than you at that age.
Retirement has been a blast and am never bored 6 years later.

 

[ERD50]

You are around a 2% WR. Go.

+1.

And that's w/o selling any home (unless the reduced expenses is how you got to $75K). But even if your expenses went up to $120K, that a pretty conservative 3.2% WR.

And what about Social Security? It sure seems you are set financially, what are you waiting for?

I will also question the $75K number, just make sure you've considered everything, including on-going 'lumpy' expenses, like car replacements, roof, HVAC, etc, health ins after Cobra, and taxes. But as I noted, you have a lot of leeway anyhow.

edit/add: Heck, if you do sell the primary home, that's another $700K I forgot to add - that makes those numbers even more conservative. what the HECK are you waiting for (end edit)

IMO, disregard the comments from others that say they retired with less. They are not you, you need to do what's right for you and your situation.

And don't be too 'conservative' with your investments. History shows that going below ~ 40/60 stocks/fixed can be hazardous to a long term portfolio.

-ERD50

 

[aaronc879]

The only thing that makes staying even a consideration is that you don't mind your job. It's manageable and you get to work from home. That is pretty nice. That said, you get a year of pay without having to work and it's a limited time offer. I don't think I could pass on that offer. You can afford to retire pretty easily so I would suggest you do so.

 

[ERD50]

Also, is lump sum the only option for the pension?

-ERD50

 

[RetiredAndLovingIt]

I worked for the same company for 38 years and with no warning whatsoever they came in one day and shut the office down and we were all unemployed. I got a small package, nothing like your offer, but that day turned out to be the best of my life. I've lost weight, I have no stress, I have no money worries and I do as I please. I was 58 at the time and was worth a lot less than you but my home was paid off.
This is the deal of a lifetime, take it. You've got a whole year still being paid to adjust and figure out the house situation before the money stops coming in.
You will probabaly also qualify for unemployment.

 

[MarieIG]

I'm sure most people would say take it, but I have been hit with a wave of fear and a little depression when thinking about walking away. We would need to sell our primary house we've had for more than 20 years, which frees up $700k and significantly lowers expenses. We would not be able to travel much immediately because my 87 year old parents, who are in bad health, refuse to move from their house for better care. I need to be around to help them. When they pass, I will probably inherit around $1M.

. . .

I have 2 months to decide for a late March 2024 departure date. Would you do it?

Me? No, not under those circumstances. (Two mortgages, one kiddo in college, DW retiring, and a low stress / work from home job.) You mention home value, but there is no guarantee that you will be able to sell it easily for the price you want, when you want.

I am not mentally hardwired the way some of the others are here. I needed my ducks in a row and wanted a feeling of security before casting off, i.e. the last step in my puzzle was getting down to one house. But - I came from a work environment with "don't let the door hit you on the way out" packages.

The one thing that I really liked about the package was the 58 weeks of pay.

Good luck with whatever you decide to do.

 

[imjustawarrior]

Think about how much fun you and your DW could have together if you were both retired.

I retired this year. My DW has been a SAHM. I can't wait until the kids are out of high school so we can hit the open roads more often.

Retirement is great.

I would spend the next month fine tuning expenses for the rest of your life to include health care and taxes. Then come up with a spending plan to cover expenses. Tools like firecalc.com and the Fidelity retirement planner can give you a good idea if you have enough money to retire.

 

[pacergal]

Why do you need to sell your primary home?
You have 2.4 million just in your 401ks, that alone would support $75K withdrawal.

Make sure your retirement budget is correct, do you have college monies set aside?
Have you answered the "can I retire" questions asked here?:

Early Retirement & Financial Independence Community > Community Forums > Early Retirement FAQs
Some Important Questions to Answer Before Asking - Can I Retire?

 

[zl55lz]

I'm 57 and have been offered a package a little earlier than expected. Company usually offers a retirement package every five years and we are at four since the last. I have been there almost 30 years and have been offered 58 weeks of pay. Wife (56) works at the same company and is definitely going to take the package (she gets 20 weeks of pay). Her job is very stressful, where mine is pretty manageable and I work from home most of the time. The package also comes with 12 months of subsidized Cobra. One of our kids has graduated and looking for his first job (living with us) and second kid is a sophomore in college.

Assets:
$400K taxable
$1.2M 401K - me
$1.2M 401K - wife
$900K lump sum pension - me
$1M Home ($220k mortgage)
$700K vacation/future retirement house ($450k mortgage)

401Ks are light because we were too conservative and always expected a crash at some point. Pension lump sum is down about $300k from a few years ago due to high interest rates.

I'm sure most people would say take it, but I have been hit with a wave of fear and a little depression when thinking about walking away. We would need to sell our primary house we've had for more than 20 years, which frees up $700k and significantly lowers expenses. We would not be able to travel much immediately because my 87 year old parents, who are in bad health, refuse to move from their house for better care. I need to be around to help them. When they pass, I will probably inherit around $1M.

I don't think we would pay off the house we would be moving to as the mortgage rate is 3%. A guess at yearly expenses would be about $75k in retirement plus a couple more years of college expenses.

I definitely don't want to wait 5 years for the next package, but it's still hard to walk away from a good salary and a pension that would grow with more time and lower interest rates.

I have 2 months to decide for a late March 2024 departure date. Would you do it?

It sounds like you are more concerned about what to do in retirement than being overly concerned with the financial picture.

I might have missed it, but I didn't see you state when you can retire if it is not related to a "package." You stated you do not want to wait 5 more years for another package deal. There is no guarantee they will offer another package deal in the future. The fact that they are offering one after 4 years instead of the usual 5 would get my attention, i.e., what exactly is going on?

Just some comments: Only you can make a best decision for yourself. In my own situation, I retired at about age 54. I will tell you for me it took a good year to adjust from the routine and pace.

Things can change. If there are things a person wants to do--travel, etc., your age could be a great time. I wanted to do such things too, but then suddenly came years of caretaking for my in-laws, then my spouse's health went south, badly.

Now being in late 60s, I can assure you that these past years went unbelievably fast, and looking back, those years would be prime years for traveling, etc.

As an aside, I would not count on an inheritance for planning. In my State, a million dollars would pay for about 4 years of Nursing Home for two and one never knows how long parents will live.

Or oneself or spouse. But everyone is different. Some people dread their jobs, while for others it is like playing, very enjoyable and fulfilling, and they want to work until much older and do their fun as they go.

Another thing is health insurance. It seems you will need to use ACA for many years for the entire family after COBRA? I personally would look into that cost for self and spouse and children?

As to what I would do having been through it? A package like that is rare. I would have taken an option like that and paid much more attention to traveling while the situation was right for it.

Sometimes just making a decision one way or the other helps see how one really feels. And of course, I listen to my spouse as well. A spouse usually knows a person better than anyone else on earth.

 

[38Chevy454]

My opinion, you are being too conservative. Between your package and the current savings, you are good to go. You've been working hard saving and putting up with work to this point in your life. Go enjoy not working.

 

[Masquernom]

A few comments;

1) Your budget guess at $75K per year seems way too low to me. You really need to take a look at your spending. I bet you're spending significantly more than that per year now.

2) You better research health insurance costs. Individual policies are not cheap.

You probably have enough funds to retire, but it may not be as comfortable a retirement as you think, unless you've really got a handle on your true retirement expenses.

 

[Midpack]

I left at the same age with less $ and no package, so you could.

But I would NOT be guessing at expenses, that needs to nailed down, along with your health care plans once COBRA runs out. Expenses need to include everything including taxes, medical expenses, and those big but infrequent expenses some people forget to budget for (replacing cars, replacing roof-HVAC-appliances-furniture-TV/consumer electronics, remodel/relandscape, travel?, etc.).

 

[scrinch]

After you and your wife claim SS benefits, pretty clearly you can afford retirement. Based on the size of your 401k's and pension (reflecting decent salaries), the SS benefits are likely to cover much of your projected $75k expenses. So will you be claiming those benefits in 5-6 years or 13-14 years? How long do your current assets have to carry the full load of your expenses?

 

[raven1]

Thanks so much for all of the comments! Like many have said $75K annual expenses in retirement is too probably too conservative. I am at about $125K now with 2 houses. If I sell my primary house, I will have about $1M to go through before I have to start cashing in retirement money. I think we will take SS beginning at age 62 instead of waiting. One other issue I am dealing with is an older sibling who did not save for retirement and now can't work because of health issues. Not sure how much I may need to help money and time-wise.

I am definitely leaning toward taking the deal. Even-though the job isn't too bad, I am locked in front of a computer all day instead of experiencing life. I will probably never spend the money I make next week. Can't wait for every day to be Saturday.

 

[easysurfer]

Congrats!

Can tell I've been FIRE'd for sometime as when I saw package on the topic line, my mind automatically thought "Amazon Package" .

 

[Exchme]

Thanks so much for all of the comments! Like many have said $75K annual expenses in retirement is too probably too conservative. I am at about $125K now with 2 houses. If I sell my primary house, I will have about $1M to go through before I have to start cashing in retirement money. I think we will take SS beginning at age 62 instead of waiting. One other issue I am dealing with is an older sibling who did not save for retirement and now can't work because of health issues. Not sure how much I may need to help money and time-wise.

I am definitely leaning toward taking the deal. Even-though the job isn't too bad, I am locked in front of a computer all day instead of experiencing life. I will probably never spend the money I make next week. Can't wait for every day to be Saturday.

Congratulations, you have plenty to retire and severance of over a year is just irresistible.

I do think you need to do some modeling, with a year of severance, a pension or $900K lump sum, plus the equity in your current home, you are going to have about $2M in taxable, so you will probably not need to tap your 401Ks before RMD ages. If you invest in a normal fashion, the 401Ks could triple or quadruple by the time RMDs are due. It seems to me a better plan would be to have at least the higher earner wait until 70 and do Roth Conversions in the meantime. As a starting point, I would be looking at conversion to the top of the 24%/28% bracket through age 62. Once you turn 63, you will be subject to IRMAA surcharges on your AGI. That is very annoying as it happens in stair steps and it works like an additional 4-5% marginal tax cost for any serious attempts to cut down your 401K balances. Taking Social security also interferes with the ability to do any meaningful Roth Conversions by increasing the tax cost of doing them.

Opensocialsecurity.com can give you a feel for the tradeoffs on SS claim dates, though it doesn't know about other tax interactions like Roth Conversions.

 

[skyking1]

Congratulations, that is a really big hint you just got. Go with it.

 

[cyber888]

Will you keep your 2 houses, or sell one? What's the plan - keeping 2 mortgages ?