CarbonaNotGlue
Recycles dryer sheets
- Joined
- Aug 20, 2022
- Messages
- 56
Hi everyone. I’m a longtime lurker who has already done two years of OMY, but think I’m going to use a year end departure payoff as an incentive to make it final at the end of this year.
All my numbers check out with 100% in firecalc under all scenarios, thanks to being a debt free empty nester and having a pension that covers a majority of our yearly expenses, including employer subsidized healthcare (My expense numbers are solid as I have been tracking them for years with quicken). I even worked a cash flow/withdrawal schedule assuming average annual expense inflation of 6% for the next 20 years and I still come out with yearly cash flow in excess of expenses ranging from $60k to $30k with maximum withdrawals from investment accounts of no more than 1.5%, the higher years being due to excess cashflow coming from ira/Roth/401k retirement account withdrawals as my wife and I hit eligibility ages. We have a healthy mix of taxable and deferred retirement accounts in our portfolio, with the dividends in taxable accounts providing more than enough cash flow on their own if I choose to take them and not reinvest prior to age 59 1/2. This leaves my wife and I a nice cushion for travel and other fun.
However, I’m still struggling with the concept of retiring during a period of high inflation and economic uncertainty. What if inflation runs higher than the historical worst case 10 year average in the seventies and exceeds 9% for a decade? Unlikely, but who knows? My pension package is kind of quirky, not giving me a cola for the first 5 years, but then giving me a pretty decent one thereafter. Will this current inflationary period severely impair my pension in those first five years, causing me to rely more on withdrawals from my portfolio to make up the lost buying power? I have enough investments in my diversified equity portfolios to cover our increased expenses if inflation grew greater than my estimated 6% during those first 5 years but it would hurt to see my exit result in the severe impairment of my pension as part of my retirement cash flow.
What’s also killing me is the pile of money I’d be leaving behind. For example, the job has guaranteed me a 6% raise for the next two years if I stay on (it could be more based on my division’s performance, but not less). This also means, based on the quirky way my pension is calculated, that for each full year I stay, my pension will increase approximately $300 per month , making OMY all the more enticing.
On the other hand, I’m currently 56, have overseen my division for over 15 years, and am highly enticed by the thought of not having my life revolve around that and all the managerial demands that go with it. I don’t hate the job, and could continue on another OMY, but I would rather not and have really become enamored with turning the page on this phase of my life. Moreover, depending on which side of the family gene Pool I acquired, My lifespan will either be into the early 70s or I’ll make it to 100, so who knows how much time I really have to enjoy all of my accumulated investment assets.
All of this brings me back to that payout I mentioned previously. It will be in excess of $130k and will expire if unused by the end of this year. After that, the retirement payout will be $85k less. This is what is leaning me towards not going another OMY. I figured I could invest the net after tax amount of around $100k, since I don’t need the money (we currently maintain over $200k in cash available for one time expenses like a new roof, AC/Heating system, new car, etc). If all goes well, the investment returns should offset a small portion of what I’m giving up and give me a little more peace of mind walking away.
Well, that’s my story. Looking forward to contributing to the forum and getting your thoughts on my mental gymnastics. I know, I know - first world problems and we are blessed to have them.
All my numbers check out with 100% in firecalc under all scenarios, thanks to being a debt free empty nester and having a pension that covers a majority of our yearly expenses, including employer subsidized healthcare (My expense numbers are solid as I have been tracking them for years with quicken). I even worked a cash flow/withdrawal schedule assuming average annual expense inflation of 6% for the next 20 years and I still come out with yearly cash flow in excess of expenses ranging from $60k to $30k with maximum withdrawals from investment accounts of no more than 1.5%, the higher years being due to excess cashflow coming from ira/Roth/401k retirement account withdrawals as my wife and I hit eligibility ages. We have a healthy mix of taxable and deferred retirement accounts in our portfolio, with the dividends in taxable accounts providing more than enough cash flow on their own if I choose to take them and not reinvest prior to age 59 1/2. This leaves my wife and I a nice cushion for travel and other fun.
However, I’m still struggling with the concept of retiring during a period of high inflation and economic uncertainty. What if inflation runs higher than the historical worst case 10 year average in the seventies and exceeds 9% for a decade? Unlikely, but who knows? My pension package is kind of quirky, not giving me a cola for the first 5 years, but then giving me a pretty decent one thereafter. Will this current inflationary period severely impair my pension in those first five years, causing me to rely more on withdrawals from my portfolio to make up the lost buying power? I have enough investments in my diversified equity portfolios to cover our increased expenses if inflation grew greater than my estimated 6% during those first 5 years but it would hurt to see my exit result in the severe impairment of my pension as part of my retirement cash flow.
What’s also killing me is the pile of money I’d be leaving behind. For example, the job has guaranteed me a 6% raise for the next two years if I stay on (it could be more based on my division’s performance, but not less). This also means, based on the quirky way my pension is calculated, that for each full year I stay, my pension will increase approximately $300 per month , making OMY all the more enticing.
On the other hand, I’m currently 56, have overseen my division for over 15 years, and am highly enticed by the thought of not having my life revolve around that and all the managerial demands that go with it. I don’t hate the job, and could continue on another OMY, but I would rather not and have really become enamored with turning the page on this phase of my life. Moreover, depending on which side of the family gene Pool I acquired, My lifespan will either be into the early 70s or I’ll make it to 100, so who knows how much time I really have to enjoy all of my accumulated investment assets.
All of this brings me back to that payout I mentioned previously. It will be in excess of $130k and will expire if unused by the end of this year. After that, the retirement payout will be $85k less. This is what is leaning me towards not going another OMY. I figured I could invest the net after tax amount of around $100k, since I don’t need the money (we currently maintain over $200k in cash available for one time expenses like a new roof, AC/Heating system, new car, etc). If all goes well, the investment returns should offset a small portion of what I’m giving up and give me a little more peace of mind walking away.
Well, that’s my story. Looking forward to contributing to the forum and getting your thoughts on my mental gymnastics. I know, I know - first world problems and we are blessed to have them.
