Pending Layoff / Can I retire?

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ripvanwinklesf
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Pending Layoff / Can I retire?

Post by ripvanwinklesf » Thu May 31, 2018 2:12 pm

I am a newbie to this forum but a long time saver and FIRE proponent before I knew the term. I am early 40s and have 2 young children in the early stages of elementary school and a working spouse who is also in her early 40s. We live in an extremely HCOL city on the West Coast. We recently sold our 2 properties in that HCOL area - fearing a market top/limited upside from here scenario and wanting to lock in our real estate gains while needing to move for my wife's new job as well.

The sale included our primary residence and an investment property condo which we 1031 into a rental property in an adjacent slightly lower cost area with excellent schools. We are renting in the HCOL city for now as our kids finish up their elementary school and will reevaluate then but most likely move to the same area as our rental.

I spent a career in a high paying profession but got burned out and downshifted to career with better work / life balance (50-60 hours per week vs. 80-100 hours in prior career). After a few startups, I landed at a big tech company currently going through big reorg and likely big layoffs. It is highly likely I will be laid off - ~75% - due to political battles my side lost. My wife downshifted from similar high paying career to start a new corporate job that seems stable as the company has carved out a sustainable niche for the medium term future albeit in a steadily declining industry.

What I am trying to figure out is can I stop working for a W-2 or not - my dream is to work for stock for startups in a back office - Finance/Accounting/Operations leadership type role - that may not pay much or at all.

Here are our stats:
Current expenses, excluding rent: ~$3-6k per month - we eat in mostly but somehow the $ goes out the door with kids activities, travel, insurance, etc.
Rent: $6k per month for next 3 years or so, then will decide to rent or buy in same area as our rental property with likely the same ~$6k per month level
Total expenses trends around $9-12k per month
Wife earnings: $200k + ~$50k in cash and stock bonuses - stable, just started but these guys are known for never firing you so she plans to do for 10 years more - healthcare provided through her after I get laid off
My earnings: $170k + $75k in cash and stock bonuses - ending in next 6 months most likely
Pensions: None
Social Security: None to be counted on, for obvious reasons
Rental income: ~$500-$1k per month from rental property
Future outflows: College - potentially $100k per year per kid for 8 years of private college but who knows = big uncertainty!!!
Other: None for either set of parents as they are well off and positioned to handle their own healthcare and living expenses through their 90s

Assets:
Sale of primary home: $1.15mm cash (net after capital gains taxes)
Sale and 1031 of condo: $775k in net proceeds and 1031 exchanged into $1.6mm rental property in nearby area with great schools
Other Cash: $1.3mm in short term CDs, treasuries, checking, etc. (waiting for inevitable correction that never seems to come)
Deferred tax accounts: $1mm in 401ks - mix of low cost index funds and higher cost, more actively managed funds
Taxable accounts: $0.7mm in mostly equities - mix of low cost index funds and higher cost, more actively managed funds
Inheritance/Other Assets: None, not counting but possible

Liabilities:
Cars / Consumer debt: None, cars paid off / low mileage and pay off credit cards every month - expect to replace cars at $300*2=$600 per month but average down via 10 year holding period to $300 total per month
Rental property debt: $825k

Thoughts on ability to stop working for W-2 income - retire by working for stock at tech startups?
If so any advice to creating passive income to supplement my wife's income given everything seems frothy and overpriced!

ExitStageLeft
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Re: Pending Layoff / Can I retire?

Post by ExitStageLeft » Thu May 31, 2018 4:39 pm

Let me see if I have the big picture. If you get laid off tomorrow, you have:

Expenses: $144k ? p.a. (includes taxes?)
Income: $250k p.a. (plus rental income but let's ignore for now)
Amount saved each year: ?
EF: $1,300k
House proceeds: $1,150k
Retirement accounts: $1700k

I'm going to be blunt and state that you can't retire now. You're probably FI, but you need to put in some work figuring out expenses before deciding that you've reached an FU level of financial independence. But you are definitely in a position to consider it, or at least shift to a career path that allows riskier remuneration.

If you find the kind of opportunity you're looking for, try for at least $18,500 in wages that you can then dump into a 401k. Also explore the realm of tax implications should your startup go public, or whatever the lottery payout is for a smashingingly successful venture.

ripvanwinklesf
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Re: Pending Layoff / Can I retire?

Post by ripvanwinklesf » Thu May 31, 2018 5:21 pm

Thank you very much for your response / advice. Here is a better snapshot of big picture to answer your questions.

Expenses: $10k per month of spending, prior to taxes. Note: $12k=144k annualized is 1 out of every 12 months, most frequent is ~$9k-9.5k per month=108k-$114k annualized, so $10k=$120k annualized pre tax is very conservative and we can hit that level very comfortably.
Resident: CA - so 10% CA tax payer currently and in retirement
Current Combined income: $495k, we were making more and saving more but at this level we save ~$100k per annum after taxes, expenses, etc.
Post my retirement income: Wife only - $250k, after all in taxes and spending we save just $18.5k in her 401k. My income only RSUs or options with small salary but exclude to be conservative
Current cash: $2.45 million (tbd - waiting for correction but ideally low cost equity mutual funds)
Taxable accounts: $700,000 (~95% equities / 5% bonds)
Retirement accounts: $1 million (~100% equities)
Total Liquid Assets: $4.15 million
Rental value: $1.6 million
Rental Equity: $775,000
Total Net Worth: $4.9 million

yes, great point about the salary of $18,500 for 401k - thanks!

ExitStageLeft
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Re: Pending Layoff / Can I retire?

Post by ExitStageLeft » Thu May 31, 2018 5:58 pm

Sounds like you have circa 12 years until both kids are off to college. I'd think about what your assets would need to be at that time for you and DW to retire fully. Then look at what you have now. I'm sure you can make do with your wife's income until then, but you won't be adding much to your retirement accounts, especially if you are trying to save for kids' college too.

If a future relocation is in the cards, I'd say you're golden to coast for the next 12 years. If you plan to stay in the Bay area for the rest of your lives, well, I'd want to run some FIRECalc scenarios were I in your shoes. Cost of living there boggles my mind. :shock:

mac808
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Re: Pending Layoff / Can I retire?

Post by mac808 » Thu May 31, 2018 6:25 pm

You seem convinced a market correction is near. Maybe it is, maybe it isn't. If it is, remember that even though you are cash-rich you also have some downside exposure: how would you feel if the value of your $3.3m in equities & rental property fell by 50%? Your net worth could drop by $1.5m and there might be additional downward pressure on wife's income. Sometimes it can be helpful to think about these "personal stress test" scenarios.

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goingup
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Re: Pending Layoff / Can I retire?

Post by goingup » Thu May 31, 2018 6:47 pm

But you're not really looking to retire and sit on the couch. You dream of working for a start-up in hopes of hitting big.

You're in great financial shape. Your wife has a very solid job. I'm not even sure you included your rental income in the calculations. At your age I think you could take 2.5% of that $4m in perpetuity. (You really should develop a plan for getting that 2.45m invested however.)

Go for it! Give yourself a few years, if it doesn't pan out, get back on the treadmill.

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Kenkat
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Re: Pending Layoff / Can I retire?

Post by Kenkat » Thu May 31, 2018 7:31 pm

Your family income even with you not working is over $100k more than your current expenses so you in theory don’t really need to work. So that should free you up to pursue the startup idea. The $4 million or so can continue to grow as you don’t need to draw any of that down in the immediate future unless something happens with your wife’s job.

TravelGeek
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Re: Pending Layoff / Can I retire?

Post by TravelGeek » Thu May 31, 2018 7:37 pm

I assume your wife is okay with you "retiring" and her being on the hook for providing steady income and healthcare benefits?

ripvanwinklesf
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Re: Pending Layoff / Can I retire?

Post by ripvanwinklesf » Mon Jun 04, 2018 12:52 pm

That is a great point. Yes, as long as I am working hard in W-2 retirement for alpha / "outsized returns" vs. sitting on the couch...however, in our perfect world I would be negotiating my own layoff in 3-4 years vs. being pushed out the door in the next 6 months or so but what are you going to do...life rarely goes according to plan, right?

Globalviewer58
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Re: Pending Layoff / Can I retire?

Post by Globalviewer58 » Mon Jun 04, 2018 1:12 pm

There are so many startup failures that you stand a better than even chance of working for free if you accept employment for stock only. My friend showed me a resume with > 20 startup employers over about that same # of years. They all had a promising story and RSUs but eventually faded due to a variety of factors. Salaries paid were competitive but the RSU ship sank in the harbor on EVERY one.

When the next downturn comes in the tech world you will find investors taking a holiday on funding many of the startups that today are funded based on abundant money and high hopes. You may hit the right ticket but hard to know which of the startups will succeed.

ripvanwinklesf
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Re: Pending Layoff / Can I retire?

Post by ripvanwinklesf » Mon Jun 04, 2018 1:20 pm

Globalviewer58 wrote:
Mon Jun 04, 2018 1:12 pm
There are so many startup failures that you stand a better than even chance of working for free if you accept employment for stock only. My friend showed me a resume with > 20 startup employers over about that same # of years. They all had a promising story and RSUs but eventually faded due to a variety of factors. Salaries paid were competitive but the RSU ship sank in the harbor on EVERY one.

When the next downturn comes in the tech world you will find investors taking a holiday on funding many of the startups that today are funded based on abundant money and high hopes. You may hit the right ticket but hard to know which of the startups will succeed.
I definitely agree/understand the survivorship bias issue with startups...it is only a lucky few that hit it and for every winner there are thousands of folks whose startups and RSU values have failed to ever materialize over a long silicon valley career. That is why I had planned to be 100% FI before taking the plunge. I had worked at two startups before and never made a cent other than my cash bonuses, and had gone to a big tech firm to get more cash compensation and hence lower risk savings/accumulation. :(

ripvanwinklesf
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Re: Pending Layoff / Can I retire?

Post by ripvanwinklesf » Mon Jun 04, 2018 1:45 pm

goingup wrote:
Thu May 31, 2018 6:47 pm
But you're not really looking to retire and sit on the couch. You dream of working for a start-up in hopes of hitting big.

You're in great financial shape. Your wife has a very solid job. I'm not even sure you included your rental income in the calculations. At your age I think you could take 2.5% of that $4m in perpetuity. (You really should develop a plan for getting that 2.45m invested however.)

Go for it! Give yourself a few years, if it doesn't pan out, get back on the treadmill.
Exactly. Yes, thank you. I agree wholeheartedly....I don't have a crystal ball and realize I can never time the markets (if I did I would be in Hawaii sipping mai tais worth 8 figures after collecting on my 2 and 20 fees managing lots of other people's money! :), but with CAPE multiples where they are today and interest rates potentially heading up toward still historically low levels from here significantly increasing our equities or bond allocations wouldn't seem to be a good idea at these levels. Real estate either as every deal I evaluate seems to have very low capitalization and cash on cash return levels even in the emerging tech and strong economic regions far outside the SF Bay / CA areas I have been scouring for months. I am pondering whether buying equities on big dips in my 401k contributions while buying laddered CDs/money market funds to preserve liquidity ahead of while trying to keep up with the official inflation rate the best way to position myself ahead of the bear market cycle in equities / real estate / bonds....working on IPS as well.

ripvanwinklesf
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Re: Pending Layoff / Can I retire?

Post by ripvanwinklesf » Mon Jun 04, 2018 1:48 pm

Kenkat wrote:
Thu May 31, 2018 7:31 pm
Your family income even with you not working is over $100k more than your current expenses so you in theory don’t really need to work. So that should free you up to pursue the startup idea. The $4 million or so can continue to grow as you don’t need to draw any of that down in the immediate future unless something happens with your wife’s job.
Thanks for taking the time to provide your feedback.

joylesshusband
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Re: Pending Layoff / Can I retire?

Post by joylesshusband » Mon Jun 04, 2018 1:49 pm

Kenkat wrote:
Thu May 31, 2018 7:31 pm
The $4 million or so can continue to grow
It might, if it was invested.
Currently, less than 1/2 of it is.
Retiring July 2018. Posting here purely for amusement.

ripvanwinklesf
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Re: Pending Layoff / Can I retire?

Post by ripvanwinklesf » Mon Jun 04, 2018 1:54 pm

mac808 wrote:
Thu May 31, 2018 6:25 pm
You seem convinced a market correction is near. Maybe it is, maybe it isn't. If it is, remember that even though you are cash-rich you also have some downside exposure: how would you feel if the value of your $3.3m in equities & rental property fell by 50%? Your net worth could drop by $1.5m and there might be additional downward pressure on wife's income. Sometimes it can be helpful to think about these "personal stress test" scenarios.
I agree. I was actually making a bit of a sarcastic remark about my own inability to time the markets - I should have put the word inevitable in quotations! :) Yes, I meant more that unless we are predicting an end to boom and bust after a record long bull market there will inevitably be another bust cycle and assuming historical data is meaningful mean reversion would take place sooner rather than later as the record bull market extends further and further...Yes, definitely anticipating a big drop but game plan is to buy into equities as the fall in price with a longer term view to capitalize on the next up cycle...the rental property was selected to be a long term value and refuge play - worst case, we could change our intent and live there ourselves down the road if we had to.

ripvanwinklesf
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Re: Pending Layoff / Can I retire?

Post by ripvanwinklesf » Mon Jun 04, 2018 1:56 pm

goingup wrote:
Thu May 31, 2018 6:47 pm
But you're not really looking to retire and sit on the couch. You dream of working for a start-up in hopes of hitting big.

You're in great financial shape. Your wife has a very solid job. I'm not even sure you included your rental income in the calculations. At your age I think you could take 2.5% of that $4m in perpetuity. (You really should develop a plan for getting that 2.45m invested however.)

Go for it! Give yourself a few years, if it doesn't pan out, get back on the treadmill.
Thank you for your time and feedback! I appreciate it.

ripvanwinklesf
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Re: Pending Layoff / Can I retire?

Post by ripvanwinklesf » Mon Jun 04, 2018 1:57 pm

joylesshusband wrote:
Mon Jun 04, 2018 1:49 pm
Kenkat wrote:
Thu May 31, 2018 7:31 pm
The $4 million or so can continue to grow
It might, if it was invested.
Currently, less than 1/2 of it is.
Aye, that is the rub and what I am trying to figure out...:)

grkmec
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Re: Pending Layoff / Can I retire?

Post by grkmec » Mon Jun 04, 2018 2:30 pm

ripvanwinklesf wrote:
Thu May 31, 2018 2:12 pm

Rental income: ~$500-$1k per month from rental property
You say this is 1.6mm property and you have 775k in equity tied up?

Using monthly midpoint, that is 9k in annual rental income? That is barely more than 1% return on equity. I hope there is a massive amount of principal amortization or else this seems like a not very good investment....

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macchiato
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Re: Pending Layoff / Can I retire?

Post by macchiato » Mon Jun 04, 2018 3:02 pm

Terrific position to be in. I would be afraid of having that much cash on the sidelines (and am in Tech in the Bay Area as well), there's no sign that companies around here are pausing hiring (at least the bigger ones).

I also think it's a poor time to get into startups at this point, with current annual decreases in funding and apparently good ideas. I have similar thoughts but would rather make hay while the sun shines and keep shoving money methodically into 401(k). I'll be thinking of joining a startup during chaotic post-downturn times (think 2010) when the, er, soil has been properly fertilized. 8-)

ripvanwinklesf
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Re: Pending Layoff / Can I retire?

Post by ripvanwinklesf » Tue Jun 05, 2018 6:03 pm

macchiato wrote:
Mon Jun 04, 2018 3:02 pm
Terrific position to be in. I would be afraid of having that much cash on the sidelines (and am in Tech in the Bay Area as well), there's no sign that companies around here are pausing hiring (at least the bigger ones).

I also think it's a poor time to get into startups at this point, with current annual decreases in funding and apparently good ideas. I have similar thoughts but would rather make hay while the sun shines and keep shoving money methodically into 401(k). I'll be thinking of joining a startup during chaotic post-downturn times (think 2010) when the, er, soil has been properly fertilized. 8-)
Nice to hear from a fellow traveler here. Great point, thanks. Yes, definitely agree the startups will stumble even while the larger tech firms hold up for longer if and when the next downturn materializes. Hopefully the layoff will not happen, and I will be able to save / accumulate for another few years, but the choice will not be mine unfortunately. To your point perhaps I should look for another full time or contractor big tech gig until the soil is properly fertilized to your point. My challenge is that I have a diverse but unfocused background, i.e. I haven't been doing corporate finance, strategy, Prod Mgmt, Sales/BD only for the past decade or so but have done all of these and more. Harder to find a place with that background. :)

aristotelian
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Re: Pending Layoff / Can I retire?

Post by aristotelian » Tue Jun 05, 2018 6:18 pm

How long is your wife planning to work? At 250k, she can easily cover your living expenses so I think you are probably fine. If she wants to retire too, then I am not sure. I would say yes for sure if you could reduce your cost of living in your new location.

neofight
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Re: Pending Layoff / Can I retire?

Post by neofight » Tue Jun 05, 2018 6:45 pm

ExitStageLeft wrote:
Thu May 31, 2018 4:39 pm
I'm going to be blunt and state that you can't retire now. You're probably FI, but you need to put in some work figuring out expenses before deciding that you've reached an FU level of financial independence. But you are definitely in a position to consider it, or at least shift to a career path that allows riskier remuneration.
Can you expand on why you said "can't retire now"? My napkin math made the answer pretty clear "you are FI" and FIREcalc suggests the same - presumably my math and/or use of FIREcalc is wrong - would be good to understand why since I'm doing similar calculus for me....

Inputs to FIREcalc:
Spending: $150k (this is the high end of his $9-12k/month X 12 months)
Portfolio: $5mm ($1m in 401k + $0.7mm in taxable + $1.3mm in CD/treasuries + $1.2mm cash from house + $0.8m in rental equity)
Years: 50 (currently mid 40s, so retiring to mid 90s == 50yrs)
=> 100% success rate assuming all else default, i.e. Constant Spending Power, omitting wife's 250k/year income for next 10 years, but also assuming his $5mm is invested
=> 100% with ongoing growing balances if you adjust for the $2.5m future earnings from his wife, add in SS, or swap to other spending profiles

Pretty much the only way he could fail would be to not put invest that cash.

Funny fact though: if you adjust FIREcalc to:
1. Assume wife's $250k/year covers all their $150k/year expenditures, so 'retirement' is deferred 10 years until 2028; and
2. Add in Social Security of the max for him, 1/2 for the spouse starting in 15 years;
3. And adjust the portfolio to put 100% of the assets into US LT Treasuries (i.e. something approximating cash); then
=> the success rate is STILL 100%

So why is he not at the FU point now? I ask, not to pick at your answer, but because this is the scenario (the expenses and assets, not the sitting-all-in-cash part :D) that I'm headed towards, and AFAICT when I hit $4mm I would consider it a clear FU point. So your saying $5mm assets isn't FU for $150k/year expenses, has me wondering.

ExitStageLeft
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Re: Pending Layoff / Can I retire?

Post by ExitStageLeft » Tue Jun 05, 2018 6:54 pm

neofight wrote:
Tue Jun 05, 2018 6:45 pm
Can you expand on why you said "can't retire now"? My napkin math made the answer pretty clear "you are FI" and FIREcalc suggests the same - presumably my math and/or use of FIREcalc is wrong - would be good to understand why since I'm doing similar calculus for me....
I got the impression from OPs first post that his expenses were ~ $12k per month, and he added additional detail in subsequent posts to refine his expenses and assets. It wasn't originally clear to me in that he had that firm grip on his expenses, hence the statement that until he does he shouldn't think of retiring. I probably could have worded that better. :oops:

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ClevrChico
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Re: Pending Layoff / Can I retire?

Post by ClevrChico » Tue Jun 05, 2018 6:59 pm

I think you have enough :moneybag to do pretty much whatever you want. You could always move to a really great LCOL area, and live like kings for $4k/month (or less). The public schools would be good too.

aristotelian
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Re: Pending Layoff / Can I retire?

Post by aristotelian » Tue Jun 05, 2018 7:13 pm

neofight wrote:
Tue Jun 05, 2018 6:45 pm
ExitStageLeft wrote:
Thu May 31, 2018 4:39 pm
I'm going to be blunt and state that you can't retire now. You're probably FI, but you need to put in some work figuring out expenses before deciding that you've reached an FU level of financial independence. But you are definitely in a position to consider it, or at least shift to a career path that allows riskier remuneration.
Can you expand on why you said "can't retire now"? My napkin math made the answer pretty clear "you are FI" and FIREcalc suggests the same - presumably my math and/or use of FIREcalc is wrong - would be good to understand why since I'm doing similar calculus for me....

Inputs to FIREcalc:
Spending: $150k (this is the high end of his $9-12k/month X 12 months)
Portfolio: $5mm ($1m in 401k + $0.7mm in taxable + $1.3mm in CD/treasuries + $1.2mm cash from house + $0.8m in rental equity)
Years: 50 (currently mid 40s, so retiring to mid 90s == 50yrs)
=> 100% success rate assuming all else default, i.e. Constant Spending Power, omitting wife's 250k/year income for next 10 years, but also assuming his $5mm is invested
=> 100% with ongoing growing balances if you adjust for the $2.5m future earnings from his wife, add in SS, or swap to other spending profiles

Pretty much the only way he could fail would be to not put invest that cash.

Funny fact though: if you adjust FIREcalc to:
1. Assume wife's $250k/year covers all their $150k/year expenditures, so 'retirement' is deferred 10 years until 2028; and
2. Add in Social Security of the max for him, 1/2 for the spouse starting in 15 years;
3. And adjust the portfolio to put 100% of the assets into US LT Treasuries (i.e. something approximating cash); then
=> the success rate is STILL 100%

So why is he not at the FU point now? I ask, not to pick at your answer, but because this is the scenario (the expenses and assets, not the sitting-all-in-cash part :D) that I'm headed towards, and AFAICT when I hit $4mm I would consider it a clear FU point. So your saying $5mm assets isn't FU for $150k/year expenses, has me wondering.
I think the large portion of the portfolio in cash and real estate is off putting. I would count the rental income against expenses but don't count the 800k as part of the portfolio. Hard to value cash and assess the expense. What if he buys another $1m house? I think he will be OK because that would reduce his expense, but it's hard to say with so much uncertainty. Also mentions kids college etc.

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whodidntante
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Re: Pending Layoff / Can I retire?

Post by whodidntante » Tue Jun 05, 2018 8:43 pm

If you have a net worth of 4.9 million, and you're told you cannot retire, you might be a Bogleneck. :happy

marcopolo
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Re: Pending Layoff / Can I retire?

Post by marcopolo » Tue Jun 05, 2018 8:49 pm

whodidntante wrote:
Tue Jun 05, 2018 8:43 pm
If you have a net worth of 4.9 million, and you're told you cannot retire, you might be a Bogleneck. :happy
+1

This does not seem like a financial/numbers issue, but rather a lifestyle/career/family dynamics issue.
Of course you can afford to retire and pursue Startups
Once in a while you get shown the light, in the strangest of places if you look at it right.

bltn
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Re: Pending Layoff / Can I retire?

Post by bltn » Tue Jun 05, 2018 9:19 pm

macchiato wrote:
Mon Jun 04, 2018 3:02 pm
Terrific position to be in. I would be afraid of having that much cash on the sidelines (and am in Tech in the Bay Area as well), there's no sign that companies around here are pausing hiring (at least the bigger ones).

I also think it's a poor time to get into startups at this point, with current annual decreases in funding and apparently good ideas. I have similar thoughts but would rather make hay while the sun shines and keep shoving money methodically into 401(k). I'll be thinking of joining a startup during chaotic post-downturn times (think 2010) when the, er, soil has been properly fertilized. 8-)
Having already been in two startups that didnt pan out, I would use the current environment to look for another job. Then continue to save for college and retirement. You would have some time to find a job you like that pays and has some security.
Stopping work now and finding another startup that succeeds is a long odds gamble for future wealth. In your current position , continuing to work and contribute your share to family savings should pretty much guarantee wealth and the option to retire comfortably in your mid 50 s. I would continue on your current path for a dozen years and then look at your options. One thing I ve learned: getting wealthy is more about continued accumulation and investment than about hitting a big score.
You re on your way. Keep going.
Best of luck.

CnC
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Re: Pending Layoff / Can I retire?

Post by CnC » Wed Jun 06, 2018 8:30 am

TravelGeek wrote:
Thu May 31, 2018 7:37 pm
I assume your wife is okay with you "retiring" and her being on the hook for providing steady income and healthcare benefits?
This is my only concern.


You are fine very very little reason to worry your wife makes more than enough to support both of you you have nearly enough to already be FI and could both cese work tomorrow if you choose to relocate out of state. And, your retirement will actually just be working for less money.

If your wife supports you and understands the implications, of being the main breadwinner.

Assuming she does make sure to earn at least 18500 +5500 for 401k and IRA contribution's that can be converted to Roth's.

ripvanwinklesf
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Re: Pending Layoff / Can I retire?

Post by ripvanwinklesf » Wed Jun 06, 2018 10:00 am

aristotelian wrote:
Tue Jun 05, 2018 6:18 pm
How long is your wife planning to work? At 250k, she can easily cover your living expenses so I think you are probably fine. If she wants to retire too, then I am not sure. I would say yes for sure if you could reduce your cost of living in your new location.
Thanks for your time / feedback. She really likes her new corporate gig and going into the office, getting paid a W-2, chit chatting around the water cooler, working with people she likes, having a corporate routine, etc. and actually tried a semi retirement and she hated it. She really likes and only feels comfortable working for a W-2. So we had considered both of us retiring and leaving to a LCOL area outside SF Bay Area but her new job requires her to be in the SF Bay Area (but not in SF city proper). So my sense is she will do this new corporate gig for a minimum of 10 years and quite possibly more. I am on the other hand not a big fan of the corporate life and hate politics and the BS. :)

ripvanwinklesf
Posts: 12
Joined: Thu May 31, 2018 9:18 am

Re: Pending Layoff / Can I retire?

Post by ripvanwinklesf » Wed Jun 06, 2018 10:07 am

bltn wrote:
Tue Jun 05, 2018 9:19 pm
macchiato wrote:
Mon Jun 04, 2018 3:02 pm
Terrific position to be in. I would be afraid of having that much cash on the sidelines (and am in Tech in the Bay Area as well), there's no sign that companies around here are pausing hiring (at least the bigger ones).

I also think it's a poor time to get into startups at this point, with current annual decreases in funding and apparently good ideas. I have similar thoughts but would rather make hay while the sun shines and keep shoving money methodically into 401(k). I'll be thinking of joining a startup during chaotic post-downturn times (think 2010) when the, er, soil has been properly fertilized. 8-)
Having already been in two startups that didnt pan out, I would use the current environment to look for another job. Then continue to save for college and retirement. You would have some time to find a job you like that pays and has some security.
Stopping work now and finding another startup that succeeds is a long odds gamble for future wealth. In your current position , continuing to work and contribute your share to family savings should pretty much guarantee wealth and the option to retire comfortably in your mid 50 s. I would continue on your current path for a dozen years and then look at your options. One thing I ve learned: getting wealthy is more about continued accumulation and investment than about hitting a big score.
You re on your way. Keep going.
Best of luck.
Thanks much appreciated and great point - the old tale about the tortoise and the hare is appropos. :) Your comment dovetails well with the other commenter who recommended staying with big tech for the cash savings/accumulation and waiting for a more opportune time to jump to a start up. I am more seriously considering looking for another big tech gig - maybe contractor vs. FTE to avoid the BS - and potentially pushing off the start up / pseudo retirement dreams for another few years after more reflection...

megabad
Posts: 362
Joined: Fri Jun 01, 2018 4:00 pm

Re: Pending Layoff / Can I retire?

Post by megabad » Wed Jun 06, 2018 11:06 am

ripvanwinklesf wrote:
Thu May 31, 2018 2:12 pm
Thoughts on ability to stop working for W-2 income - retire by working for stock at tech startups?
If so any advice to creating passive income to supplement my wife's income given everything seems frothy and overpriced!
Sure I think you can "retire" into a startup position. If you're income were to drop to zero, I would be concerned that you and family would not be ok with lifestyle change, but if you are receiving fair compensation (even if significantly less than current) I don't see much issue. My rough calcs have you currently with 150k leftover after spending and some retirement savings. If you're income dropped to zero and you were to live on just the spouse's, you would essentially have nothing leftover. That means to me that all your other needs (cars, college, etc) would have to come out of your cash nestegg. I don't see a problem with this but it may take some adjustment for you. I would suggest that remember that you might lose out on SS benefits with no W2 income, but SS is probably not a significant factor for your given your high expenses.

Also two steps I would take:
1) Determine you're desired asset allocation and invest the cash ASAP if it is not needed short term.
2) If you are ever going to buy a house, buy a house in your desired location before you lose your job (you may need the income to qualify for a large mortgage).

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