Stressed/Job loss/Retirement possible?

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jamgand
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Stressed/Job loss/Retirement possible?

Post by jamgand » Fri Dec 07, 2018 11:39 am

I have been in the shadows for a long time on this website. Along with Jonathan Clements website I must say I have received quite the education. In fact, I feel I should donate financially to this site. Maybe a moderator can help me with that. This website has been a lifesaver.
I am posting because with a twist of unexpected events, I am in a dilemma of what to do and actually may need to retire about 10 years earlier than expected. I am looking for advice as to the following issues:

Some facts:

• My husband and I are 51 and 49 respectively. He is losing his job due to a company selling and will be out of work in the next 90 days with no pension.
• I am currently out of work after my company closing. I have health and dental coverage through 9/2019 but no pension.
• Our income in 2018 will be about $250,000. Soon to be zero until we find other jobs, which will be difficult due to a very specialized background. So likely we may be able to achieve about $75K next year combined.
• We have 1 child age 13, college bound hopefully. We have saved $110K for this in a 529 and think this will cover about half (which is what we tell him he will get from us)
• We have invested (after realizing how much our broker stole from us over the years) in 4 low cost vanguard index funds. We have a 65/35 stock to bond allocation
• Total assets are $2.95M. These assets are about 1.3M in taxable accounts, the rest in tax deferred accounts (401K and soon to be IRA’s)
• Allocation is 70/30 (bonds)
• Home is paid off and worth $325,000
• We have no debt
• I / we did not expect this employment scene to unravel so fast. We plan on taking a job (or two) essentially for health and dental coverage and some income to cover taxes, other utilities etc.

Questions:
1. Can we comfortably retire NOW with $100k spending annually assuming we can cover health care with a job (regardless of pay)?
2. Neither of us have health issues (knock on wood) but figure health care is likely the single biggest reason to keep working in some capacity, otherwise we would deduct about $18,000 from our PRE-TAX income of $100k

3. We are totally stressed out and this hit us about 10 years prior to what we thought originally. I guess I am looking for advice and to some degree, reassurance.

4. Has anyone retired early in similar situations? We are very worried we likely cant retire and our assets are at an absolute peak in the stock market.

thanks

Brit
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Re: Stressed/Job loss/Retirement possible?

Post by Brit » Fri Dec 07, 2018 12:40 pm

Hi Jamgand,

Have not been in that situation myself. Points in your favor are:

1. Good portfolio at ~$3m

2. $100k per year withdrawal would be under the 4% Safe Withdrawal Rate (SWR) - lots of good posts on SWR.

3. I plugged you numbers into this SWR calculator, gives you 95% chance of success over 30 years -- you'll need more than 30 years
https://retirementplans.vanguard.com/VG ... ggCalc.jsf

4. You could reduce your annual withdrawal when you are entitled to Social Security.

You AA at 70/30 is aggressive, you may wish to adjust (over time) to something with less equities. I've asked MANY questions on that topic in this forum and ended up with shifting slowly over the next 8 years to 40/60, then add 1% equities each year in retirement to get to 50/50 AA and increase the success probability of portfolio.

Does that help?

Shallowpockets
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Re: Stressed/Job loss/Retirement possible?

Post by Shallowpockets » Fri Dec 07, 2018 12:51 pm

Aside from retiring, this is the lowest national unemployment rate in a loooong time, so you should be able to get jobs if this retirement plan does not sit well with you.

Rexindex
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Re: Stressed/Job loss/Retirement possible?

Post by Rexindex » Fri Dec 07, 2018 1:14 pm

If you are working for a few more years and assume an income of $100,000 from assets and an additional job income of $75,000 for a few years, doesnt that mean you are living off $175,000 annually? Am I missing something? Thats a lot of money.
“Attention is the rarest and purest form of generosity.” | — Simone Weil

Thegame14
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Re: Stressed/Job loss/Retirement possible?

Post by Thegame14 » Fri Dec 07, 2018 1:20 pm

First sorry for your job losses. Second congrats on such a great level of savings. I think they best option is for you to find new jobs even at a reduced pay, just covering your living expenses plus 401K max and insurance would be enough to get you by for a few more years, and then hopefully some more market gains and will be in an even better position to retire. You probably could retire now, but if you can work a few more years even at just maxing 401K and covering living expenses, you should be fine.

Also if your income is going to be zero for a year, might be a good year to do a roth conversion.

jamgand
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Re: Stressed/Job loss/Retirement possible?

Post by jamgand » Fri Dec 07, 2018 1:30 pm

Thegame14 wrote:
Fri Dec 07, 2018 1:20 pm
First sorry for your job losses. Second congrats on such a great level of savings. I think they best option is for you to find new jobs even at a reduced pay, just covering your living expenses plus 401K max and insurance would be enough to get you by for a few more years, and then hopefully some more market gains and will be in an even better position to retire. You probably could retire now, but if you can work a few more years even at just maxing 401K and covering living expenses, you should be fine.

Also if your income is going to be zero for a year, might be a good year to do a roth conversion.
Thats a great idea. It helps me to actually take some concrete action steps after formulating a plan. Thanks for that suggestion,

btenny
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Re: Stressed/Job loss/Retirement possible?

Post by btenny » Fri Dec 07, 2018 1:59 pm

Sorry for your job loss but you need to be happy. Congratulations. Set back and enjoy. Your finances are in great shape. You and your husband can find play jobs that earn maybe $40k plus some access to health insurance and enjoy life. Think ski instructor or Uber driver or church secretary or golf shop clerk or ???? Then spend $60K of your savings to supplement this small income. Call it semi-retirement. Do this for a year or so while you look for better work. Or do this long term until you get close to 60-65 and full retirement. Enjoy life. You have done a wonderful job. The key is to stop worrying and think about options.

I also suggest you reduce your AA to 50/50 or 40/60 soon. This reduces your risk. You have won the game so you no longer need to take that much stock risk.

I retired early at 52 for different reasons a long time ago. I did part time play work for 5 years because it was fun. My wife kept her job for three years. We had way less money. We have had a ball.

Good Luck.

Time2Quit
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Re: Stressed/Job loss/Retirement possible?

Post by Time2Quit » Fri Dec 07, 2018 2:22 pm

Sorry to hear about your situation, but congratulations on saving as much as you have. I am in the same boat at moment, deciding if I should look for work or start enjoying retirement. It is very hard to crack that egg that you have built up and shift to the ducumulation phase.

Deciding on an asset allocation is the key, I know a lot of of posters on this site state 50/50 or 40/60, with your age you could potentially have a 50 year retirement horizon.

I am not advocating this but some sites who focus on early retirement have stated you will need somewhere in the 70/30 AA with a 3% SWR for a long retirement horizon.

FWIW, I still have not decided on a final AA and need to do so soon.

FoolMeOnce
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Re: Stressed/Job loss/Retirement possible?

Post by FoolMeOnce » Fri Dec 07, 2018 2:34 pm

Thegame14 wrote:
Fri Dec 07, 2018 1:20 pm
Also if your income is going to be zero for a year, might be a good year to do a roth conversion.
But also keep in mind the cutoff for qualifying for ACA subsidies.

Also consider that when deciding whether to take a low-paying job with health insurance. It might not be as valuable as it seems, though still probably a decent idea. But you are in pretty good shape to not panic about how to proceed.

pdavi21
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Re: Stressed/Job loss/Retirement possible?

Post by pdavi21 » Fri Dec 07, 2018 2:38 pm

Probably. It depends on your spending.

When you suggest that you will pay xx amount for health insurance or yy amount for college, you should consider 1) the chance that costs may vary significantly and 2) you are not obligated to spend as much, if anything, on most things (even health insurance and college). You should just consider/acknowledge, that if you don't have enough income to support your current lifestyle (it seems you do), you will either cut back or go back to work.

Beehave
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Re: Stressed/Job loss/Retirement possible?

Post by Beehave » Fri Dec 07, 2018 3:01 pm

Sorry about your job losses. This happened to me, but I was older at the time and within retirement range - - just premature for me. I wanted to continue in my field, but despite a very solid resume and interviews at top organizations and companies - - no job.

Posts above have very good suggestions. Any work with benefits would be a big plus. Even work without benefits, including part-time, woud be a big plus because any income is better than no income. Certainly, also, be sure to get whatever unemployment pay you can. Roth conversions before age 65 and at today's reduced tax rates also make excellent sense.

Under your family's current circumstances, the $110,000 529 plan balance should not be planned to cover 1/2 of undergrad expenses. The effort should be CAREFULLY made, your child's participation included, to lay out a plan for that money to cover all undergrad and as much of grad school (if it's in the offing) as possible.
Some suggestions:
- Two years of community college. I've attended and taught at top-notch state universities, which are obviously superior to community colleges in many ways. But what can significantly mitigate the delta in overall quality are (1) finding the smart, CC faculty members who are highly skilled AND want to be teaching (and especially appreciate the highly motivated students in their classes) and (2) the small class sizes. Together with the cost savings, these factors can be compelling. I now teach part-time at a community college and am experienced in what I'm suggesting.
- If your child is an outstanding student or athlete or musician, consider smaller second-tier private schools. See if your child can score a significant four-year scholarship. If your child has some career in mind, the idea is to convey through the application and interview process (and mind you, I believe this should only be done with sincerity) the idea that this prospective student will be successful in their career and bring credit to the school and have loyalty to the school. One of my children took this path (rather than low-cost state school) and has been successful in her career and remains a loyal alumna. If there's enough financial support from a small private school, then as with the community college path, this path offers small classes and faculty more closely in tune with undergraduate education.

Plan realistically for all possibilities regarding your future employment. I hope you and your husband get employment you enjoy real soon, and I especially wish you happiness regardless of your employment.

delamer
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Re: Stressed/Job loss/Retirement possible?

Post by delamer » Fri Dec 07, 2018 3:27 pm

There are two stages to your retirement — 1) pre-Social Security and 2) Social Security and later.

To get to Social Security, all your spending (plus income taxes) has to come out of your savings. Depending when you take SS, you will need to spend roughly $1.5 million (excluding taxes) to get through the first stage.

Once SS starts, you will need to take less from your savings to get to your $100,000 (plus taxes). Your SS will be reduced if you don’t work at all or work at jobs that have substantially less earnings.

So take a hard look at your numbers — including income tax rates and SS benefits. We don’t really know enough to give you a good opinion.

You’ll probably find you’ll be a lot more comfortable with a job(s) that provide health insurance and cover some of your expenses.

The 4% SWR doesn’t fit your situation. First, it pertains to those retiring in their 60’s or later. Also, your withdrawal needs will vary in the two stages.

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Feb29
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Re: Stressed/Job loss/Retirement possible?

Post by Feb29 » Fri Dec 07, 2018 4:03 pm

I'm sorry to hear about your job loss. I was shocked when I was downsized at age 60. After unsuccessful job hunting for about a year on unemployment I decided to retire. My wife retired from her part-time job shortly after that. Our savings were not as large as I had planned, but they were enough to allow us to use a 3% withdrawal rate. Combined with our social security and a small pension we have have enough to live on. We have cut back on many expenses, and have found low cost ways to vacation and entertain ourselves.

Both my wife and I are very, very happy to be out of the workforce. Our stress level is much lower, and we have the time and energy do do the things we like. There are some really good ideas posted above. Crunch the numbers and see if it can work for you. Best wishes!

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Duckie
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Re: Stressed/Job loss/Retirement possible?

Post by Duckie » Fri Dec 07, 2018 7:50 pm

jamgand wrote: I feel I should donate financially to this site.
Support this Site

StopIroningShirts
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Re: Stressed/Job loss/Retirement possible?

Post by StopIroningShirts » Fri Dec 07, 2018 7:57 pm

I'm sorry to hear about the joint job loss, but in looking at your numbers you are in incredible shape to never work again (if that's what you want!).

I'd recommend taking some time off, take COBRA or ACA depending on cost/benefit, then figure out what you'd like to do. Working and earning something if it is 1) Mentally stimulating and fulfilling and 2) Gets you into a group plan makes your retirement plan almost bulletproof.

Regarding your asset allocation, I'd recommend you look into something I've heard termed an "equity glidepath". You need to have a higher level of equity for an extended retirement, but you should consider starting with a higher bond allocation (maybe 40% bonds) then increasing that up to a 75/25% over the first five years. The biggest risk to your plan is a large and prolonged draw down in the first five years.

You have a paid off house and no of work related expenses, so you probably have flexibility on that side.

Congratulations for your diligent savings. We're going through a pile of christmas-time company layoffs and I hate watching the human impact.

mary1969
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Re: Stressed/Job loss/Retirement possible?

Post by mary1969 » Fri Dec 07, 2018 8:13 pm

I was in a similar situations as you in 2010. My advise is take a deep breath and relax. I was a futures trader and after a long period of high income, could no longer make money. stay invested. you will sort this out.

there are part time jobs out there that give you health insurance in case you find it difficult finding a job or you want to do something else for a bit. i had a real difficult time changing careers, but eventually it happened. takes time, patience, and persistence. just wish i would have realized that financially there was no reason to stress, but i grew up with nothing and i always worry about money.

KlangFool
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Re: Stressed/Job loss/Retirement possible?

Post by KlangFool » Fri Dec 07, 2018 8:24 pm

OP,

1) In general, you should have at least 10 years of expense in fixed income. So, 10 X 100K = 1 million. Your AA should be at least 67/33. How much is your emergency fund in term of annual expense? You may want to adjust your AA to 60/40.

2) I would assume that both you and your husband earned 100K to 150K. I had been unemployed for more than 1 year a few times. It is my experience that it is easier to find a high paying job/contract/project at reduced hours than a low-paying job.

So, it might be easier for you and your husband to find

A) A 150K project/job/contract at 50% capacity paying 75K

than

B) A 75K full-time job.

I could found contract work at $65 to $100 per hour. But, I had no contract offer at $40 per hour.

This may or may not apply to you. In a highly specialized field, the opportunity is few and far in between. But, when the demand is there, you could be paid very well.

KlangFool

Time2Quit
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Re: Stressed/Job loss/Retirement possible?

Post by Time2Quit » Fri Dec 07, 2018 8:56 pm

Klang Fool,

So are you saying that as long as you have 10x withdrawals in safe FI you can invest the rest in equities?

KlangFool
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Re: Stressed/Job loss/Retirement possible?

Post by KlangFool » Fri Dec 07, 2018 8:57 pm

OP,

Stop reinvesting the dividend/interest income/distribution of your taxable account now. This will build up your cash reserve quickly.

KlangFool

HEDGEFUNDIE
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Re: Stressed/Job loss/Retirement possible?

Post by HEDGEFUNDIE » Fri Dec 07, 2018 8:59 pm

$3M plus a paid off house? Congratulations, you’ve won the game, whether you get new jobs or not.

KlangFool
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Re: Stressed/Job loss/Retirement possible?

Post by KlangFool » Fri Dec 07, 2018 9:02 pm

Time2Quit wrote:
Fri Dec 07, 2018 8:56 pm
Klang Fool,

So are you saying that as long as you have 10x withdrawals in safe FI you can invest the rest in equities?
Time2Quit,

You misinterpreted my answer. My answer was OP should have at least 10 years of expense in the fixed income. He/she may want to have more.

KlangFool

rgs92
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Re: Stressed/Job loss/Retirement possible?

Post by rgs92 » Fri Dec 07, 2018 9:12 pm

I would put about a million dollars (or more if needed) in an SPIA (joint life) to generate about $5000/month gross and then just withdraw from the leftover money (invested 60/40, like in Vanguard Balanced Index) as needed, just keeping an eye on extravagant spending.

Down the line, you should get decent twin social security payment (maybe around FRA time, ~age 67, say, or 70 if you are really motivated).

This should work out fine.

Why this approach? I think it is vital to have a healthy regular source of income (a paycheck equivalent) coming in each month to preserve your sanity and avoid doing anything rash or emotional with your money.

I know there are arguments math-wise and inflation-concerned about SPIAs, but believe me, the sleep-at-night factor is all important, at least IMHO.

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Watty
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Re: Stressed/Job loss/Retirement possible?

Post by Watty » Fri Dec 07, 2018 9:41 pm

jamgand wrote:
Fri Dec 07, 2018 11:39 am
3. We are totally stressed out and this hit us about 10 years prior to what we thought originally. I guess I am looking for advice and to some degree, reassurance.

My husband and I are 51 and 49 respectively. .....

Total assets are $2.95M. .......

Can we comfortably retire NOW with $100k spending annually assuming we can cover health care with a job (regardless of pay)?
Just for some perspective if you just put your money under a mattress you could pull $100K out each year for 29.5 years until you are 80 and 79.

That doesn't include Social Security or any earnings on your investments.

Once your kid is out of college your cost will likely go down too.

One thing that might help is to get your expected Social Security benefit from the Social Security website, when getting it be sure to specify that it is to be as if you stop working today since it defaults to assuming that you will keep working longer.

You can then take that number and and use this web site to get a suggested Social Security claiming strategy. This was created by a poster here who has written a book on Social Security.

https://opensocialsecurity.com/

It can vary but typically it makes sense for a couple to have one person start at 62 and then the other start theirs sometime between the ages of 66 and 70, usually closer to 70. This could mean that you will start getting that income in a dozen years or so.

You also have to look at your income needs at different ages. I have seen relatives get into their mid 70's and naturally slow down even though they were in relatively good health. At that point they had little desire to do things like travel and they were more interested in downsizing than buying new stuff so their expenses went way down until their health declined.
Last edited by Watty on Sat Dec 08, 2018 2:46 pm, edited 1 time in total.

Cleverusername
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Re: Stressed/Job loss/Retirement possible?

Post by Cleverusername » Sat Dec 08, 2018 1:09 pm

There are many psychological issues at play IMHO.

Emotionally at some point we must all deal with recognizing we are in the drawdown phase rather than the accumulation phase. In ones 50’s, with the assets you seem to have and no debt issues, it comes to living within ones means.

Healthcare is certainly a concern, but boredom may be equally as dangerous to your health.

I think you should take a moment and realize you could work in almost any capacity and receive healthcare with minimal needs for income other than covering expenses. If you can contribute to a 401k or 403b as well, that’s gravy. Don’t underestimate the challenge of going from 100mph to 0 work wise. Do something.

You’ve done well. Take a deep breath, you are in an envious position.

staustin
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Re: Stressed/Job loss/Retirement possible?

Post by staustin » Sat Dec 08, 2018 1:59 pm

Sorry for your job loss but you need to be happy. Congratulations. Set back and enjoy. Your finances are in great shape. You and your husband can find play jobs that earn maybe $40k plus some access to health insurance and enjoy life. Think ski instructor or Uber driver or church secretary or golf shop clerk or ???? Then spend $60K of your savings to supplement this small income. Call it semi-retirement. Do this for a year or so while you look for better work. Or do this long term until you get close to 60-65 and full retirement. Enjoy life. You have done a wonderful job. The key is to stop worrying and think about options.

I also suggest you reduce your AA to 50/50 or 40/60 soon. This reduces your risk. You have won the game so you no longer need to take that much stock risk.

I retired early at 52 for different reasons a long time ago. I did part time play work for 5 years because it was fun. My wife kept her job for three years. We had way less money. We have had a ball.

Good Luck.
excellent, wise advice

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ram
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Re: Stressed/Job loss/Retirement possible?

Post by ram » Sat Dec 08, 2018 4:14 pm

You are in a much better position than what you might think.
3.3% withdrawal of 3M is 100k which should be sustainable for 40 years.
A low stress job for at least one of you with a good insurance will be helpful. That way the other person can look for a somewhat better paying job that may not have insurance. ( ? Consultant in their own field with variable work flow)

One such job that comes to my mind is that of a "Medical Assistant". Median pay $15/ hr. Minimum educational requirement is high school graduate. Few MAs have a 4 year college degree. Somebody who (presumably) has a college degree and has (presumably) held a job paying >100K/year would be able to quickly learn on the job in a few months. These jobs come with good health insurance. My employer provides the same health insurance for me (physician) and my MA. The employer portion of my family insurance plan is about 15 K and my portion is 5 to 6K. Any employee working 80% (32hr/wk) has same health insurance benefits as a full time employee at my work place. There are plenty of job opportunities all across the country. A smart person can potentially graduate to a managerial position in smaller department in 3-4 years with a 50 to 75% pay increase. There are plenty of other job options in the health care field with additional 6 to 24 months of training that can be done while holding a job for 32 hrs/week.
Ram

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indexmonkey
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Re: Stressed/Job loss/Retirement possible?

Post by indexmonkey » Sat Dec 08, 2018 5:28 pm

You two are in the sweet spot of experience but not too old career wise.

Not sure what field you are in but if solidly educated and command good communication skills, I can’t see you doing less than entering a very fun time if you have the right attitude.

quantAndHold
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Re: Stressed/Job loss/Retirement possible?

Post by quantAndHold » Sat Dec 08, 2018 8:04 pm

Take a breath. You’ll be fine. You might read the wiki topics on the various methods of calculating safe withdrawal rates.

Much the same happened to me a couple of years ago. I left my job in January of 2017 at age 52, and decided to take 2017 off to reassess and figure out what to do next. Wife was already retired.

One of the things I discovered was that it was fairly easy to get short term contract work. The pay is less than what I was making as a FTE, but it is still a decent hourly rate, and it’s a W-2 job with insurance. If I wanted, I could work for a couple of months, then use COBRA for the next 18 months. At the moment, I’m happy enough with my lightly subsidized ACA plan, so I haven’t gone back to work at all.

At this point, I’m having too much fun living life to go back to work. We’re traveling a lot, doing things that matter to us and make a difference in the world, and we’re both in the best shape of our lives. There’s a whole big world outside of the cubicle I sat in for 30 years.

Good luck to you.

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Sandtrap
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Re: Stressed/Job loss/Retirement possible?

Post by Sandtrap » Sat Dec 08, 2018 8:16 pm

Excellent posts by "btenny", "delamer" and "watty".

Also: search the forum archives for the following:
1. ACA Subsidy Cliff
2. Sequence of Returns Risk
3. Retirement Red Zone (kitces)

As others have wisely stated and suggested:
1. Income supplement/employment until Social Security.
2. Part time/employment as needed for health insurance coverage until Medicare.
3. Adjust your 100k/annual income needs accordingly.

Good luck.
j

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htdrag11
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Re: Stressed/Job loss/Retirement possible?

Post by htdrag11 » Sat Dec 08, 2018 9:18 pm

Good news: you both have a much larger portfolio than us when we were at your age. Give yourself a pat on the back.

Bad news: My volunteering work involves in helping folks in transition. For the 45+, it's much tougher to find decent paying jobs but in your case, you do not need to match or come close to your current salaries. I took a 30% cut when I landed after 2.5 years in transition.

Suggestions: network, network and network. One effective way is volunteering. Let people know that you both are looking for work. Print a business card (Vistaprint always has coupons for 250 cards at $10). Do not blindly wasting too much time submitting resumes on the web. You need to create or spruce up your LinkedIn profile (with a headshot). Cleaned up your social media sites as well. Do not pay for any premium or hire a coach to rework your resume. When you asked 10 people about your resume, you will get 12 opinions. Learn how to interview in the 21st century. It's a totally brand new ball game. This site is free and I personally know this international job coach (low cost interviewing technique) since 2012 https://www.landingexpert.com/. He taught many classes in the Princeton adult school on the whole gamut of getting a job from soup to nuts.

Like most Bogleheads, living below your means would certainly help. I still find ways to cut cost after retiring in my 4th year. Keep firing your questions away here. Your AA is a bit high for your current situation. Once you find your comfort zone, then try to rebalance toward your new allocation.

BTW, thanks for reminding me to donate to this wonderful site.

jamgand
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Re: Stressed/Job loss/Retirement possible?

Post by jamgand » Sun Dec 09, 2018 10:20 am

rgs92 wrote:
Fri Dec 07, 2018 9:12 pm
I would put about a million dollars (or more if needed) in an SPIA (joint life) to generate about $5000/month gross and then just withdraw from the leftover money (invested 60/40, like in Vanguard Balanced Index) as needed, just keeping an eye on extravagant spending.

Down the line, you should get decent twin social security payment (maybe around FRA time, ~age 67, say, or 70 if you are really motivated).

This should work out fine.

Why this approach? I think it is vital to have a healthy regular source of income (a paycheck equivalent) coming in each month to preserve your sanity and avoid doing anything rash or emotional with your money.

I know there are arguments math-wise and inflation-concerned about SPIAs, but believe me, the sleep-at-night factor is all important, at least IMHO.
Thanks for all the comments. I do consider an annuity just for the psychological effect of knowing I can count on $4,000 of guaranteed income. But I just get scared of annuities as they seem to be frowned upon in similar circumstances.

Have others retired this early and gone, in part the annuity route? If so I would really like to hear about their decisions and how it has worked out.

quantAndHold
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Re: Stressed/Job loss/Retirement possible?

Post by quantAndHold » Sun Dec 09, 2018 10:33 am

jamgand wrote:
Sun Dec 09, 2018 10:20 am
rgs92 wrote:
Fri Dec 07, 2018 9:12 pm
I would put about a million dollars (or more if needed) in an SPIA (joint life) to generate about $5000/month gross and then just withdraw from the leftover money (invested 60/40, like in Vanguard Balanced Index) as needed, just keeping an eye on extravagant spending.

Down the line, you should get decent twin social security payment (maybe around FRA time, ~age 67, say, or 70 if you are really motivated).

This should work out fine.

Why this approach? I think it is vital to have a healthy regular source of income (a paycheck equivalent) coming in each month to preserve your sanity and avoid doing anything rash or emotional with your money.

I know there are arguments math-wise and inflation-concerned about SPIAs, but believe me, the sleep-at-night factor is all important, at least IMHO.
Thanks for all the comments. I do consider an annuity just for the psychological effect of knowing I can count on $4,000 of guaranteed income. But I just get scared of annuities as they seem to be frowned upon in similar circumstances.

Have others retired this early and gone, in part the annuity route? If so I would really like to hear about their decisions and how it has worked out.
I’ve thought about this (I’m a couple of years older than you). The main risk at our age is the counterparty risk, i.e. the risk that the insurance company goes broke in the next 50 years. Some states will backstop the insurance company, but it depends on the state, and amounts are often limited.

The decision I made was to consider a SPIA at 80 or 85. By then I’ll know a) in I’m still alive, and b) what my financial situation is at that time. And at 85, the odds of the insurance company I choose going broke while I’m still collecting is much lower.

aristotelian
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Re: Stressed/Job loss/Retirement possible?

Post by aristotelian » Sun Dec 09, 2018 11:17 am

I am sure you are in shock but anyone with $3m invested and a paid off house should be absolutely fine. You will just need to keep you expenses at a safe level and invest wisely. Rather than sorry for your job loss, I should say congratulations on your retirement.

btenny
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Re: Stressed/Job loss/Retirement possible?

Post by btenny » Sun Dec 09, 2018 11:28 am

I retired at 52 in late 1998. My MegaCorp gave me a small pension as part of my retirement package. That is paid out as an annuity from Prudential. I get a check every 1st of the month. It was a nice sum when I first retired but since it is not COLA indexed it has diminished in worth after 16 years (pension did not start until 55). My wife retired at 56 and took her pensions as well which are sort of like annuities. Hers pensions pay out almost what she was earning by check every month.

My plan was always to have "multiple sources" of money coming in during retirement with each source kicking in as we got older and give us regular "raises". So when I first retired for three years I spent only my fun job wages and my wife's salary and a little from my investments. Note three sources of income. Then when I got to 55 I got a "raise" by taking my pension and downsizing. Note four sources and lower expenses. Likewise my wife retired and took her pension to replace her salary at 56. When she turned 62 she got a "raise" and added her SS. When I turned 65 I got "raise" by going on Medicare and spending less on medical. When I turned 66 I got a "raise" by taking SS on my wife's account. When I turned 69.5 I got a "raise" by taking my SS. This year I turned 70.5. I got a "raise" by taking my RMD. In fact now we are "making" so much money we are now reinvesting some of the "income" rather than spending it all. I have more $$ in investment accounts now than when I retired.

Hope this story helps. Good Luck.
Last edited by btenny on Sun Dec 09, 2018 11:34 am, edited 2 times in total.

mouses
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Re: Stressed/Job loss/Retirement possible?

Post by mouses » Sun Dec 09, 2018 11:32 am

I haven't had time to read all the replies.

That happened to me, laid off as an engineer in my fifties. I encourage you to get some sort of job, maybe even part time, as you both may have a long time to live and medical and surprisingly dental expenses can be extraordinarily high in later years. Better to accumulate more savings now while you can, but enjoy semi-retirement as well.

Don't forget to apply for unemployment insurance, regardless of what HR says you may qualify.

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