Threw me a curve [unexpected layoff]

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Topic Author
oldandintheway
Posts: 2
Joined: Wed Sep 11, 2019 8:07 pm

Threw me a curve [unexpected layoff]

Post by oldandintheway » Thu Sep 26, 2019 5:28 pm

Hi All,
I'm new to Bogleheads, single, 63 years old, and I was recently laid off as part of a workforce reduction. I have an 11 week severance and a 6 month emergency fund. In addition, I have two 401K's, a small TDA IRA, a small TDA Roth IRA and $18,000 in an HSA with $10,500 of that (HSA) invested in an S&P 500 Index fund. My plan is to live frugally and try to remain positive while seeking gainful employment. At the same time I want to be realistic in that I may never find gainful employment again. I'm flexible as far as relocation goes and I've already placed my house on the MLS but I have not started an active job search yet and probably won't until I check the requirements for unemployment compensation. I will most likely need to begin withdrawing from 401K #2 (the only one that allows partial withdrawals) in the not too distant future, as well as start receiving dividend payments from 401K #1 instead of doing the DRIP. I can also start receiving 2 small pensions worth a total of $7780/yr in the next 11 months. I've always planned on waiting until I'm at least 68 before starting SS and that hasn't changed. The bad news is I don't have health or dental insurance and I can't imagine paying for it while I'm unemployed, but I'm open for feedback. I have budgeted $1700/month (maybe as low as $1550/month) excluding health insurance, to live on until I can figure things out. Last year I was in the 22% Federal tax bracket. I recently moved to Nevada so I'm not sure about my state tax rate yet. My home is paid off but my HOA is $158/month payable quarterly and of course there are quarterly property taxes. My car is paid off but it's 16 years old and starting to limp a bit. I don't currently have any debt. I guess for starters, after having been brought to the Bogleheads site to satiate my curiosity regarding 3 fund portfolios, my main question is whether or not I would be better off rolling all my retirement savings into Vanguard funds in order to preserve wealth while taking $7500 to $12,000 per year in withdrawals, or continuing with what I've outlined above. I'm also curious about my AA's. I'm definitely worried about living in real poverty, as well as outliving my savings. On the other hand I'm no stranger to living below my means. I've outlined my financial situation below and it's accurate as of 2 weeks ago. I would be thrilled and very appreciative of your honest advice as it applies to my situation. Thank you in advance!

401K #1: (no yearly admin fees)
Money Market Fund - Standish Mellon $38,072.67 11.93% AA .052% Fee
Intermediate Bond Fund $24,436.31 07.66% AA .24% Fee
Northern Trust S&P 500 Index $147,784.84 46.33% AA .016% Fee
Northern Trust Small/Mid Cap Index $11,158.71 03.50% AA .05% Fee
Company Stock (1,266.25562 shrs) $97,562.21 30.58% AA .02% Fee
TOTAL $319,014.74 100.00%
Note: Company Stock DRIP currently paying $.9175/shr. I could elect to receive dividends of $4700/year rather than DRIP.
Note2: No withdrawals allowed. Keep it or roll it over?

401K #2: (approximately $300/yr admin fees in addition to the fees below)
Stable Value Fund $36,736.59 13.28% AA .33% Fee
Intermediate Bond Fund $52,762.11 19.07% AA .04% Fee
S&P 500 Index $98,970.30 35.77% AA .01% Fee
Small/Mid Cap Index $30,487.34 11.02% AA .05% Fee
Foreign EX US Index $57,758.58 20.87% AA .08% Fee
Total $276,714.92 100.00%
Note: Can take prorata withdrawals.
Note2: Approximately $2800 is in the Roth side of this 401K.

Naivety got me here!
IRA at TDA worth approximately $11,000 consisting of DRIP equities and $450 cash.
The only stocks that aren't down are MSFT and ZION. The rest are down considerably.
They pay these quarterly dividends:
SSW (90 x .125) $11.25
F (89 x .15) $13.35
MO (62 x .84) $52.08
MSFT (21 x .46) $09.66
ZION (70 x .34) $23.80
QEP (31 x .02) $00.62
MGTI (31 x .00) $00.00
---------
$110.76 Total Dividends ($443.04 per year or $36.92 per month)

Naivety got me here!
Roth at TDA worth approximately $8000 consisting of these DRIP equities and $500 cash.
The only stock that isn't down is ORI. The rest are down considerably.
They pay these quarterly dividends:
ORI (62 x .20) $12.40
SSW (110 x .125) $13.75
F (99 x .15) $14.85
MO (87 x .84) $73.08
QEP (86 x .02) $01.72
MGTI (53 x .00) $00.00
----------
$115.80 Total Dividends ($463.20 per year or $38.60 per month)

Pension #1: Age 64 (11 months away) $6100/year
Pension #2: Age 63 (Soon) $1681/year

I would like to wait until at least 68 before I claim SS.
SS @ 63 $1,881/ mo or $22,572/ yr
SS @ 64 $2,017/ mo or $24,204/ yr
SS @ 66.3 $2,412/ mo or $28,944/ yr
SS @ 68 $2,596/ mo or $31,152/ yr
SS @ 69 $2,787/ mo or $33,444/ yr
SS @ 70 $3,145/ mo or $37,740/ yr

TallBoy29er
Posts: 773
Joined: Thu Jul 18, 2013 9:06 pm

Re: Threw me a curve [unexpected layoff]

Post by TallBoy29er » Thu Sep 26, 2019 6:10 pm

Hello BH Friend!

First, I am sorry you got laid off at this time in your career. That is not easy to swallow, I can only imagine.

However, please take a deep breath. I read your post high level, and quite honestly, I think your financial situation is much better than your "worried about living in real poverty" statement says. In 5 years, you will have an income of almost $40k/yr with SS and your pensions. That is solid.

Can you tell us the value of your home? You may also want to take a small breather on selling so quickly without a plan on where to go, and what your next step is.

You may also want to share your monthly expenses that you project in retirement. It will be much easier for us to analyze with that information.

But again, breathe. Don't take hasty action. At a minimum, you have a solid base w/ SS and pensions, and Medicare is just around the corner. You have done well, good sir.

TallBoy29er
Posts: 773
Joined: Thu Jul 18, 2013 9:06 pm

Re: Threw me a curve [unexpected layoff]

Post by TallBoy29er » Thu Sep 26, 2019 6:15 pm

I forgot to include this in my response. Re keeping your 401k's, or consolidating, which would mean moving to an IRA. Personally, if the fees in the 401k's are not bad, and the options are ok, I would leave the funds there. Why? 401k's enjoy some slightly better protections than many IRA's. IRA protections are governed under state law, and many states do not have things like full creditor protection, which 401k's do (as they are covered by ERISA, under Federal code). I guess I would think a bit on 401k #2, as it has an annual fee of $300, but even that is small in the grand scheme, and your fund choices have low expense ratios. In sum, I would stay put in the 401k's.

averagelonghorn
Posts: 33
Joined: Sun Aug 26, 2018 8:26 pm

Re: Threw me a curve [unexpected layoff]

Post by averagelonghorn » Thu Sep 26, 2019 6:17 pm

I'll leave full reply to others, but especially since you DO plan to look for new employment, get on claiming unemployment. (As in call TOMORROW MORNING).

Every state is different; but when I was laid off, even though I got a decent severance, I was eligible for unemployment within 2 weeks of separation from my employer. This is in a state not particularly known for a generous safety net. It was small compared to previous paycheck; but it DOES put food on the table!

Also, I'd look into Cobra at least short term, and figure out the ACA landscape. (Possibly as soon as next year if you'll get subsidies at new small income.) I wouldn't consider health insurance optional at age 62; especially since you'll be Medicare eligible in 3(ish) years.

Otherwise; of course tighten your belt as best you can. Severance plus unemployment plus cutting out all non-essentials can actually be stretched quite a while.

How much do you expect to clear from sale of home? Are you SURE you want to sell? Are you SURE you'll qualify (and be able to afford) a comparable (or at least acceptable) rental if you sell your house tomorrow? (Truly don't want to dissuade you from selling if that's right, but not enough detail to say whether having your house on the market now is the right decision; to me it's a little like the reverse side of the coin to advice in case of a windfall.... you just went through a major change; but is selling and moving the right decision? What if the day after your sale closes you get a good job in the same area? Waiting even a little while while you get the job hunt going might not be the worst thing. (I'm a real estate agent... if you called me tomorrow and wanted to sell, of course I'd list your property and do my best to sell it; but I WOULD ask that same question: If I sold your house tomorrow, would you have somewhere to go?)

I'll let others offer portfolio advice. (But will say, I'm confused by you not being able to sell and withdraw from one of your 401(k)s.... Just haven't ever seen one where it's all or nothing after age 59 1/2.... Double check those rules On initial glance, your ERs in both those plans don't look too bad, and for some of the funds they look superb! Wouldn't be in a huge hurry to change them up, but surely others will have advice to optimize and consolidate if that's what you want to do.
Last edited by averagelonghorn on Thu Sep 26, 2019 6:17 pm, edited 1 time in total.

mjb
Posts: 129
Joined: Sat Nov 30, 2013 11:43 am

Re: Threw me a curve [unexpected layoff]

Post by mjb » Thu Sep 26, 2019 6:17 pm

Pause for a second. This has happened to plenty of my friends and family. As was already said, you are in good financial shape. Don't make any hasty decisions, especially without a plan.

Take things one at a time. First, look into unemployment. Then assess living expenses and start looking for a job. I also recommend finding a way to bring down your annual 401k fees, likely through a transfer.

Of my family and friends than have gone through this at this stage of life, some find a new job, other retire early, and a few find something part time that they enjoy that gets them by.

epictetus
Posts: 557
Joined: Sat Mar 10, 2007 6:43 pm

Re: Threw me a curve [unexpected layoff]

Post by epictetus » Thu Sep 26, 2019 6:18 pm

let me encourage you to mentally step back from the situation and take a few deep breaths before you make any major decisions/take any big actions.

what are your monthly expenses now/what are they going to be? that is a key piece of info we need.

if i read correctly you have almost 600,000 in 401ks and will be getting a decent amount from the pensions. depending on your expenses you might be able to make it on your pensions alone. and then later will be social security. and then you still have almost 600,000 in the 401ks.

so i think you are in a much better situation than your mind is telling you you are in.
Focus on what you can control

eer_no_evil
Posts: 37
Joined: Thu Jun 29, 2017 1:50 pm

Re: Threw me a curve [unexpected layoff]

Post by eer_no_evil » Thu Sep 26, 2019 6:19 pm

Sorry you're dealing with all of this.

Agreed, tough pill to swallow- not sure selling the house so quickly is the right move- may want to consider keeping it, turning it into a rental - transactions costs always kill you and renting a cheaper place while you get back on your feet with the new job hunt.

I wish you good fortune.

delamer
Posts: 9344
Joined: Tue Feb 08, 2011 6:13 pm

Re: Threw me a curve [unexpected layoff]

Post by delamer » Thu Sep 26, 2019 6:25 pm

Sorry about your layoff.

You need health insurance. Have you found out what the cost would be under COBRA to continue under your company’s plan? That would get you almost to — or maybe all the way to — Medicare eligibility.

I’d suggest you set up a spreadsheet showing your income sources for each year (including your severance and unemployment) and your expenses. The difference is what you’ll need to withdraw from your savings. I suspect you’ll find that you’ll be OK, given your modest expenses.

Consider rolling over both 401(k)s for simplicity’s sake.

dknightd
Posts: 1878
Joined: Wed Mar 07, 2018 11:57 am

Re: Threw me a curve [unexpected layoff]

Post by dknightd » Thu Sep 26, 2019 6:32 pm

File for unemployment.
Brush up your resume. Start looking for a new job.
Combine as many 401k as you can to your preferred provider. This will make those funds easier to track.
Getting laid off might be a blessing in disguise. Use your severance to figure out if you really want to work for money any more.
Last edited by dknightd on Thu Sep 26, 2019 6:38 pm, edited 1 time in total.

User avatar
whodidntante
Posts: 6710
Joined: Thu Jan 21, 2016 11:11 pm
Location: outside the echo chamber

Re: Threw me a curve [unexpected layoff]

Post by whodidntante » Thu Sep 26, 2019 6:37 pm

oldandintheway wrote:
Thu Sep 26, 2019 5:28 pm
my main question is whether or not I would be better off rolling all my retirement savings into Vanguard funds in order to preserve wealth while taking $7500 to $12,000 per year in withdrawals
Welcome to the forum.

Consolidating your assets in an IRA would likely make sense. A Vanguard IRA is fine if that's where you want to be. Some 401ks have an attractive stable value fund, and you cannot buy stable value funds within an IRA. I'm not sure what you mean by "preserve wealth" though. Vanguard has funds that have a high degree of risk, and funds with a low degree of risk. It's a matter of which funds you pick.

It doesn't seem your assets would support a lot of spending, but if you just need 12k a year as mentioned above you have no problems. I doubt it's that low though. Look at cutting waste from your spending, within reason. Post your expenses here if you want some tips.

If I were in your situation I would look hard at starting a business to supplement my income. Nothing capital intensive. No 20 unit apartment complexes. You can't stand the risk. Basically, sell your labor or do knowledge work if you have lucrative skills. I wouldn't consider Uber/Lyft, I think neither they nor you make much money from that. List your skills and then brainstorm about how you can make money from them. Then see if you can get orders for your services or doodads. An extra two grand a month coming can make a world of difference.

aristotelian
Posts: 6487
Joined: Wed Jan 11, 2017 8:05 pm

Re: Threw me a curve [unexpected layoff]

Post by aristotelian » Thu Sep 26, 2019 6:41 pm

I agree, we need to know more about your spending but you are in good shape with pension and SS providing a solid floor of income for you.

Your investments are all tax advantaged I believe, so it should be easy to determine the portfolio you want and set it up. You know what a three fund portfolio is, so it is time to get rid of those individual stocks and buy the portfolio you want. Roll over those 401ks into your Traditional IRA and simplify.

The main thing I would start thinking about is the withdrawal strategy since the Lion's share of your portfolio is in pre-tax accounts.

If you are able to work part time, look to build up your Roth funds while you are in a low tax bracket.

TallBoy29er
Posts: 773
Joined: Thu Jul 18, 2013 9:06 pm

Re: Threw me a curve [unexpected layoff]

Post by TallBoy29er » Thu Sep 26, 2019 6:42 pm

whodidntante wrote:
Thu Sep 26, 2019 6:37 pm
oldandintheway wrote:
Thu Sep 26, 2019 5:28 pm
my main question is whether or not I would be better off rolling all my retirement savings into Vanguard funds in order to preserve wealth while taking $7500 to $12,000 per year in withdrawals
Welcome to the forum.

Consolidating your assets in an IRA would likely make sense. A Vanguard IRA is fine if that's where you want to be. Some 401ks have an attractive stable value fund, and you cannot buy stable value funds within an IRA. I'm not sure what you mean by "preserve wealth" though. Vanguard has funds that have a high degree of risk, and funds with a low degree of risk. It's a matter of which funds you pick.

It doesn't seem your assets would support a lot of spending, but if you just need 12k a year as mentioned above you have no problems. I doubt it's that low though. Look at cutting waste from your spending, within reason. Post your expenses here if you want some tips.

If I were in your situation I would look hard at starting a business to supplement my income. Nothing capital intensive. No 20 unit apartment complexes. You can't stand the risk. Basically, sell your labor or do knowledge work if you have lucrative skills. I wouldn't consider Uber/Lyft, I think neither they nor you make much money from that. List your skills and then brainstorm about how you can make money from them. Then see if you can get orders for your services or doodads. An extra two grand a month coming can make a world of difference.
Why move to an IRA?

Also, without knowing expenses, why would you suggest that a new career (summed up your thoughts into a word) is needed? Sure, it would be a safety net, but is it necessary? I don't know enough to know.

frcabot
Posts: 211
Joined: Mon Mar 26, 2018 12:59 am

Re: Threw me a curve [unexpected layoff]

Post by frcabot » Thu Sep 26, 2019 6:42 pm

TallBoy29er wrote:
Thu Sep 26, 2019 6:15 pm
I forgot to include this in my response. Re keeping your 401k's, or consolidating, which would mean moving to an IRA. Personally, if the fees in the 401k's are not bad, and the options are ok, I would leave the funds there. Why? 401k's enjoy some slightly better protections than many IRA's. IRA protections are governed under state law, and many states do not have things like full creditor protection, which 401k's do (as they are covered by ERISA, under Federal code). I guess I would think a bit on 401k #2, as it has an annual fee of $300, but even that is small in the grand scheme, and your fund choices have low expense ratios. In sum, I would stay put in the 401k's.
This is 100% false. IRAs are protected under federal law up to $1.3MM and change, and ROLLOVER IRAs have unlimited federal protection in bankruptcy. Please check your information. I’ve seen this falsely repeated a number of times and it’s quite frustrating that this misinformation is being disseminated so carelessly.

TallBoy29er
Posts: 773
Joined: Thu Jul 18, 2013 9:06 pm

Re: Threw me a curve [unexpected layoff]

Post by TallBoy29er » Thu Sep 26, 2019 7:01 pm

frcabot wrote:
Thu Sep 26, 2019 6:42 pm
TallBoy29er wrote:
Thu Sep 26, 2019 6:15 pm
I forgot to include this in my response. Re keeping your 401k's, or consolidating, which would mean moving to an IRA. Personally, if the fees in the 401k's are not bad, and the options are ok, I would leave the funds there. Why? 401k's enjoy some slightly better protections than many IRA's. IRA protections are governed under state law, and many states do not have things like full creditor protection, which 401k's do (as they are covered by ERISA, under Federal code). I guess I would think a bit on 401k #2, as it has an annual fee of $300, but even that is small in the grand scheme, and your fund choices have low expense ratios. In sum, I would stay put in the 401k's.
This is 100% false. IRAs are protected under federal law up to $1.3MM and change, and ROLLOVER IRAs have unlimited federal protection in bankruptcy. Please check your information. I’ve seen this falsely repeated a number of times and it’s quite frustrating that this misinformation is being disseminated so carelessly.
I cede to the gentleman above. This is what I had learned in the past. However, a quick online search shows that my point-of-view went out of date in 2005 (BAPCPA). Thank you, kind sir, for pointing out my carelessness (although perhaps not in a non-adversarial way). Peace out -

User avatar
whodidntante
Posts: 6710
Joined: Thu Jan 21, 2016 11:11 pm
Location: outside the echo chamber

Re: Threw me a curve [unexpected layoff]

Post by whodidntante » Thu Sep 26, 2019 7:06 pm

TallBoy29er wrote:
Thu Sep 26, 2019 6:42 pm
whodidntante wrote:
Thu Sep 26, 2019 6:37 pm
oldandintheway wrote:
Thu Sep 26, 2019 5:28 pm
my main question is whether or not I would be better off rolling all my retirement savings into Vanguard funds in order to preserve wealth while taking $7500 to $12,000 per year in withdrawals
Welcome to the forum.

Consolidating your assets in an IRA would likely make sense. A Vanguard IRA is fine if that's where you want to be. Some 401ks have an attractive stable value fund, and you cannot buy stable value funds within an IRA. I'm not sure what you mean by "preserve wealth" though. Vanguard has funds that have a high degree of risk, and funds with a low degree of risk. It's a matter of which funds you pick.

It doesn't seem your assets would support a lot of spending, but if you just need 12k a year as mentioned above you have no problems. I doubt it's that low though. Look at cutting waste from your spending, within reason. Post your expenses here if you want some tips.

If I were in your situation I would look hard at starting a business to supplement my income. Nothing capital intensive. No 20 unit apartment complexes. You can't stand the risk. Basically, sell your labor or do knowledge work if you have lucrative skills. I wouldn't consider Uber/Lyft, I think neither they nor you make much money from that. List your skills and then brainstorm about how you can make money from them. Then see if you can get orders for your services or doodads. An extra two grand a month coming can make a world of difference.
Why move to an IRA?

Also, without knowing expenses, why would you suggest that a new career (summed up your thoughts into a word) is needed? Sure, it would be a safety net, but is it necessary? I don't know enough to know.
Investment choice, costs, and ease of access.

I suggested start a business that is not capital intensive because the OP mentioned a desire to seek employment. But in some situations, it can be better to start a business. I have done that myself when the world didn't think I was worth very much. If OP can get a great job in a reasonable amount of time, do that.

User avatar
JoeRetire
Posts: 3951
Joined: Tue Jan 16, 2018 2:44 pm

Re: Threw me a curve [unexpected layoff]

Post by JoeRetire » Thu Sep 26, 2019 7:09 pm

oldandintheway wrote:
Thu Sep 26, 2019 5:28 pm
I'm new to Bogleheads, single, 63 years old, and I was recently laid off as part of a workforce reduction.
Sorry to hear that.
At the same time I want to be realistic in that I may never find gainful employment again.
Sorry. I don't understand that at all. You aren't being realistic.

If you want to work, you can. It may not be as lucrative as you would prefer, but there are plenty of jobs out there that a 63 year old could fill. My wife is 64 and she just started a part time job after choosing among many possibilities.
I've already placed my house on the MLS
Why? Were you planning to move before being laid off?
but I have not started an active job search yet and probably won't until I check the requirements for unemployment compensation.
Call your local unemployment office now. No need to wait.
The bad news is I don't have health or dental insurance and I can't imagine paying for it while I'm unemployed, but I'm open for feedback.
Don't be foolish. It's okay to skip dental insurance, but you absolutely must remain insured for health. Skimp elsewhere. The quickest and surest road to poverty is via uninsured medical expenses.

I was almost 63 when I was diagnosed with cancer. It cost more than $28k for each of my 1.5 years worth of infusion treatments, not even considering all the tests and doctors visits. I wouldn't want to pay that bill out of pocket.
Last edited by JoeRetire on Thu Sep 26, 2019 8:32 pm, edited 2 times in total.
Don't be a lemming.

stan1
Posts: 7744
Joined: Mon Oct 08, 2007 4:35 pm

Re: Threw me a curve [unexpected layoff]

Post by stan1 » Thu Sep 26, 2019 7:13 pm

Re Health Insurance: You know your health history but you are 63 which is close to 65 and Medicare. You can get COBRA for 18 months. I'd at least get a quote. How many months until you turn 65? COBRA may get you all the way to 65.

frcabot
Posts: 211
Joined: Mon Mar 26, 2018 12:59 am

Re: Threw me a curve [unexpected layoff]

Post by frcabot » Thu Sep 26, 2019 7:15 pm

TallBoy29er wrote:
Thu Sep 26, 2019 7:01 pm
frcabot wrote:
Thu Sep 26, 2019 6:42 pm
TallBoy29er wrote:
Thu Sep 26, 2019 6:15 pm
I forgot to include this in my response. Re keeping your 401k's, or consolidating, which would mean moving to an IRA. Personally, if the fees in the 401k's are not bad, and the options are ok, I would leave the funds there. Why? 401k's enjoy some slightly better protections than many IRA's. IRA protections are governed under state law, and many states do not have things like full creditor protection, which 401k's do (as they are covered by ERISA, under Federal code). I guess I would think a bit on 401k #2, as it has an annual fee of $300, but even that is small in the grand scheme, and your fund choices have low expense ratios. In sum, I would stay put in the 401k's.
This is 100% false. IRAs are protected under federal law up to $1.3MM and change, and ROLLOVER IRAs have unlimited federal protection in bankruptcy. Please check your information. I’ve seen this falsely repeated a number of times and it’s quite frustrating that this misinformation is being disseminated so carelessly.
I cede to the gentleman above. This is what I had learned in the past. However, a quick online search shows that my point-of-view went out of date in 2005 (BAPCPA). Thank you, kind sir, for pointing out my carelessness (although perhaps not in a non-adversarial way). Peace out -
Didn't mean to be a jerk about it. Sorry.

TallBoy29er
Posts: 773
Joined: Thu Jul 18, 2013 9:06 pm

Re: Threw me a curve [unexpected layoff]

Post by TallBoy29er » Thu Sep 26, 2019 7:16 pm

frcabot wrote:
Thu Sep 26, 2019 7:15 pm
TallBoy29er wrote:
Thu Sep 26, 2019 7:01 pm
frcabot wrote:
Thu Sep 26, 2019 6:42 pm
TallBoy29er wrote:
Thu Sep 26, 2019 6:15 pm
I forgot to include this in my response. Re keeping your 401k's, or consolidating, which would mean moving to an IRA. Personally, if the fees in the 401k's are not bad, and the options are ok, I would leave the funds there. Why? 401k's enjoy some slightly better protections than many IRA's. IRA protections are governed under state law, and many states do not have things like full creditor protection, which 401k's do (as they are covered by ERISA, under Federal code). I guess I would think a bit on 401k #2, as it has an annual fee of $300, but even that is small in the grand scheme, and your fund choices have low expense ratios. In sum, I would stay put in the 401k's.
This is 100% false. IRAs are protected under federal law up to $1.3MM and change, and ROLLOVER IRAs have unlimited federal protection in bankruptcy. Please check your information. I’ve seen this falsely repeated a number of times and it’s quite frustrating that this misinformation is being disseminated so carelessly.
I cede to the gentleman above. This is what I had learned in the past. However, a quick online search shows that my point-of-view went out of date in 2005 (BAPCPA). Thank you, kind sir, for pointing out my carelessness (although perhaps not in a non-adversarial way). Peace out -
Didn't mean to be a jerk about it. Sorry.
No worries. I honestly appreciate learning from you. A sincere "thank you" for that.

frcabot
Posts: 211
Joined: Mon Mar 26, 2018 12:59 am

Re: Threw me a curve [unexpected layoff]

Post by frcabot » Thu Sep 26, 2019 7:19 pm

epictetus wrote:
Thu Sep 26, 2019 6:18 pm
depending on your expenses you might be able to make it on your pensions alone.
I agree that OP is actually in a decent spot considering his savings, but I’m struggling to see how you think someone can survive on $7.7K per year (gross), when OP has already said his expenses are at least $1500-1700/month, NOT including health insurance. Health insurance alone is going to be about that.

To the OP, first of all, you have my sympathy. Being laid off is hard, not just financially but psychologically. You WILL get through this, so try to keep your chin up. And you’ll get through it even if you decide to retire early.

I agree with some other suggestions re consolidating to an IRA. You will lose access to the stable value fund but that’s easily replaceable. You have a sizeable allocation to your company stock that you’ll probably want to wind down for the sake of diversification. I haven’t done the math on your allocations to stocks/bonds, but you may want to consider a fairly conservative allocation until you find another source of income.

ACA plans can sometimes be cheaper than COBRA, and you may qualify for a subsidy as well (although I think there may be restricted eligibility for a subsidy if you are eligible for COBRA, I don’t remember all the rules). In any case, look into it because you might save some money there.

Apply for unemployment insurance.

Agree with others about not being too hasty to sell your home. I’m sure you could find work in a week if you wanted to. It might not be in the same field or at the wage you were making before, but there are definitely jobs out there to be had if you are willing to accept the psychological and financial sacrifice of a pay and title cut. Obviously you shouldn’t rush out and take the first job you can get, but that’s what unemployment insurance is for: to tide you over until you find a job that’s a good fit.

You seem like a pretty bright guy. Stay positive and don’t beat yourself up. You’ll make it through this.
Last edited by frcabot on Thu Sep 26, 2019 7:32 pm, edited 1 time in total.

User avatar
Watty
Posts: 17652
Joined: Wed Oct 10, 2007 3:55 pm

Re: Threw me a curve [unexpected layoff]

Post by Watty » Thu Sep 26, 2019 7:32 pm

oldandintheway wrote:
Thu Sep 26, 2019 5:28 pm
The bad news is I don't have health or dental insurance and I can't imagine paying for it while I'm unemployed, but I'm open for feedback. I have budgeted $1700/month (maybe as low as $1550/month) excluding health insurance, to live on until I can figure things out.
I don't know if it would be appropriate for you but just for brainstorming I knew several people that were laid off from IT jobs when they were in their late 50s or early 60s and they could not find another IT job. They ended up getting jobs as school bus drivers. It did not pay a lot but it had benefits and at least around here they are always looking for school bus drivers since it did not pay enough for people that needed a full time job.

They seemed to like the job since they got lots of time off during school holidays and with the benefits it was enough for a bridge job to retirement. I also know someone that had a job in a school cafeteria mainly to get benefits until they could get on Medicare.
oldandintheway wrote:
Thu Sep 26, 2019 5:28 pm
I would like to wait until at least 68 before I claim SS.
You can check this web site to get a suggested claiming strategy.

https://opensocialsecurity.com/

MJS
Posts: 419
Joined: Sat Aug 05, 2017 10:55 pm

Re: Threw me a curve [unexpected layoff]

Post by MJS » Thu Sep 26, 2019 10:04 pm

If you have a spare bedroom, consider finding a housemate. In most states, the money from renting is considered passive income (not wages,) so you continue to receive unemployment. Doing AirBnB is more iffy; some states definitely consider hospitality to be work.

Your public library can find out how your state defines having a housemate in terms of wages. Also, many public libraries have job centers with resume tools and seminars.

Topic Author
oldandintheway
Posts: 2
Joined: Wed Sep 11, 2019 8:07 pm

Re: Threw me a curve [unexpected layoff]

Post by oldandintheway » Thu Sep 26, 2019 11:00 pm

Thank you all for your comments. I truly do appreciate it. I thought I had posted a reply answering a few questions, but I guess not. Let me give it another try.

My house is worth approximately $255K plus or minus $5K, the expenses for selling will be 5% commission and traditional closing costs. I've only been in the house 2 months, and yes I did list it before losing my job. Mesquite NV is just not my cup of tea and it was more or less a panic buy after selling my house in Utah. So, now that I've lost my job I'm not in a hurry to sell, but figure if I did I could move to a metro area like Phoenix and be better off searching for a job in my field. I also have family in Florida and that may be an option.

I've checked all my options with 401K #1 and 401K #2.
401K #1 is either cash out or leave it alone but there is the option to take my dividends from the company stock.
401K #2 can be cashed out, left alone, or partially withdrawn from.
I can't combine or contribute to either 401K because I no longer work for either of those companies.

My current bare bones budget is around $1500/month and does not include health insurance:
HOA and Property Taxes: $304
Utilities: $400
Food: $275 (Probably more like $320)
Gas: $125
Misc: $300 (HO/ vehicle ins, etc.)
------------------------------------------
Total: $1404/ mo


My income while unemployed and pinching pennies is as follows:
Pension #1: $6100/year starting at age 64 (in 11 months)
Pension #2: $1680/year starting at age 63 (soon)
Dividends from 401K #1: $4750/year beginning 3/20/2020
Partial withdrawals from 401K #2: $7500/year ($6000/year after 20% Fed Withholding)

The idea behind all of this is to not need to withdraw more than $60,000 (@ $12K/year max) over the next 5 years from 401K #2. Hopefully, 401K #1 will have grown to over $340K by then, leaving me with two 401K's worth over $500K at age 68, at which time I'll probably take SS.

Curious what you think of my battle plan to muster through the down turn? It's all fairly high level and I haven't thought through all the minutia. Must admit my budget is probably going to be closer to $1650/month than $1404/month and that's still without health insurance.

User avatar
galawdawg
Posts: 272
Joined: Thu Dec 14, 2017 12:59 pm
Location: Georgia

Re: Threw me a curve [unexpected layoff]

Post by galawdawg » Fri Sep 27, 2019 6:38 am

If I understand correctly, all of your investments are in a 401k, IRA or Roth IRA. In that case, I would consider eliminating (or at least significantly reducing) your stock position in your former company unless there is a sound financial reason to hold those shares. If you were "downsized", perhaps that is an indicator that holding stock in your former company wouldn't be the best idea.

Also, you mention dividends as a source of income. However, if the dividend paying shares are in the 401k or IRA accounts, they are simply part of the basket of funds in those accounts as you only pay tax on them once withdrawn. If any dividend paying investments are in taxable accounts, by all means continue to use those as income, rather than reinvesting, as you are taxed on those at the time they are distributed even if reinvested.

The expense ratios aren't bad on your current holdings but I like simplicity and would consider doing a direct rollover of the 401k accounts into your existing IRA (or better yet, move everything to a low cost provider like Vanguard, Fidelity, etc) and invest in a two or three fund portfolio at an asset allocation you are comfortable with. By rolling them all over, you can make withdrawals on your timetable based upon your needs. I think it also makes re-balancing or adjustments to your allocation much simpler if everything is in one place in just a few low cost index funds.

As far as selling the house, you already listed it before your layoff due to your dissatisfaction with the area, so I'd say why stay where you aren't happy! Go ahead and sell it and put the funds in a taxable account (perhaps with a year or two needs in money market, the rest in index funds appropriate to your allocation). Then you can use your severance and the funds from the sale of your house for the next few years instead of pulling from tax advantaged accounts. I'd then recommend renting somewhere for awhile as you look for employment or contemplate the next steps in your adventure. Best wishes!

epictetus
Posts: 557
Joined: Sat Mar 10, 2007 6:43 pm

Re: Threw me a curve [unexpected layoff]

Post by epictetus » Fri Sep 27, 2019 11:56 am

frcabot » Thu Sep 26, 2019 7:19 pm

epictetus wrote: ↑
Thu Sep 26, 2019 6:18 pm
depending on your expenses you might be able to make it on your pensions alone.

I agree that OP is actually in a decent spot considering his savings, but I’m struggling to see how you think someone can survive on $7.7K per year (gross), when OP has already said his expenses are at least $1500-1700/month, NOT including health insurance. Health insurance alone is going to be about that.
*************************
you are exactly right. I misread the original post and thought that was a monthly pension amount (not a yearly pension amount).

thank you for catching my error.
Focus on what you can control

User avatar
Wiggums
Posts: 1961
Joined: Thu Jan 31, 2019 8:02 am

Re: Threw me a curve [unexpected layoff]

Post by Wiggums » Fri Sep 27, 2019 1:00 pm

Sorry for your job loss. I’d definitely apply for any benefits you can. Even a part time job will help you preserve some of your savings. You definitely need medical insurance.

I think you’ll be fine. Good luck to you...

delamer
Posts: 9344
Joined: Tue Feb 08, 2011 6:13 pm

Re: Threw me a curve [unexpected layoff]

Post by delamer » Fri Sep 27, 2019 3:05 pm

I think you need to do a realistic current budget that includes health insurance and assumes that you stay in your house until you hit Medicare eligibility.

That’s sort of your “worst case scenario” that keeps you with medical coverage and a roof over your head. I wouldn’t be in a hurry to sell your house because it is a known cost. Unless you have the option to move in with friends/family for even less than your current costs.

Once you know how much you’ll have left in your savings at Medicare time, then you can figure out how (and where) to go from there.

If you take Medicare and Social Security at 65, it looks like you’d have about $34,000 in gross income from pensions and SS. Plus roughly a 4% withdrawal from whatever is left in your savings, which probably will be around $500,000.

You can live on $54,000 a year if you buy another home that is worth roughly what you net after selling your current one, right?

That way, any work income that you obtain allows you to delay Social Security or reduces the withdrawals from your savings.

mark39
Posts: 61
Joined: Tue Dec 13, 2016 7:45 pm

Re: Threw me a curve [unexpected layoff]

Post by mark39 » Sat Sep 28, 2019 7:51 pm

I can't add anything earth shattering but my mom went thru the same thing in 2012 at age 62. A big difference is she was forced to retire which meant she received health insurance through a megacorp. Health insurance is not optional, in my opinion.

She had around $300k in her 401k that she hasn't touched and her social security covers all her expenses. I can't remember the exact amount but it's around $2700/mo currently. Recently she sold the house she lived in for 35 years but it wasn't a large sum. She has almost no knowledge of boglehead or any kind of investing principles. She simply doesn't live above her means. She never travels because she doesn't like to and doesn't have expensive hobbies. She does expensive medical issues and still is happy.

One thing I might add is even IF you don't find a new full time job there are almost certainly part time jobs you can do to earn some money. Eve a few hundred dollars a month will make a noticeable difference when unemployment runs out. This is assuming you never find another full time job which will depend a lot on your industry.

User avatar
Cyclesafe
Posts: 972
Joined: Wed Dec 31, 2014 1:03 pm

Re: Threw me a curve [unexpected layoff]

Post by Cyclesafe » Sat Sep 28, 2019 10:10 pm

I was laid off twice. I would echo the above: step back and assess before you actually do anything. Then do nothing for a bit longer.

If no other job with health insurance is readily apparent, figure out how you can bridge to Medicare. An ACA subsidy would be available if you limit your income to below 4X the federal poverty level. It's certainly worth a shot.
"Plans are useless; planning is indispensable.” - Dwight Eisenhower

csm
Posts: 308
Joined: Sun Mar 27, 2016 7:52 am

Re: Threw me a curve [unexpected layoff]

Post by csm » Sun Sep 29, 2019 1:41 pm

oldandintheway wrote:
Thu Sep 26, 2019 11:00 pm
So, now that I've lost my job I'm not in a hurry to sell, but figure if I did I could move to a metro area like Phoenix and be better off searching for a job in my field. I also have family in Florida and that may be an option.
I may have missed it above, but what is your field?

If you are considering Florida, one benefit is no state income tax. Also, if you are seeking a part-time job or bridge job until you qualify for Medicare, and don't need a significant income but just enough to supplement your existing assets and to get benefits, you may want to consider central Florida where there are always jobs for retirees in the tourist industry.

Someone upthread mentioned bus driving. On a similar vein, in Florida you could apply for jobs at Disney or Universal (bus driving, boat or monorail driving, retail, life guard, etc.). My husband and I know a few early retirees who work at Disney to stay occupied and earn a bit to supplement their pension income. My understanding is that they offer benefits and both are increasing minimum wage to $15 per hour. They have different work schedules including full time, part time, seasonal work. Both are expanding tremendously.

Apologies if this doesn't fit you skills - I didn't see mention of the field you are interested in.

Good luck.

DanFrancis
Posts: 15
Joined: Wed Jun 21, 2017 12:38 am

Re: Threw me a curve [unexpected layoff]

Post by DanFrancis » Mon Sep 30, 2019 2:47 am

I went through a similar situation and survived! Start collecting your unemployment benefits. Don't go a day without healthcare insurance--use Cobra and then ACA until Medicare. Look at the fees, but I would probably transfer my money to Vanguard. Hope you find a job you like, but you'll be fine even if you don't get one. Keep us informed...

Money Market
Posts: 105
Joined: Thu Mar 16, 2017 10:36 am

Re: Threw me a curve [unexpected layoff]

Post by Money Market » Mon Sep 30, 2019 4:11 am

Isn't it better for OP to leave his money in his 401k due to the creditor protection (outside of bankruptcy) for ERISA accounts? Each state has their own protection limit for IRAs. His fund choices are great and inexpensive too.

DanFrancis
Posts: 15
Joined: Wed Jun 21, 2017 12:38 am

Re: Threw me a curve [unexpected layoff]

Post by DanFrancis » Mon Sep 30, 2019 7:05 am

I didn't do the math, but it looked more expensive in his current investments. I have never considered bankruptcy for myself. It sounds like you know those considerations better than me. And if he goes without healthcare coverage, that could become a consideration.

Shallowpockets
Posts: 1426
Joined: Fri Nov 20, 2015 10:26 am

Re: Threw me a curve [unexpected layoff]

Post by Shallowpockets » Mon Sep 30, 2019 7:36 am

You can see his as an oppurtunity. You are 63. May be a good time to retire. Not everyone gets to call the shots on that. Same thing happened to my wife. Out the door from large layoffs at 58. IT was the profession. I say you should consider this because at 63 you may not find another job of the type you desire.
So look at in a new light. This is your time. All the years you worked and had retirement in your mind somewhere down the road and now that time has been put upon you.
Do not even think about moving until you settle your questions.
First and foremost is to deal with health insurance and unemployment. That is job 1. Today. Do not wait on these. Forget the IRA and money movement. That is secondary.
Go to ACA find out your eligibility. What you many pay. Have a comparison for any COBRA. Learn about it. Study it. Wife here is 65 now and has medicare, but her ACA was as low as $80 month. Huge savings that I doubt you could even touch with any COBRA. Maybe you won't get that rate where you live, but you NEED to know what it is.
Get on that unemployment ASAP. Cal or go to the office today. It is Monday. Do not waste time. Sooner you start recieving those benefits the better.
All your investments can just lie as they are. No need to think about them until you iron out the unemployment and health insurance.

deikel
Posts: 885
Joined: Sat Jan 25, 2014 7:13 pm

Re: Threw me a curve [unexpected layoff]

Post by deikel » Mon Sep 30, 2019 1:05 pm

mark39 wrote:
Sat Sep 28, 2019 7:51 pm
Health insurance is not optional, in my opinion.
+1

Certainly not at the OPs age (the older we get, the more parts of the machine start to fail) and a job loss is described as one of the most stressful events in life....so this is the time where health issues surface the most likely - do COBRA for a little while and until you have ACA in place (you qualify to sign up due to job and insurance loss).

Also, COBRA will cover you for three months after the job loss 'automatically' (I believe, please confirm), so you can pay after three months if nothing happens or don't pay after three months (no claims) and have found a different coverage by then - gives you some room and you ARE in fact covered if something does happen within the first three months.

Depending on where you live, there might be an additional COBRA coverage by your state (e.g. NY offers additional 18 months COBRA) - so you can cover 3 years with COBRA if you have to....expensive, but possible - that carries you to Medicare.
Everything you read in this post is my personal opinion. If you disagree with this disclaimer, please un-read the text immediately and destroy any copy or remembrance of it.

birdy
Posts: 337
Joined: Sun May 02, 2010 7:31 pm

Re: Threw me a curve [unexpected layoff]

Post by birdy » Mon Sep 30, 2019 2:03 pm

I too was laid off in my 60's. I: applied for unemployment, Got Cobra (ACA was even more cost then cobra for me), rolled my 401k to a IRA at Vanguard, started working for a Temp agency until I could find a couple of clients and became an independent contractor. I liked the suggestion to get rid of your stock from this company (company not doing good -layoffs). On selling your house, how much money are you going to loose when you just recently acquired the house? Could you hold onto it by using it as rental income?

My layoff turned out well for me as I hope it does for you. I was forced to figure out what was really important in my life and what would make me happy in this new phase. I know it is scary and you probably feel betrayed by the company for throwing you away. I always had excellent work habits and kept up-to-date on my work knowledge. Just keep repeating like I did, "it's not personal, it's business" and it might help the hurt a little bit.

I am so glad you found Bogleheads! This group is responsible for my financial success and my ability to retire before 65! The best to you and be sure to let us know how you finally resolve all your financial issues!

birdy

User avatar
One Ping
Posts: 773
Joined: Thu Sep 24, 2015 4:53 pm

Re: Threw me a curve [unexpected layoff]

Post by One Ping » Mon Sep 30, 2019 2:11 pm

deikel wrote:
Mon Sep 30, 2019 1:05 pm
mark39 wrote:
Sat Sep 28, 2019 7:51 pm
Health insurance is not optional, in my opinion.
+1
+2
Apparently, Nevada has a 'window shopping' site for estimating the cost of health insurance policies.
Nevada Health Link wrote: Nevada Health Link consumers will be able to compare plans & prices to estimate the cost of their health insurance premiums and subsidies if eligible. During window shopping you will enter your location, income, age, and family size to estimate your eligibility for subsidies and premium assistance. Be sure to check for savings because your household income may qualify you for lower costs. Once you find the right plan you can begin the enrollment process immediately.

Window Shopping Available October 1, 2019
https://www.nevadahealthlink.com/costs/

Good luck.
"Re-verify our range to target ... one ping only."

Post Reply