Laid Off, Considering Multiple Options - Which Would You Recommend?

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entropy2017
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Laid Off, Considering Multiple Options - Which Would You Recommend?

Post by entropy2017 » Tue Sep 11, 2018 2:07 am

Have worked at Megacorp for the past 13 years. I have been notified that I will be impacted by an upcoming layoff. Part of a high performing team, but the company is being restructured. I am trying to secure a different position in same company, but this may not be possible.

I am considering several options and would greatly value the community’s thoughts.

46 years old, 2 kids elementary school age, wife is SAHM

Financial Picture

Net worth - $1.65M

Assets
Cash: (checking/savings/CDs) = $51K
Investments:
IRAs - $266K
401K - $443K
Joint-taxable - $35K
529 plan for kid 1 - $115K
529 plan for kid 2 - $115K
All investments above in 3-fund portfolio (65% stock/35% bonds)
Primary residence - $840K value ($250K mortgage remaining)

Liabilities
Mortgage - $250K remaining @ 30-year at 3.5% rate
No other debt

Monthly Expenses
Mortgage - $1,900
Other expenses (food, utilities, gas, insurance, kids activities) $4,000
Total Monthly Expenses ~$6K per month


Current Job
~$300K total comp/year (base+bonus+RSUs)
Good performer with strong work history and industry accomplishments

Layoff details
12 weeks severance, plus another month of PTO that would be paid out. Will also receive 30 days “notice” before last day
Would also receive annual bonus at layoff and accelerated RSU vesting
Company would pay COBRA for 4 months
So I estimate I would leave with about $160K cash after taxes, between bonus, RSUs, severance, and COBRA reimbursement to add to cash reserves.

Other details
COBRA available for 36 months (would be ~$1,800 out of pocket cost per month)
In my state, I could get ~$1,800 per month of unemployment insurance for 26 weeks


Here are the options I am considering.

Option 1 - Find Another Job - Look for a similar position at another company in my industry, probably a different Megacorp. This may take a while at the level I am at (Director) and may entail lifestyle changes such as moving. For several family-related reasons (children, aging parents nearby), I would strongly prefer not to relocate. I imagine it could take 6-12 months to find a new job of this type.

Option 2 - Start a Company - Before joining Megacorp, I started and ran a small company doing this same type of work for nearly a decade. I now have more experience, accomplishments, and contacts. One option is to start another company and move to self-employment. This would be an "expert" type of consulting business. I worked 80 hour weeks when starting my first company, so I know the sacrifices needed and the risks involved. However, I started my first company when I was in my 20s. Now I have kids headed to college, and retirement hopefully in a few decades. Would it be too risky to pursue this path at this point in my life during my prime earning / accumulating years? The main benefits to me are the upside potential and also the self-determination in that no one could fire me in my 50s. The thing I dislike most about Megacorp is having my fate determined by the whims of others. That said, I know not all Megacorps (or companies) are alike.

Option 3 - Contract - Megacorp has many contractors who do this type of work, usually working through a third-party agency. This is something I could do, but I am not sure what the end goal would be. It seems like it would be uncertain (limited term contracts), the upside potential would be limited, and that I would need to pay for my own benefits. Does it make sense to contract for 20 years until retirement in my situation?

Which option would you lean towards? Are there any options I am missing? While my work is important, my family is more important. I want to provide for them while meeting my goals of retirement in a couple of decades, paying for college, providing healthcare, and putting food on the table. We generally try to LBYM and have no plans to change this.

Even beyond this point in time, this will be a decision that will almost certainly be “forced” upon me as Megacorp has been in layoff mode for many years now. Ultimately, I want to be able to “stay the course” in terms of investing and our current way of life as much a possible until retirement.


Thank you

HEDGEFUNDIE
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Re: Laid Off, Considering Multiple Options - Which Would You Recommend?

Post by HEDGEFUNDIE » Tue Sep 11, 2018 2:29 am

Sorry to hear about your predicament. The good news is you will have $200k+ in cash to fall back on, that’s a very nice buffer.

First things first, cut back expenses where you can, until you find a new job.

As for your three options, why not pursue all three at the same time? Get a few consulting contracts to tide you over while you are hunting for that next director role. You said your MegaCorp has been in layoff mode for a long time, perhaps you should look for a smaller faster growing Mid or SmallCorp that could use your years of experience.

moneywise3
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Re: Laid Off, Considering Multiple Options - Which Would You Recommend?

Post by moneywise3 » Tue Sep 11, 2018 2:43 am

It sounds like you could even retire. May require you to move to LCOL area or cheaper housing in the same area. Even your kids education is all set.

gotester2000
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Re: Laid Off, Considering Multiple Options - Which Would You Recommend?

Post by gotester2000 » Tue Sep 11, 2018 5:15 am

First thing to do is to stop pressurising yourself to find a similar role and pay(peak paying years?) and putting a number(6-12 months). You could land a job even the next day.
Your financial situation is good. Stop thinking about your family role, stay the course in investment etc - that will not help, only action will. Life happens and you as well as your dependents have to adapt.
Take any of the options of the three that you find suitable and keep working out what is best for you. Be flexible in location, role and pay(Dont get tied to last pay and role).
Personally, I find it very liberating to be a consultant/contractor. No time wasted in useless meetings and meaningless reviews and work your own hours - no tie up with a single company.

Grt2bOutdoors
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Re: Laid Off, Considering Multiple Options - Which Would You Recommend?

Post by Grt2bOutdoors » Tue Sep 11, 2018 5:29 am

moneywise3 wrote:
Tue Sep 11, 2018 2:43 am
It sounds like you could even retire. May require you to move to LCOL area or cheaper housing in the same area. Even your kids education is all set.
He can’t retire, half his assets are effectively “locked” up, after taxes and penalties it would be even less. I’d start the job search now. Pursue all available options. If you don’t find something with comparable compensation you may find something that offers better quality of life.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

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CyclingDuo
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Re: Laid Off, Considering Multiple Options - Which Would You Recommend?

Post by CyclingDuo » Tue Sep 11, 2018 5:49 am

entropy2017 wrote:
Tue Sep 11, 2018 2:07 am
Are there any options I am missing?
What about your wife's human capital? Is she trained to work in any career? Don't rule out the possibility of becoming a dual income household...
"Everywhere is within walking distance if you have the time." ~ Steven Wright

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djpeteski
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Re: Laid Off, Considering Multiple Options - Which Would You Recommend?

Post by djpeteski » Tue Sep 11, 2018 6:05 am

You will have about 160k "in salary" with about 8k in expenses (assuming COBRA from day 1 to make the math easier) with no cutting back. That will last 20 months without touching your current investments.

So what do you want to do?

To me it sounds like you want to start your own business. Can you start looking for customers now? Can you start creating the infrastructure to get this thing up and running quickly? How quick can you get a contract job? (I am assuming pretty darn quick.)

If it was me this is what I would do:
1) Do what ever I can now, provided I did not break any non-compete agreements, to start the business. This would include making a list of potential clients.
2) Once the lay off happens, start calling your list.
3) If no revenue in about 6 months, abandon.
4) After about 9 months, I would want at least have the ability to pull out about 6k/month in salary. If not abandon.
5) After about a year I would want the ability to pull out around 10k/month in salary and have the ability to grow the business into something more. If not abandon.

Once you abandon I would take the first contract job that comes along and look for something better.

Following such a plan would leave your last paycheck, at least partially in tact, and your portfolio fully. This is kind of risk-less.

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Cyclesafe
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Re: Laid Off, Considering Multiple Options - Which Would You Recommend?

Post by Cyclesafe » Tue Sep 11, 2018 8:48 am

This happened to me three times.

The first two times I got another position before missing a paycheck, but had to move across the world each time. The third "layoff" was much more of a surprise and after a year of looking for another position, I decided I was retired - at age 45. I had the means, but if I had to do it again, I would not have given up so easily. Not because of the money, but for my at-the-time-not-recognized need to be plugged in.

My take on this is that (as mentioned above) you should work all three options simultaneously and evaluate opportunities as they arise. Maintain as much flexibility as to position, pay, and location to create opportunities, Cull when necessary in view of your prospects for something "better".

Don't take time off. It's easy to rationalize a "sabbatical", but you'll lose your edge and anyway all you and your family will think about is your/their future.

Probably the first thing you need to do is to clear your head of anything negative and to get your entire family on board with your plan so they can support rather than hinder you. Your wife is key here: children and parents can adapt.

The third time, I was a coward, a quitter. Be better than that.

JBTX
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Re: Laid Off, Considering Multiple Options - Which Would You Recommend?

Post by JBTX » Tue Sep 11, 2018 9:22 am

I agree with others, I'd pursue all options. Ultimately, the key to finding a new job is networking, and you'll need to do that no matter which of the three options you choose.

Also agree that it is best dive in ASAP, as the longer you delay, the harder it gets - and I speak from personal experience.

KlangFool
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Re: Laid Off, Considering Multiple Options - Which Would You Recommend?

Post by KlangFool » Tue Sep 11, 2018 9:43 am

Grt2bOutdoors wrote:
Tue Sep 11, 2018 5:29 am
moneywise3 wrote:
Tue Sep 11, 2018 2:43 am
It sounds like you could even retire. May require you to move to LCOL area or cheaper housing in the same area. Even your kids education is all set.
He can’t retire, half his assets are effectively “locked” up, after taxes and penalties it would be even less. I’d start the job search now. Pursue all available options. If you don’t find something with comparable compensation you may find something that offers better quality of life.
+1.

Out of the 1.6+ million, 590K is in the house. Then, another 230K in the 529 plan.

KlangFool

KlangFool
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Re: Laid Off, Considering Multiple Options - Which Would You Recommend?

Post by KlangFool » Tue Sep 11, 2018 9:45 am

entropy2017 wrote:
Tue Sep 11, 2018 2:07 am

Option 3 - Contract - Megacorp has many contractors who do this type of work, usually working through a third-party agency. This is something I could do, but I am not sure what the end goal would be. It seems like it would be uncertain (limited term contracts), the upside potential would be limited, and that I would need to pay for my own benefits. Does it make sense to contract for 20 years until retirement in my situation?
entropy2017,

For some megacorp, this is not allowed. Aka, the laid-off employee cannot be hired back as a contractor. Or, the laid-off employee will lose the severance pay. You may want to reconfirm this with the HR before you are gone from this employer.

KlangFool

KlangFool
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Re: Laid Off, Considering Multiple Options - Which Would You Recommend?

Post by KlangFool » Tue Sep 11, 2018 9:50 am

entropy2017 wrote:
Tue Sep 11, 2018 2:07 am

Option 1 - Find Another Job - Look for a similar position at another company in my industry, probably a different Megacorp. This may take a while at the level I am at (Director) and may entail lifestyle changes such as moving. For several family-related reasons (children, aging parents nearby), I would strongly prefer not to relocate. I imagine it could take 6-12 months to find a new job of this type.
entropy2017,

In some cases, you may have to relocate but leave your family where they are now. Aka, only relocate yourself and live in a rented apartment for a while.

KlangFool

entropy2017
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Re: Laid Off, Considering Multiple Options - Which Would You Recommend?

Post by entropy2017 » Tue Sep 11, 2018 1:30 pm

Hi all,

Thank you for the feedback and for sharing your personal experiences. It is very helpful, and frankly reassuring. It is not easy to get this type of insight in a situation like this so I really appreciate it. If I could buy you all a beer, or whatever your preferred beverage, I would. :sharebeer

A few thoughts.

1. It seems like a common piece of feedback is essentially "don't panic." Since graduating college, for the past two decades I have been continually employed, moving from role to role largely driven from a place of insecurity (must save, eliminate debt, have roof over head). While this "must do" attitude it often helpful, it tends to focus the mind on the downside of a situation rather than the potential upside opportunity. I guess I need a mindset shift. While I can't yet afford to retire, I can afford to take a few weeks to assess the situation, consider options and maybe think about what I want to do, rather than what I have to do.

2. A second theme is to consider all options and perhaps pursue multiple options at the same time - in other words be flexible. I think this is good counsel - you never know what opportunities will arise. I think in my case, it even opens up some new options. My line of work is expertise-based, transferable between Megacorps, and I have some degree of recognition in the industry. This could open up a "hybrid" 4th option. Rather than contract, where the staffing firm would take a huge cut of earnings, I could incorporate, leverage my network, and provide services across multiple companies. I know the mechanics of running a small business, so this may help. This would effectively be Contract+Start a Business+Get A New Job.

A few other notes

- My wife is ready to re-enter the workforce, though she would earn a fraction of what I do. She has said she will do whatever it takes in terms of lifestyle change or being flexible to allow me to pursue opportunities that interest me. She thinks I am under-leveraging my skill set or value in the market, and that I should "go for it."
- @KlangFool - Thank you for pointing out the corporate restrictions on returning as a contractor. This is something I will take into account when planning. By the way, I read this forum daily, and have greatly benefited from all of your insights - so thank you!
- @ Cyclesafe - Thank you for your personal story. I will plan to keep going.

Anyways, thank you again. Now, on to figuring out what's next!

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Watty
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Re: Laid Off, Considering Multiple Options - Which Would You Recommend?

Post by Watty » Tue Sep 11, 2018 3:08 pm

entropy2017 wrote:
Tue Sep 11, 2018 2:07 am
6 years old, 2 kids elementary school age, wife is SAHM
entropy2017 wrote:
Tue Sep 11, 2018 2:07 am
Option 2 - Start a Company -
.....

I worked 80 hour weeks when starting my first company, so I know the sacrifices needed and the risks involved.
With kids that age I would not take on that sort of time commitment.

If there is a recession in the near future that could be a hard time to start up a business.

I would take the option of starting up a company off the table.

One option would be to look for a new job and also contract while you are looking for the job. Once you have a new job offer you could decide which you want to do then.
entropy2017 wrote:
Tue Sep 11, 2018 2:07 am
Does it make sense to contract for 20 years until retirement in my situation?
I would think that in ten years(or less) you would be able to retire. Once the kids are out on their own, the house is paid off, and you stop saving for retirement you may find that your income needs are a lot less.

Once the kids are out school you will not need a big family home or great school districts. Even if you want to stay in the same area moving 20 or 30 minutes farther out may make a dramatic difference in home prices if you downsize then. When you are retired the commute time will not make any difference.

renue74
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Re: Laid Off, Considering Multiple Options - Which Would You Recommend?

Post by renue74 » Tue Sep 11, 2018 3:36 pm

Option 1 - Find another position. Even if not in the same company, you can look for another position. Most likely, you are not ready to change your lifestyle...so finding another job is probably best.

Unemployment is at a low...so it may be easier to find a position, even if not as high paying. If you find road blocks, you can always sell your home and slightly downsize living to free up more capital.

You should probably take a hard look at expenses.

cashboy
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Re: Laid Off, Considering Multiple Options - Which Would You Recommend?

Post by cashboy » Tue Sep 11, 2018 5:15 pm

OP, same exact thing happened to me 3 months ago, so I feel your pain.

FWIW, of the options mentioned, if you cannot (or don't want to) stay with the company as their employee, i would suggest:

go with the consulting gig at your company - your option 3 (if you can do that quickly, for income)

while also looking for another job - your option 1 (but you will have less pressure since you have the consulting gig bringing in $).

I worked for the same company 36+ years; I am receiving one year severance that i receive like a paycheck every other week (and am collecting unemployment), so I am somewhat lucky. right now I am on sabbatical and will look to consult once unemployment runs out.

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joe8d
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Re: Laid Off, Considering Multiple Options - Which Would You Recommend?

Post by joe8d » Tue Sep 11, 2018 7:20 pm

46 is not too old to find another job. That's what I would do.
All the Best, | Joe

wilked
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Re: Laid Off, Considering Multiple Options - Which Would You Recommend?

Post by wilked » Tue Sep 11, 2018 7:30 pm

What’s your line of work?

JGoneRiding
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Re: Laid Off, Considering Multiple Options - Which Would You Recommend?

Post by JGoneRiding » Wed Sep 12, 2018 9:32 am

Grt2bOutdoors wrote:
Tue Sep 11, 2018 5:29 am
moneywise3 wrote:
Tue Sep 11, 2018 2:43 am
It sounds like you could even retire. May require you to move to LCOL area or cheaper housing in the same area. Even your kids education is all set.
He can’t retire, half his assets are effectively “locked” up, after taxes and penalties it would be even less. I’d start the job search now. Pursue all available options. If you don’t find something with comparable compensation you may find something that offers better quality of life.
First he doesn't need all his assets at any one time, second half his assets are still a lot of assets, third he is getting a huge chunk of cash that would tide him many months at his stated burn rate. But most importantly it's not that hard to get cash out of a 401k without penalty he has several options. It's been discussed many times. The cash isn't as locked up as some seem to think.

Thegame14
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Re: Laid Off, Considering Multiple Options - Which Would You Recommend?

Post by Thegame14 » Wed Sep 12, 2018 9:42 am

find another job, stability is important, at least to me it is.

Luke Duke
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Re: Laid Off, Considering Multiple Options - Which Would You Recommend?

Post by Luke Duke » Wed Sep 12, 2018 9:55 am

You are in a very good position. I was laid off with no notice, but I received a good severance (not as good as yours). I was able to find a job in a couple of months and I had a lot of the severance left over to beef up the EF.

You need to start looking for a job now. Update your LinkedIn page and connect with as many current/former coworkers/customers/vendors that you can. I would recommend paying for one of the Premium LinkedIn options. It will allow for better searches and give you more visibility. At your level it may be wise to engage the services of a recruiter that specializes in placing senior managers/executives.

jminv
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Re: Laid Off, Considering Multiple Options - Which Would You Recommend?

Post by jminv » Wed Sep 12, 2018 10:22 am

I would pursue all options since you might otherwise miss an interesting opportunity out there, but would be most inclined to move forward with Option 2 but that's because I prefer doing my own thing. I also don't like being subject to corporate whims.

Also, perhaps your wife could consider re-entering the workforce to supplement your income in this transitional period. That's an untapped opportunity.

simas
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Re: Laid Off, Considering Multiple Options - Which Would You Recommend?

Post by simas » Wed Sep 12, 2018 10:39 am

The short answer - your options is what would actually work, these are not either/or type situations
1. start thinking of what/where you would like to go next and start doing it now.
2. I would not spend too much time on the finding position in the same company, by all means try it but your chances are extremely low. The company would never say there is a 'blacklist' however experienced of people around me in the past is that these searches while on the layoff list never succeeded without massive step down in level/pay.
3. you already heard about consulting for mothership (the company), your severance agreement may have specific details on it. Also, you can easily check (IQN or equivalent) what your company pays contractors and think of whether you want to move from 300K comp to say 70/hour contractor working for megacorp (yes, company would pay 30% more to the preferred provider company but the person would receive on hand significantly less). rarely worth it , unless you are absolutely desperate.
4. consulting on your own is great, the question is where your clients would come from. would you subcontract? would you do your own marketing ,etc. it is difficult to always sell, and consulting gigs could (and often do) easily end on very short notice.


5. expect your job search to take time. unlike payday fantasies often posted here, 200 or 300k positions are few and far between and your competition would be fierce for them.

6. start thinking of how to cut expenses. rather do it on your terms and planned vs being forced into it suddenly.

SoAnyway
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Re: Laid Off, Considering Multiple Options - Which Would You Recommend?

Post by SoAnyway » Wed Sep 12, 2018 11:29 am

OP, a couple things I've not seen mentioned:
1. Will you be subject to a non-compete after you leave?
2. Will the company offer outplacement services as part of the severance package? If not, ask for it as part of negotiating the severance agreement. If so, take advantage. I found it very helpful when I went through a layoff years ago and my "new job" became "finding my next job". Lots of resources/coaching to sort through options and stay positive, lots of networking with others (we all became each others' eyes and ears), etc.

At this stage given how industry and employment have evolved, just about everyone I know has gone through a layoff/restructuring/downsizing at some point. There's NO shame in it since it has nothing to do with the people or their talents. Everyone landed on their feet, and in most cases, their new situation was far better than the one they were in before. Inertia had kept them where they were, and the experience led them to find all sorts of opportunities they hadn't really considered before.

BeneIRA
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Re: Laid Off, Considering Multiple Options - Which Would You Recommend?

Post by BeneIRA » Wed Sep 12, 2018 5:44 pm

OP, from the HR side of it, your company is leaving you in a good situation. Most mega corps are far less generous. While someone in HR will never tell you there is a blacklist for employees on a lay off list, well, let's just say it is extremely difficult to find a position within the same company in the midst of being laid off. Your chances are much, much higher somewhere else. I would find another job in the meantime, start your search right this second, and go from there. Even if it is a step down, it doesn't have to be permanent, it is just to have money coming in. Don't think of your next position as one you have to stay in for a set period of time. It's a job and you can always move again. Best of luck to you.

bhough
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Re: Laid Off, Considering Multiple Options - Which Would You Recommend?

Post by bhough » Wed Sep 12, 2018 5:58 pm

Dear OP,

Similar thing happened to me 11 months ago. Wasn't laid off, but company was in decline and I was being asked to do 200% of what was reasonable each day, so I quit. Got 12 weeks severance. Similar finances, similar family situation. I decided to try to start my own business to stay in my hometown where my parents and the in-laws work.

The advice from the poster about benchmarks at 6, 9 and 12 months is spot-on and very, very helpful. It is hard psychologically to start a new business, but also be looking for a job, because you really need to be "all-in" for the business if you want to make it work. I would incorporate now, rent office space, buy a computer, etc. whatever you need for your business, but don't advertise or open a web page until the day you leave. Then immediately go all-in, 12 hour days including weekends for the first 6 months.

At 6 months, use the metrics the guy above posted. I would argue that you use dollars invoiced rather than revenue as clients sometimes take 60 days to pay on a 30 day net invoice. Agree that if you don't have the start of real revenue, I would switch gears into full job search mode then.

Now the soft side of things. I personally have inculcated a "sense of urgency" about my work and life and financially and professionally it has served me well. However, this sense of urgency can turn dark if you have too much time on your hands and not enough to do. So please give yourself some room to breathe. Allow yourself to go to the gym each day if you don't have a pressing issue. Read a book if you don't have a client scheduled. What I mean is try not to get discouraged with all this extra time. It is a weird sensation and it can drive you crazy.

Good luck. This happens to alot of intelligent, hard-working, well meaning people. You are not alone.
b

entropy2017
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Re: Laid Off, Considering Multiple Options - Which Would You Recommend?

Post by entropy2017 » Wed Sep 12, 2018 10:17 pm

First of all, Wow! The feedback and advice that I have received from all of you is amazing.

Judging from many of the responses, I am not alone. This is a scenario that many, if not most, people will go through at some point if they work for a large company. For those of you who have shared their personal experiences, I really appreciate it. Thank you.

As an aside, I mentor a few people in their early 20’s, just getting started in life, and I strongly recommend that they begin reading this forum as much as possible, learning from the perspectives that are graciously shared here. I certainly wish I had access to this knowledge at that age!

To answer a few of the questions posed.

- I would not be subject to a non-compete
- I believe the company would offer outplacement services
- I work in a specialized marketing field
- Wife is pursuing re-entry to workforce and/or other new income streams
- We are cutting back expenses wherever possible


Update: Here is how things are looking so far.

1. I have identified a new role in same company which seems promising. This is my first preference as both the team and opportunity are great.
2. Second preference is contracting for income + concurrent job search as many posters have suggested. Contracting could relieve a bit of the financial pressure as I pursued, what could be, an extensive job search. LinkedIn updated / Premium subscribed, resume revised, some initial opportunities identified. Also putting together lists of headhunters and contracting firms.
3. Third preference would be to start a company. I have the knowledge to spin up all the required infrastructure (incorporation, accounting, website) within a few days, so I am really focused on thinking through the potential business model and, most importantly, the offerings and customer acquisition strategy, which would make or break the business.

One key takeaway is that the best approach is one of parallel processing. Advance all options simultaneously to the extent possible, while retaining flexibility to choose and switch between them as things evolve. This is what I am doing with all three scenarios above. Through this experience, I have also learned that our personal outcomes are often affected by decisions that others make, which we have no control over, and also by factors (black swans) that we can’t anticipate and often have no visibility of.

Another key learning is the power of relationships - relationships with people whom you respect, trust, and can count on. While navigating this situation, these relationships have been invaluable to me, both personally and professionally.


Thanks again to everyone!

nyclon
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Re: Laid Off, Considering Multiple Options - Which Would You Recommend?

Post by nyclon » Wed Sep 12, 2018 10:25 pm

You could strike a balance between #2 and #3 and eventually take the training wheels off and eliminate #3. Contract work can be structured to less than full time.

StealthRabbit
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Re: Laid Off, Considering Multiple Options - Which Would You Recommend?

Post by StealthRabbit » Wed Sep 12, 2018 10:45 pm

Warning... I am not a 'conventional thinker'... I am a DOER (risk taker / variety)

46 years old, 2 kids elementary school age, wife is SAHM
OPTION #5... (tho personally I would retire... (Which I did at age 49 off an hourly job that never exceeded $60k/ yr, and a SAHM / no extra income)

Take a yr off and do a RTW trip (or at least a subset / LONG vacation with wife and kids)

1) This particular time and opportunity will never pass your way again (Wife to work, kids to school / college / you back slaving away / elder care / health risks...)
2) VERY educational / nice event to travel with kids (they open a LOT of doors / relationships / exposure / events)
3) Do something else interesting (@ age 38 (after yet another international assignment / our house (farm) was rented) I enrolled in a Bible school and we (family) lived in a foreign country on an island for 6 months. We sailed, fished, did adventures every day, (eagles on our deck, bears in the woods (and on beach), 30+ sea lions following us around in Kayaks, bobcats, cougars, and really interesting culture and people) It was very special for our kids (7 boys (staff kids) chummed together like a little tribe, age 7-9) TONS of adventures and memories, I made some beautiful furniture out of driftwood.
4) Do something you want as a family... Build a lake or mtn cabin that will be in the family for generations.
5) home (un) school your kids and invest / get to know them really well (they are GONE soon!)
6) Do a few volunteer gigs to explore your interests.

...
Anyway.. you are smart... you get it. use this to your family's advantage, you will NOT regret it

retire early - retire often you might not get it right the first, 2nd, 3rd time... :D

BTW: I took a LOT of sabbaticals though I stuck with one excellent employer for 32+ yrs (since HS) They paid for 5 degrees! (which I enjoy utilizing in my 'retirement' (volunteer / help start-ups / farmers / whoever / currently on a Foreign assignment paid engineering gig. )
I worked NIGHTS for many yrs so I could Homeschool my kids and volunteer in Public Schools. Kids are really neat to get to know! and to get to grow!

Your time away does NOT have to be costly. We did a 1 yr 'round-the-world' in 2016. <$40k. only (8) nights in hotels... the rest of the time we were staying with locals, usually farmers. Kids learned a LOT from these stays (free to $20 / night WW) https://wikitravel.org/en/Hospitality_exchange

rgs92
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Re: Laid Off, Considering Multiple Options - Which Would You Recommend?

Post by rgs92 » Thu Sep 13, 2018 12:29 am

When you envision (as you say "imagine") taking an estimated 6-12 months to find an equivalent job, I say Danger Will Robinson!
You are doing just that, imagining things.

I would try to find a job ASAP just because once you are unemployed for even 3 months they look at you like you have horns. They ask you "what's wrong?"

So take any sort of decent job at any pay level. You may even like it -- less stress, less time at work.
It's a good middle-lane approach between retiring and trying to replicate your original situation.

But again, I would not sit around taking UI since, after 6 month out of work, you may easily foreclose yourself from re-entering the workforce, maybe at any level. You do NOT want big gaps on your resume.

So getting any sort of professional job will keep your options open.

If down the road you want to either ramp up or ramp down your career, well, there is time for that later.
I know people will say, hey, if you take a lower paying job, you will be locked in at that rate, but there is a bigger danger in the dreaded gap in your work record. That's the kiss of death for getting back in the job market.

mouses
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Re: Laid Off, Considering Multiple Options - Which Would You Recommend?

Post by mouses » Thu Sep 13, 2018 12:51 am

One of my brothers does extremely well as an independent consultant.

A friend laid of by a Megacorp now makes more money as a contractor working for them, even including having to pay for benefits they previously paid, than she did working for them directly. I was not expecting this situation to last very long, but it's been several years now.

You have a lot of options. I would put the ones with a bad impact on your life, like relocating, at the bottom of the list.

Unless you're in a high cost of living area, that is a lot of house. Downsizing to a smaller but still nice house would help with ongoing expenses, including property tax and insurance. I wouldn't suggest doing this right away, just something to keep in mind.

EnjoyIt
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Re: Laid Off, Considering Multiple Options - Which Would You Recommend?

Post by EnjoyIt » Thu Sep 13, 2018 3:20 am

Grt2bOutdoors wrote:
Tue Sep 11, 2018 5:29 am
moneywise3 wrote:
Tue Sep 11, 2018 2:43 am
It sounds like you could even retire. May require you to move to LCOL area or cheaper housing in the same area. Even your kids education is all set.
He can’t retire, half his assets are effectively “locked” up, after taxes and penalties it would be even less. I’d start the job search now. Pursue all available options. If you don’t find something with comparable compensation you may find something that offers better quality of life.
Huh, what?

OP has $709k in a 401k/IRA. Convert all to IRA and do 72t withdrawals penalty free
After termination payout, OP will have $200k cash
Sell $840k house and after paying off remaining mortgage and 6% closing fee, OP will have $539k in cash. Buy a beautiful home for $300k in a LOC area with good schools. Take the remaining $239k and invest.

OP has $1,148,000 in cash and investments. which at 4% withdrawal give $3,826 per month in spending. OP says that they spend $6k per month but $1900 of that is mortgage and i'm sure property tax will be lower as well as decrease in spending on work clothes and commuting OP will have the same lifestyle they have now and not work another day in their lives. This is actually a better lifestyle. More than likely OP may do some consulting work for entertainment and a little extra cash. At 70 years old OP will get another $1k-$2k/month in SS and the spouse will get half that.

student
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Re: Laid Off, Considering Multiple Options - Which Would You Recommend?

Post by student » Thu Sep 13, 2018 5:58 am

EnjoyIt wrote:
Thu Sep 13, 2018 3:20 am
Grt2bOutdoors wrote:
Tue Sep 11, 2018 5:29 am
moneywise3 wrote:
Tue Sep 11, 2018 2:43 am
It sounds like you could even retire. May require you to move to LCOL area or cheaper housing in the same area. Even your kids education is all set.
He can’t retire, half his assets are effectively “locked” up, after taxes and penalties it would be even less. I’d start the job search now. Pursue all available options. If you don’t find something with comparable compensation you may find something that offers better quality of life.
Huh, what?

OP has $709k in a 401k/IRA. Convert all to IRA and do 72t withdrawals penalty free
After termination payout, OP will have $200k cash
Sell $840k house and after paying off remaining mortgage and 6% closing fee, OP will have $539k in cash. Buy a beautiful home for $300k in a LOC area with good schools. Take the remaining $239k and invest.

OP has $1,148,000 in cash and investments. which at 4% withdrawal give $3,826 per month in spending. OP says that they spend $6k per month but $1900 of that is mortgage and i'm sure property tax will be lower as well as decrease in spending on work clothes and commuting OP will have the same lifestyle they have now and not work another day in their lives. This is actually a better lifestyle. More than likely OP may do some consulting work for entertainment and a little extra cash. At 70 years old OP will get another $1k-$2k/month in SS and the spouse will get half that.
But OP has to add in the cost of health care. He can use COBRA for a few month and it is $1,800 per month, which the company is paying for the first 4 months.

EnjoyIt
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Re: Laid Off, Considering Multiple Options - Which Would You Recommend?

Post by EnjoyIt » Thu Sep 13, 2018 1:08 pm

At $40k per year income some of which will not be IRA funds and therefor not all will be taxable brings this family of 4 below 400% poverty and therefor qualifies for ACA subsidies.

entropy2017
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Re: Laid Off, Considering Multiple Options - Which Would You Recommend?

Post by entropy2017 » Thu Sep 13, 2018 4:23 pm

nyclon: That is a very good point. I could contract part time while starting a business which would allow more time to develop the opportunity.

StealthRabbit: I really appreciate your perspective. In fact, our family I think is very aligned with the philosophy you described. We value experiences more than things. As an example, we have visited more than a dozen countries over the past few years - at low cost using free miles, staying with family, and by finding ultra cheap tickets. Thanks to my work situation, I’ve gotten to see my kids grow up and be very involved in their lives. These things are priceless to me. The path you’ve taken in life is both unconventional and inspirational, so thanks for sharing.

rgs92: Thanks for the perspective and caution. You are right, I tend to imagine things that are probably not knowable. Whatever I do, I will avoid any gap in the resume. I will always do something related to my field and to bring in income that is worthy of mention.

mouses: Good to know about the success of others contracting. We live in a HCOL area and our house is just a regular middle class suburban home here. We bought it for about $500K at the bottom of the market and the price has risen. Our mortgage is about the price of a 1 bedroom apartment rent around here now.

EnjoyIt, student: Really interesting calculations and points on the early retirement scenario. Definitely something to think about. For now, though, I intend to keep working for the next 7-10 years at least, and then maybe transition to part-time once the kids are done with college and hopefully out on their own.

Thank you.

tesuzuki2002
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Re: Laid Off, Considering Multiple Options - Which Would You Recommend?

Post by tesuzuki2002 » Thu Sep 13, 2018 6:16 pm

moneywise3 wrote:
Tue Sep 11, 2018 2:43 am
It sounds like you could even retire. May require you to move to LCOL area or cheaper housing in the same area. Even your kids education is all set.
If I were in your shoes... I would fall on the retiring side from normal work... that being said you mentioned option 2... starting a company... Build up a small company that can say generate $50K a year going forward... Based on what you have saved already you have done quite well.

My NW is only $1.1M and I would consider this... but then again my home is a $190K home so taxes are cheaper and it is paid for.

TravelforFun
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Joined: Tue Dec 04, 2012 11:05 pm

Re: Laid Off, Considering Multiple Options - Which Would You Recommend?

Post by TravelforFun » Thu Sep 13, 2018 6:51 pm

- Keep a copy of all your work records if your company allows you to
- Update your resume, and LinkedIn account or create one if you haven't
- Do you or family members have medical, dental, vision procedure that you have planned on doing but haven't? Now may be the time
- Work your network and let people know you're available
- Take on a part time job now to pad your savings
- Cut back on spending now to pad your savings
- Don't be too down on yourself and good luck. The economy is good so hopefully anyone who wants to work can a find a job quickly
- This could be a blessing.

TravelforFun

rgs92
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Re: Laid Off, Considering Multiple Options - Which Would You Recommend?

Post by rgs92 » Thu Sep 13, 2018 6:52 pm

Good luck entropy. Many times these things can be a blessing in disguise.

EnjoyIt
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Re: Laid Off, Considering Multiple Options - Which Would You Recommend?

Post by EnjoyIt » Fri Sep 14, 2018 9:22 am

entropy2017 wrote:
Thu Sep 13, 2018 4:23 pm
EnjoyIt, student: Really interesting calculations and points on the early retirement scenario. Definitely something to think about. For now, though, I intend to keep working for the next 7-10 years at least, and then maybe transition to part-time once the kids are done with college and hopefully out on their own.

Thank you.

What is nice about being FI (Financially Independent) is that it buys you options. Lets say you find another job and after 1-2 years you utterly hate it. No big deal. You are FI you can can either try and change the job or quit and find something else. You can start playing the game on your terms. Maybe in 3-4 years you feel spending more time with family is more important that spending 10 hours a day preparing for work, driving to work, working, and then returning home. No big deal, you have options and can work part time or do consulting. As of right now, the world is yours.

Goodluck entropy2017

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Sandtrap
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Location: Hawaii😀 Northern AZ.😳 Retired.

Re: Laid Off, Considering Multiple Options - Which Would You Recommend?

Post by Sandtrap » Fri Sep 14, 2018 9:31 am

#1 while concurrently pursuing #2 and #3.
While streamlining expenses.
Cover all of your bases at the same time.
j

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