Potential job loss at 62

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Tom_T
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Potential job loss at 62

Post by Tom_T »

Need some sage advice. I am about to turn 62, and my company has just been sold. I am not optimistic I will have a job a year from now. I am in tech, but getting another job in this field at my age would be a miracle and I'm not expecting to do so.

I have figured that if I can get any job that pays $15/hour, that, along with my wife's job, and some minor IRA withdrawals, we'd be ok with the bills -- except for the mortgage. Mortgage balance is $115K with six years to go. Monthly payment is $2,700. No way can we swing that without my current paycheck.

We do have assets: I have $400K in IRA. Wife is 58, she has $160K IRA. (Both are approximately 60/40 split.) She will have $120K in inheritance cash within a couple of months. $45K is needed for college tuition. I am expecting my own inheritance of around $175K within 1-5 years. Add all that up, and we'll be in good shape by the time I reach 65 -- if I can get there in one piece! My original plan was to wait until 70 for SS, because between myself and my wife, we'd be getting ~70K/year if we can wait until then, and we're both very healthy so I think it's a good choice. I have zero desire to take SS early. If I take it at FRA (66.7 months), then it's just me because my wife is only 62 by then and she plans on working longer than that.

My immediate question: I am thinking about refinancing the mortgage, which will cut the monthly nut from $2,700 to $1,200 - obviously a big difference. That will give me perhaps a few months to sock away extra cash while I can still do so. I still have the option to pay it off (or pay it down faster) within five years using our other assets if I so choose. Also, my wife and I have discussed downsizing to a smaller house in the next few years, and the possible places are perhaps $50-75K less than the current value of my home, so we could probably pay cash even after paying off whatever mortgage we still have at that time.

The company sale is still three months from closing, so nothing is imminent with my job. -- and I'm a key part of the tech team that would be involved in integrating our applications into theirs, so I think I'm safe for a little while, but there are a lot of unknowns right now. I decided that now is the time to start planning, especially while I still have a good paycheck stub to show a refinancing officer.

Any advice to help me get my head wrapped around all this would be greatly appreciated.
Escapevelocity
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Re: Potential job loss at 62

Post by Escapevelocity »

Have you factored in any likely severance payment? That could be used to pay down the mortgage or fund the monthly shortfall.
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tennisplyr
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Re: Potential job loss at 62

Post by tennisplyr »

Regarding working, I was in a similar position some years ago where I got several freelance jobs. I worked less time and made more money. I also looked for a full time job and landed a good position at a Fortune 500 company in my late fifties. Never give up, keep looking...you might be surprised on what you find. Don't rule out taking SS at 62, we did.
Those who move forward with a happy spirit will find that things always work out.
invest2bfree
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Re: Potential job loss at 62

Post by invest2bfree »

Personally losing your job is not certain, it can go in either direction.

The purchasing Company would have some performance metrics which your current company needs to fulfill so they would not immediately get rid of important technical people.

My company got sold 4 years back still Iam in my job. My boss got fired and couple of other colleagues got fired. Luckily I have survived but This Covid crisis is pushing this to the limit.
rr2
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Re: Potential job loss at 62

Post by rr2 »

If possible, refinance to a thirty year. Rates are really low.
Wrench
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Re: Potential job loss at 62

Post by Wrench »

Tom_T wrote: Sun Oct 25, 2020 2:57 pm <SNIP>

My immediate question: I am thinking about refinancing the mortgage, which will cut the monthly nut from $2,700 to $1,200 - obviously a big difference.
<SNIP>
If you can save $1500 per month on your mortgage why wouldn't you do it regardless of what happens with your job? Even if closing costs are $3K-$5K, you can recover those in a few months with that reduction in payment.
Nummerkins
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Re: Potential job loss at 62

Post by Nummerkins »

Once your wife gets the inheritance use that to wipe out the mortgage. Sounds like you will still have a job for a few months so it seems like there's nothing to worry about?
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Sandi_k
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Re: Potential job loss at 62

Post by Sandi_k »

I would refi now, to reduce required expenses.

I would not pay for kids' college; use the funds for you.

If/when inheritance comes along, pay off house and student loans.
dandinsac
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Re: Potential job loss at 62

Post by dandinsac »

Definitely pursue the refinance to provide flexibility. You may also want to look at how you can beef up your skills or certifications so that you can earn more than $15/hour if you do get laid off.
delamer
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Re: Potential job loss at 62

Post by delamer »

Wrench wrote: Sun Oct 25, 2020 4:42 pm
Tom_T wrote: Sun Oct 25, 2020 2:57 pm <SNIP>

My immediate question: I am thinking about refinancing the mortgage, which will cut the monthly nut from $2,700 to $1,200 - obviously a big difference.
<SNIP>
If you can save $1500 per month on your mortgage why wouldn't you do it regardless of what happens with your job? Even if closing costs are $3K-$5K, you can recover those in a few months with that reduction in payment.
Because their current mortgage will be paid off in 6 years and they’ll be significantly extending the term if they refi.

But given the uncertainty of their situation, I think it makes sense to do the refi. If the job situation turns out to be better than expected, they can pay it off earlier.
Lalamimi
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Re: Potential job loss at 62

Post by Lalamimi »

Factor in unemployment (I got 6 months in 2018 when I was laid off at age 64). Work on your resume - new company might require it, and you will be ready to look. Join Linkedin and any other sites for your skills. DH and I both had our companies put up for sale in 2000. We were fine, but younger and times were different. Good luck!
stan1
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Re: Potential job loss at 62

Post by stan1 »

Some things to consider:
- Downsize to the smaller, less expensive house now not later.
- Understand consulting opportunities with the technologies you know. You may not want to put your name out there just yet (word could get back to employer) but right now its a mistake to assume a tech worker who knows some older technologies and how to integrate with newer technologies has no demand. On the contrary I've found that tech people who really know arcane software like SAP or even older Oracle technologies still command good salaries (not FAANG level great, but a lot more than $15/hour). No one graduates from college aspiring to work on SAP implementations, and while some companies and governments would love to be off SAP entirely they won't be for years. Substitute SAP with what you've worked on and know.
- Keep your people network current (former co-workers, former clients, etc)
- Consider fitness and health and wardrobe. It's not fair, but a 63 year old who looks and acts 50 is going to be less likely to face "age discrimination" than a 63 year old who looks and acts 75. No guarantees of course, just a little dose of realism if you are able to pull it off.
- I really would not want to refi a mortgage with 6 years left on it to 30 years. Consider the payment and rate for a 10 or 15 year mortgage.
chw
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Re: Potential job loss at 62

Post by chw »

rr2 wrote: Sun Oct 25, 2020 4:27 pm If possible, refinance to a thirty year. Rates are really low.
Do this ASAP! If you don’t lose your job, you can still make extra principal payments, but the refi would give you options. Don’t delay in case you lose the job sooner than later.
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Watty
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Re: Potential job loss at 62

Post by Watty »

Escapevelocity wrote: Sun Oct 25, 2020 3:23 pm Have you factored in any likely severance payment? That could be used to pay down the mortgage or fund the monthly shortfall.
+1

It is hard to predict but in mergers I have seen situations where the acquiring company would give certain people a retention bonus to stay around until they were ready to close the office if they will be closing the office.

It varies a lot but I have also seen people do well after a merger. The acquiring company may have just paid a lot to buy the business you are doing so they may not be looking to get rid of you if you are doing hands on work that makes the company money.

A lot depends on what you do. Someone that does something like payroll would likely not do very well since the merged company does not need two payroll departments so their jobs may be eliminated first. My impression from your post is that you job is not like this and your skills may be needed for at least a while.

If the stars align just right then you could even hit the jackpot and get laid off with a nice severance package the day before you wanted to retire anyway.
Tom_T wrote: Sun Oct 25, 2020 2:57 pm I am in tech....

I have figured that if I can get any job that pays $15/hour.....
You may be overly pessimistic about your prospects. It varies by area but there is a lot of demand for tech people and even if you would just be doing things like user support.
Tom_T wrote: Sun Oct 25, 2020 2:57 pm Mortgage balance is $115K with six years to go. .....

My immediate question: I am thinking about refinancing the mortgage, which will cut the monthly nut from $2,700 to $1,200 - obviously a big difference.
If you can find a new mortgage with low or no closing costs there would be no downside to refinancing if you can get the same or lower interest rate.

What is the interest rate on your current mortgage?

You might want to start on that ASAP and don't volunteer any information about the company being sold unless they specifically ask a question that covers that.

I would assume that the mortgage payment includes an escrow account for property taxes and insurance. It would be good to take those out of your calculations since you will be paying them no matter what you do.
Tom_T wrote: Sun Oct 25, 2020 2:57 pm My original plan was to wait until 70 for SS, because between myself and my wife, we'd be getting ~70K/year if we can wait until then, and we're both very healthy so I think it's a good choice. I have zero desire to take SS early. If I take it at FRA (66.7 months), then it's just me because my wife is only 62 by then and she plans on working longer than that.
Check this website to see what it suggests.

https://opensocialsecurity.com/
Topic Author
Tom_T
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Re: Potential job loss at 62

Post by Tom_T »

Watty wrote:If you can find a new mortgage with low or no closing costs there would be no downside to refinancing if you can get the same or lower interest rate.

What is the interest rate on your current mortgage?
Current rate is 3.5%. My current 15-year mortgage has six years to go, and my original plan was to work until 66 and then pay off the last two years and be done with it. Balance is dropping fast: 108K, 87, 66, 44, 21, 0 are the end-of-year balances from now until the end.

On the other hand, if I refinance, I'd have more options. If I think I won't have a job in a year, I could continue to make the same monthly payment as now until that time, and lower the balance even faster. After that, I could continue the extra payment by pulling money out of my IRA each month (this would be approximately a 5% withdrawal for the year, allowing for taxes), and do this for a couple of years. This would actually lower my balance even faster than what I would owe on my current mortgage.

It sounds like refinancing gives me the most flexibility, so I'm going to do it.
Last edited by Tom_T on Mon Oct 26, 2020 6:44 am, edited 1 time in total.
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Re: Potential job loss at 62

Post by Outer Marker »

Sorry to hear about your late career disruption. On the theory of "hope for the best, prepare for the worst" I would definately refi to a 30 year at today's super low rates with enough in lender credits to offest the cost. Check out AmeriSave.

I suspect you are being too pesimistic about your prospects for employment. My teenage daughter made $15/hr as a lifeguard this summer, during covid. If you've got skills and experience in tech, I think you're worth more than her sassy butt!

If the severance comes through, you can pay down the mortgage, but by all means lock in the low 30 year payment while you have a steady income stream and easy path to refi.
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Tom_T
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Re: Potential job loss at 62

Post by Tom_T »

In a way, I have to laugh about it. There's a Twitter meme that goes something like this:

Me: "The year 2020 can't get any worse!"
2020: "Hold my beer"
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anon_investor
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Re: Potential job loss at 62

Post by anon_investor »

Tom_T wrote: Mon Oct 26, 2020 6:26 am
Watty wrote:If you can find a new mortgage with low or no closing costs there would be no downside to refinancing if you can get the same or lower interest rate.

What is the interest rate on your current mortgage?
Current rate is 3.5%. My current 15-year mortgage has six years to go, and my original plan was to work until 66 and then pay off the last two years and be done with it. Balance is dropping fast: 108K, 87, 66, 44, 21, 0 are the end-of-year balances from now until the end.

On the other hand, if I refinance, I'd have more options. If I think I won't have a job in a year, I could continue to make the same monthly payment as now until that time, and lower the balance even faster. After that, I could continue the extra payment by pulling money out of my IRA each month (this would be approximately a 5% withdrawal for the year, allowing for taxes), and do this for a couple of years. This would actually lower my balance even faster than what I would owe on my current mortgage.

It sounds like refinancing gives me the most flexibility, so I'm going to do it.
Look for a "no cost" refi. This means you are NOT rolling any costs into your new loan and lenders credits are large enough to all costs, with you only paying prepaids and funding escrow (both of which you would have to pay regardless).
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sapphire96
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Re: Potential job loss at 62

Post by sapphire96 »

Tom_T wrote: Mon Oct 26, 2020 6:26 am
Watty wrote:If you can find a new mortgage with low or no closing costs there would be no downside to refinancing if you can get the same or lower interest rate.

What is the interest rate on your current mortgage?
Current rate is 3.5%. My current 15-year mortgage has six years to go, and my original plan was to work until 66 and then pay off the last two years and be done with it. Balance is dropping fast: 108K, 87, 66, 44, 21, 0 are the end-of-year balances from now until the end.

On the other hand, if I refinance, I'd have more options. If I think I won't have a job in a year, I could continue to make the same monthly payment as now until that time, and lower the balance even faster. After that, I could continue the extra payment by pulling money out of my IRA each month (this would be approximately a 5% withdrawal for the year, allowing for taxes), and do this for a couple of years. This would actually lower my balance even faster than what I would owe on my current mortgage.

It sounds like refinancing gives me the most flexibility, so I'm going to do it.
Another consideration is (and I am assuming here) it will be a lot harder, if not very unlikely, for you to be *able to* refinance if you do become unemployed. Then you are stuck with the original 15 year. If you suspect there is a material risk to being laid off, then I would consider refinancing to a 30 year. You can always pay extra each month to mimic the original mortgage if you remain employed.
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mr_brightside
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Re: Potential job loss at 62

Post by mr_brightside »

chw wrote: Sun Oct 25, 2020 5:28 pm
rr2 wrote: Sun Oct 25, 2020 4:27 pm If possible, refinance to a thirty year. Rates are really low.
Do this ASAP! If you don’t lose your job, you can still make extra principal payments, but the refi would give you options. Don’t delay in case you lose the job sooner than later.
agree. that refi would give you options and a little breathing room.

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Re: Potential job loss at 62

Post by Outer Marker »

Tom_T wrote: Sun Oct 25, 2020 2:57 pm Mortgage balance is $115K with six years to go. Monthly payment is $2,700. No way can we swing that without my current paycheck.

We do have assets: I have $400K in IRA. Wife is 58, she has $160K IRA. (Both are approximately 60/40 split.) She will have $120K in inheritance cash within a couple of months. $45K is needed for college tuition. I am expecting my own inheritance of around $175K within 1-5 years. Add all that up, and we'll be in good shape by the time I reach 65 -- if I can get there in one piece! My original plan was to wait until 70 for SS, because between myself and my wife, we'd be getting ~70K/year if we can wait until then, and we're both very healthy so I think it's a good choice. . . .
I would also reconsider whether you are in a position to pay for college given the current unexpected turn of events. I would not want my parents to have jeaopardized their own security and retirement to pay for my school. The upcoming $45,000 college tuition can likely be funded with student loans. If the inheretance you're expecting works out and you're then in a position to be generous and help your child pay it off, great. If not, they have years to pay it off and you do not. I will say from personal experience that paying a part of my education increased it value to me. Don't count on the inheritance until the grantor is deceased and you have seen the will. Patients can linger for a long time and require very high end stage care expenses. Agree with your plan to delay SS as long as possible.
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Re: Potential job loss at 62

Post by David Jay »

Tom_T wrote: Mon Oct 26, 2020 6:26 am
Watty wrote:If you can find a new mortgage with low or no closing costs there would be no downside to refinancing if you can get the same or lower interest rate.

What is the interest rate on your current mortgage?
Current rate is 3.5%. My current 15-year mortgage has six years to go, and my original plan was to work until 66 and then pay off the last two years and be done with it. Balance is dropping fast: 108K, 87, 66, 44, 21, 0 are the end-of-year balances from now until the end.

On the other hand, if I refinance, I'd have more options. If I think I won't have a job in a year, I could continue to make the same monthly payment as now until that time, and lower the balance even faster. After that, I could continue the extra payment by pulling money out of my IRA each month (this would be approximately a 5% withdrawal for the year, allowing for taxes), and do this for a couple of years. This would actually lower my balance even faster than what I would owe on my current mortgage.

It sounds like refinancing gives me the most flexibility, so I'm going to do it.
I would ask your lender if they can recast Your mortgage. If they will recast the mortgage, that will lower your monthly payment without closing costs, which seems the thing to do with a payoff with the inheritance.
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Re: Potential job loss at 62

Post by Outer Marker »

David Jay wrote: Mon Oct 26, 2020 9:15 am I would ask your lender if they can recast Your mortgage. If they will recast the mortgage, that will lower your monthly payment without closing costs, which seems the thing to do with a payoff with the inheritance.
I respectfully disagree. Rates are so much lower today you can likely get a new 15 year for nearly a full point less with enough lender credits to cover all closing costs. Its worth the minor paperwork hassle vs. recasting the mortgage. On $115,000 outstanding balance, that's basically $1,000/yr in free no-risk money.
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Re: Potential job loss at 62

Post by Jack FFR1846 »

Outer Marker wrote: Mon Oct 26, 2020 8:58 am
Tom_T wrote: Sun Oct 25, 2020 2:57 pm Mortgage balance is $115K with six years to go. Monthly payment is $2,700. No way can we swing that without my current paycheck.

We do have assets: I have $400K in IRA. Wife is 58, she has $160K IRA. (Both are approximately 60/40 split.) She will have $120K in inheritance cash within a couple of months. $45K is needed for college tuition. I am expecting my own inheritance of around $175K within 1-5 years. Add all that up, and we'll be in good shape by the time I reach 65 -- if I can get there in one piece! My original plan was to wait until 70 for SS, because between myself and my wife, we'd be getting ~70K/year if we can wait until then, and we're both very healthy so I think it's a good choice. . . .
I would also reconsider whether you are in a position to pay for college given the current unexpected turn of events. I would not want my parents to have jeaopardized their own security and retirement to pay for my school. The upcoming $45,000 college tuition can likely be funded with student loans. If the inheretance you're expecting works out and you're then in a position to be generous and help your child pay it off, great. If not, they have years to pay it off and you do not. I will say from personal experience that paying a part of my education increased it value to me. Don't count on the inheritance until the grantor is deceased and you have seen the will. Patients can linger for a long time and require very high end stage care expenses. Agree with your plan to delay SS as long as possible.
The only student loans I'm aware of that are not parent loans are Staffords. First year is only $5500.

Certainly, the choice of college can be changed. But $45k isn't much more than full state college with dorm cost in my state (a bit over $30k a year). With 2 years worth of Staffords, its possible in my state to squeek out 2 years from that $45k. I do know that other states have lower cost state colleges.

I'd look into 2 things for the house. A NO COST refinance. I hear advertisements on the radio again for these. Yes, the rate will be higher than bribing the bank....I mean paying points, but when you are either again comfortable at your present job or in a new, similar job, you won't have paid the bribe for no reason. The other is a NO COST HELOC. I have one of these, which is a much higher rate than a mortgage. But it's only there for emergencies. Lastly (I said 2, but thought of another) is to look into refinancing your cars. I know DCU has great rates for car refi and advertises for these all the time. They tend to be far lower than any mortgage rate.
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Re: Potential job loss at 62

Post by willthrill81 »

I agree that a no-cost refi makes the most sense. Yes, the rate may be a little higher, but avoiding closing costs is significant, and if the OP doesn't lose the job, the mortgage should be paid off as quickly as possible anyway.

This is a good illustration as to why many folks should pay off their mortgage before their 60s.
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oldfort
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Re: Potential job loss at 62

Post by oldfort »

delamer wrote: Sun Oct 25, 2020 5:11 pm
Wrench wrote: Sun Oct 25, 2020 4:42 pm
Tom_T wrote: Sun Oct 25, 2020 2:57 pm <SNIP>

My immediate question: I am thinking about refinancing the mortgage, which will cut the monthly nut from $2,700 to $1,200 - obviously a big difference.
<SNIP>
If you can save $1500 per month on your mortgage why wouldn't you do it regardless of what happens with your job? Even if closing costs are $3K-$5K, you can recover those in a few months with that reduction in payment.
Because their current mortgage will be paid off in 6 years and they’ll be significantly extending the term if they refi.

But given the uncertainty of their situation, I think it makes sense to do the refi. If the job situation turns out to be better than expected, they can pay it off earlier.
My back of the envelope math suggest they will pay $80k in interest on a $115k balance over the next 6 years. I didn't run the exact numbers, but this appears to be way above market interest rates.
bearwithbear
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Re: Potential job loss at 62

Post by bearwithbear »

OP,

The mortgage numbers are confusing. Oldfort's back of the envelope calculation shows that. Can you give us the details on the mortgage?
You told us 3.5% and monthly payment is $2,700. So $380,000 was financed? But then the balance of $115,000 is off.

Thanks,
Bear
rich126
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Re: Potential job loss at 62

Post by rich126 »

You might also want to search for online/work at home jobs depending on what you do in technology. There are a lot of tech opportunities you can do from home and they will pay a lot more than $15/hr. At least investigate some so you have a head start if you do lose your job.
michaeljc70
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Re: Potential job loss at 62

Post by michaeljc70 »

I would refinance assuming the first inheritance is going toward the college tuition. As others said consider any severance pay you might get. You probably can also collect unemployment. I don't know what you make now, but I'd collect unemployment and look for a job in my field before taking a job for $15/hour until the unemployment is exhausted. Though I don't think you need to, there's also no shame in taking SS early if you need to. Nobody knows if waiting to take SS is going to pay off (unless you know when you are going to die).
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Tom_T
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Re: Potential job loss at 62

Post by Tom_T »

bearwithbear wrote: Mon Oct 26, 2020 11:03 am OP,

The mortgage numbers are confusing. Oldfort's back of the envelope calculation shows that. Can you give us the details on the mortgage?
You told us 3.5% and monthly payment is $2,700. So $380,000 was financed? But then the balance of $115,000 is off.

Thanks,
Bear
Ah, I should have clarified that 2700 includes taxes and insurance. Actual P&I is around 1850.
bearwithbear
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Re: Potential job loss at 62

Post by bearwithbear »

OP,

Thanks for the updated numbers.
So looks like you will pay about $18,250 of interest over the last 6 years of your current 15 year mortgage.
If you refi at the same 3.5% then your payment drops about $1,000 per month. If the new mortgage goes to term then you would pay less than $35,000 total interest on the new loan. If you could get that to 3.0% it would drop to about $29,000.
Makes sense to do the refi now.
Also if your employment doesn't change, if you pay the loan off in full within 5 or 6 years you may not have paid more than the interest on the original loan.
That $1,000 a month that you would be saving, I would not put it toward the mortgage. Build up taxable or Roths. Put it where you get flexibility to use it in case you lose your current job. If everything turns out for the best, take that big pile of cash and pay off the mortgage early.

Best,
Bear
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FelixTheCat
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Re: Potential job loss at 62

Post by FelixTheCat »

I planned my downfall. Company was sold and we were told there would be no changes. The company started layoffs every year for 5+ years. I knew the writing was on the wall.

I cut expenses to NEEDs only. I paid off all of my debt including my home. I took my old mortgage payment and started investing it.

When my time came, I smiled because I was in a great position to retire early.
Felix is a wonderful, wonderful cat.
bmelikia
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Re: Potential job loss at 62

Post by bmelikia »

Tom_T wrote: Sun Oct 25, 2020 2:57 pm Need some sage advice. I am about to turn 62, and my company has just been sold. I am not optimistic I will have a job a year from now. I am in tech, but getting another job in this field at my age would be a miracle and I'm not expecting to do so.

I have figured that if I can get any job that pays $15/hour, that, along with my wife's job, and some minor IRA withdrawals, we'd be ok with the bills -- except for the mortgage. Mortgage balance is $115K with six years to go. Monthly payment is $2,700. No way can we swing that without my current paycheck.

We do have assets: I have $400K in IRA. Wife is 58, she has $160K IRA. (Both are approximately 60/40 split.) She will have $120K in inheritance cash within a couple of months. $45K is needed for college tuition. I am expecting my own inheritance of around $175K within 1-5 years. Add all that up, and we'll be in good shape by the time I reach 65 -- if I can get there in one piece! My original plan was to wait until 70 for SS, because between myself and my wife, we'd be getting ~70K/year if we can wait until then, and we're both very healthy so I think it's a good choice. I have zero desire to take SS early. If I take it at FRA (66.7 months), then it's just me because my wife is only 62 by then and she plans on working longer than that.

My immediate question: I am thinking about refinancing the mortgage, which will cut the monthly nut from $2,700 to $1,200 - obviously a big difference. That will give me perhaps a few months to sock away extra cash while I can still do so. I still have the option to pay it off (or pay it down faster) within five years using our other assets if I so choose. Also, my wife and I have discussed downsizing to a smaller house in the next few years, and the possible places are perhaps $50-75K less than the current value of my home, so we could probably pay cash even after paying off whatever mortgage we still have at that time.

The company sale is still three months from closing, so nothing is imminent with my job. -- and I'm a key part of the tech team that would be involved in integrating our applications into theirs, so I think I'm safe for a little while, but there are a lot of unknowns right now. I decided that now is the time to start planning, especially while I still have a good paycheck stub to show a refinancing officer.

Any advice to help me get my head wrapped around all this would be greatly appreciated.
Over your course of having this mortgage did you ever pay EXTRA towards principal? The reason I ask is that if you did pay extra towards principal over that time you may be eligible to do a "mortgage recast" that could give you some temporary relief.
"I would rather die with money, than live without it...." - Bogleheads member Ron | | "The greatest enemy of a good plan, is the dream of a perfect plan." | -Bogle
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JaneyLH
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Re: Potential job loss at 62

Post by JaneyLH »

I was subject to a layoff after company sale at age 45, after receiving permission to relocate and telecommute one year earlier. Very little tech labor market in new area... Fortunately I had my home paid off so expenses weren't overwhelming. I called all my contacts and put out feelers.

Within 3 weeks I was hired as a contractor earning the same amount of money as before. Another year went by and I got a lead on another contractor position with my old company at $125/hour, a good raise over what I had been earning. That lasted another year, and other work came and went.

Don't give up hope on your current position, or fear you won't get another. A positive outlook is very helpful. Getting the mortgage expense down will also help you breathe a little bit easier. Good luck!
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JoeRetire
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Re: Potential job loss at 62

Post by JoeRetire »

Tom_T wrote: Sun Oct 25, 2020 2:57 pm Need some sage advice. I am about to turn 62, and my company has just been sold. I am not optimistic I will have a job a year from now. I am in tech, but getting another job in this field at my age would be a miracle and I'm not expecting to do so.
What kind of tech? I know plenty of folks "in tech" who got consulting/contracting jobs after being laid off in their 60s. And I know others who were able to land full time permanent positions. They were flexible and got jobs in roles related to their previous roles.
I have figured that if I can get any job that pays $15/hour, that, along with my wife's job, and some minor IRA withdrawals, we'd be ok with the bills -- except for the mortgage. Mortgage balance is $115K with six years to go. Monthly payment is $2,700. No way can we swing that without my current paycheck.

We do have assets: I have $400K in IRA. Wife is 58, she has $160K IRA.
So you have plenty of money to help pay your monthly mortgage. You can swing it without a paycheck if needed.
$45K is needed for college tuition.
Whose college tuition? Can't they get a loan?
Add all that up, and we'll be in good shape by the time I reach 65 -- if I can get there in one piece!
With your retirement savings, that should be simple. You'll arrive in one piece.
My original plan was to wait until 70 for SS, because between myself and my wife, we'd be getting ~70K/year if we can wait until then, and we're both very healthy so I think it's a good choice.
I agree. Most likely you are in exactly the situation where delaying to 70 would be most beneficial (you will need higher benefits and can afford to delay). But check with https://opensocialsecurity.com/ to be sure.
I am thinking about refinancing the mortgage, which will cut the monthly nut from $2,700 to $1,200 - obviously a big difference.
Without numbers, it's not possible to give advice. In general, it's a great time to refinance, with extremely low rates.
I still have the option to pay it off (or pay it down faster) within five years using our other assets if I so choose.
That would almost certainly be exactly the wrong thing to do.
The company sale is still three months from closing, so nothing is imminent with my job. -- and I'm a key part of the tech team that would be involved in integrating our applications into theirs, so I think I'm safe for a little while, but there are a lot of unknowns right now. I decided that now is the time to start planning, especially while I still have a good paycheck stub to show a refinancing officer.
Don't panic. Look around, but don't jump until necessary. Wait to see what actually happens after the company is purchased.

When my small company was purchased by a megacorp, it took several years before anything at all changed. And even then the changes were gradual, and (barely) tolerable until I retired.
It's the end of the world as we know it. | It's the end of the world as we know it. | It's the end of the world as we know it. | And I feel fine.
Outer Marker
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Re: Potential job loss at 62

Post by Outer Marker »

bmelikia wrote: Mon Oct 26, 2020 2:48 pm Over your course of having this mortgage did you ever pay EXTRA towards principal? The reason I ask is that if you did pay extra towards principal over that time you may be eligible to do a "mortgage recast" that could give you some temporary relief.
To repeat, at today's lower rates, it is much more advantageous to do a zero-cost refi to obtain a lower rate and a longer term than to recast at the original rate.
megabad
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Re: Potential job loss at 62

Post by megabad »

I’ll be the contrarian here...I don’t see what the refi would do for you. Unless you default, either you can afford the house or not, a refi doesn’t change that long term. The market timer in me believes that you may be better off with a 3% guaranteed return paying off the mortgage thrown than in investments at your current asset allocation. The possible exception is if you plan on default (which is basically what millions of Americans are doing right now as allowed by the CARES Act). If so, then I agree that a refi can make sense. In fact, I might do a cash out if this was my chosen path.
johnny
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Re: Potential job loss at 62

Post by johnny »

You might seriously consider selling your house to free up cash, rent for a while or buy a smaller house. It's a seller's market where I am.

I sold last year before the recession and now rent. Lost my job in the spring, but monthly rent is appreciably less than my mortgage payment was and I have flexibility to deal with life as it comes.
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