About to be laid off. Will we be OK? Also, how bad is a career break?

[framez]

Ages: 40, 37, 1.5

Current Asset allocation: 80% stocks (VOO) / 20% bonds/cash

Total portfolio: ~5M

Current annual expenses: ~130K

Emergency funds: Have 6 months of expenses in cash in addition to portfolio above.

Debt: None

Annual Family Income: Low 7 figures in the last few years, about to become ~60K after layoff

Tax Filing Status: Married Filing Jointly

The primary breadwinner in our family is about to be laid off from a tech Megacorp. They are in a relatively senior management position and finding a new role is proving to be very difficult in the current environment.

Questions:

1. Will we be OK with our current expenses or do we need an intervention to reduce spending? How long can we realistically sustain this?

2. Is there anything we need to do to prepare for upcoming unemployment?

3. Need some wisdom from other tech Megacorp bogleheads: How long of a career break is OK for someone to take in a senior role before it becomes impossible to get back into the game? Is it better to pursue other management roles in Megacorps or try building a startup in the current environment? Is the current portfolio a sufficient cushion to take the startup risk?

4. Existential question: How do you successfully separate self-worth and income? At some point it would be nice to not care about income at all.

[crre]

you will be ok. 130K / 5M = 2.6%, so if you are right about your expenses (did you include health care?) neither of you need to work ever again.

i can't speak to the career thing, but as to your existential question: one of you was making low 7 figures, one was making 60k, and you ask how to successfully separate self-worth from income. do you really believe that one partner is a better human, more to be admired, whatever, than the other? if not, then there's your answer.

[Valuethinker]

Ages: 40, 37, 1.5

Current Asset allocation: 80% stocks (VOO) / 20% bonds/cash

Total portfolio: ~5M

Current annual expenses: ~130K

Emergency funds: Have 6 months of expenses in cash in addition to portfolio above.

Debt: None

Annual Family Income: Low 7 figures in the last few years, about to become ~60K after layoff

Tax Filing Status: Married Filing Jointly

The primary breadwinner in our family is about to be laid off from a tech Megacorp. They are in a relatively senior management position and finding a new role is proving to be very difficult in the current environment.

Questions:

1. Will we be OK with our current expenses or do we need an intervention to reduce spending? How long can we realistically sustain this?

2. Is there anything we need to do to prepare for upcoming unemployment?

3. Need some wisdom from other tech Megacorp bogleheads: How long of a career break is OK for someone to take in a senior role before it becomes impossible to get back into the game? Is it better to pursue other management roles in Megacorps or try building a startup in the current environment? Is the current portfolio a sufficient cushion to take the startup risk?

4. Existential question: How do you successfully separate self-worth and income? At some point it would be nice to not care about income at all.

Not US based, not directly involved in tech any longer.

So, impressionistically:

1. yes, you will be fine. Be careful to ensure you have enough cash or ST bonds, CDs etc for 1-2 years. It could be quite a while before you get back on the horse (or you might have a career change). You already have 6 months of this.

I would consider going to 70/30 or 60/40 on your asset allocation, for safety.

But you are just over 2% of your portfolio as a burn rate, you should be fine. More than, in fact.

2. How to spend your days. You might say spend the AM doing the usual job hunt things. And then spend PM on personal activities: exercise, writing, walk in the park, art galleries etc. Just plan your leisure time as zealously as you do your working time. It's too easy to wind up watching TV (or yelling at the news).

You might also consider this opportunity to visit some of the places you have always wanted to go to, but never have. Those 3/4 week chunks. You probably have to keep in touch by email in case of job leads, but otherwise - time to enjoy that in life.

The time spent with your 1 1/2 year old will be very special. Don't miss that. Keep a diary of those experiences (it's mostly pretty boring, ofc, but there's wonder in it too).

4. we all have to do this in retirement. It's come sooner to you. You are not only what you do for a living.

Don't be surprised if it takes you a couple of years to find a similar role - and the compensation may be half (or less). At the kind of level you have been on, a job with that responsibility will take a while to unearth. Be willing to shift vertical (eg tech to finance or industry or government) if the new role continues to develop skills and CV. And don't get too proud on compensation.

[mrmass]

What's your plan for health insurance? For your expenses, does that include RE Taxes?

How many years were they in that senior role?

[Claudia Whitten]

3. Need some wisdom from other tech Megacorp bogleheads: How long of a career break is OK for someone to take in a senior role before it becomes impossible to get back into the game? Is it better to pursue other management roles in Megacorps or try building a startup in the current environment? Is the current portfolio a sufficient cushion to take the startup risk?

I liked how Alexandria Ocasio-Cortez recently said she would be happy and proud to return to bartending if circumstances required. That's the attitude you need.

Are there more jobs for individual contributors or managers? The former, right? Before you "managed," you did something with the rank and file, I assume. Emphasize that. Have two resumes, one for management and one for individual contributor.

It's harder to find a job as a manager in a new company, and for good reason: It's riskier for companies to hire managers from outside, as they can come in and do tremendous damage to morale or productivity. I personally think companies are nuts to hire (middle) managers from outside the company unless they're a known quantity with proven people skills. Individual contributors are less risky to hire.

I went from management back to individual contributor when I saw that it was much easier to get hired as the latter, and now I don't want to return to management and have repeatedly turned away gestures to consider a management role.

As to portfolio, if I were you I'd reduce expenses and think "outside the box," as managers like to say, regarding relocation and your future. The world is a big place, and many tech companies in very attractive and less expensive countries have English as the working language. Layoffs are opportunities for someone with your means. I wish I had been laid off more than once in my life. I never felt happier, or freer, than after I got laid off by WorldCom in the dot-com bust. Sadly, I had another job in a week or two, for in those days the jobs came knocking, via headhunters. Not sure if it's still that way.

[Sandtrap]

<snip>
4. Existential question:
A
How do you successfully separate self-worth and income?
B
At some point it would be nice to not care about income at all.

to op:
Questions for you to ponder:
A1
Do you feel or act or function from a place, inner space, where your "self worth", "Identity", "confidence", "ethos", constructs -- are correlated -- to your "income" and "net worth financially", or perception of wealth??
A2
While that may be typical to AAA successful driven self-directed ambitious people/professionals with successful careers/businesses, etc, and is their "secret sauce" that powers them through the maze of "normal", -- do you realize that all of that is an artificial construct (especially in Westernized society and culture) that is "not" your "Self"??
B
We can only "not care" about income when our wants and needs are well provided for and assured such that we "feel" safe, secure, and protected as far as financially, family, lifestyle, and the future.
IE: When we are in poverty and shopping at the thrift store for clothing for our children then we indeed "care about income", and should, to provide safety and security for ourselves and our loved ones. We have a "filial obligation" to do so, to care.

"Reality check" to ponder on:
If you did not have your income and assets and financial security as you have now, would you "not care about income at all"?

C
Personal Existential Crisis can lead to either positive or negative, destructive or constructive, Personal Catharsis. While most will fervedly avoid trauma and change at that level, it can be a powerful impetus toward "Self" growth and realization, and life paths taken. (paraphrase from "As A Man THinketh" by James Allen)
D
Introspection is a good thing at the right times. Don't you think so?
"To live a self-examined life in the pursuit of knowledge and excellence in all things over a path of mediocrity and ambivilence is a noble path" (paraphrase from ancient Greek Stoic, Emperor Marcus Aurelius).

Reading: (Amazon: softcover)
"On The Shortness of Life" by Seneca
https://www.amazon.com/gp/product/B09DM ... UTF8&psc=1
"Man's Search for Meaning" by Viktor Frankl
https://www.amazon.com/Mans-Search-Mean ... 134&sr=1-1
"As A Man THinketh" by James Allen
https://www.amazon.com/gp/product/16409 ... UTF8&psc=1

E
Instead of a career "break", consider working part time or alternatives such as being "self employed" in a related field, consulting, etc. With your qualifications and experience, abilities and motivations, you can do anything at this point and thrive.
Will you lose "momentum" if you take a "break" or too long of a break occupationally?
What do you think?


I hope this is helpful for you.
j
dis laimer: many ways to things and thinking about things. This is only one.

[Watty]

Low 7 figures in the last few years, about to become ~60K after layoff
....
The primary breadwinner in our family is about to be laid off from a tech Megacorp. They are in a relatively senior management position and finding a new role is proving to be very difficult in the current environment.

I never worked anywhere near that level but I would expect that they would also get a good severance package so also keep that in mind.

Also, how bad is a career break?

Most of the executives I saw at that level who lost their jobs who quickly got similar jobs went to work with some former company president or at a supplier or competitor where they have personal contacts.

Frankly though some career paths are "Move up or out" and if a new similar new position is not found quickly through people they already know then they may never work at that level again.

There is a good chance that this is not a "career break" but that career path is over and if they want to keep working then they need to find a new career path and reinvent themselves if they want to keep working.

They should be doing job hunting hard right now and not be tempted to take a few months break since the longer they are out of a job the harder it will be to find a similar job.

Part of the problem with finding their next job is that if the company they are working for is struggling then with them being an executive they may be seen as part of the reason that the company was not doing well. It may not always be fair but there have been a lot of articles recently about how laid off tech workers are seen as being undesirable.

https://www.sfgate.com/tech/article/cal ... 723851.php

I worked my entire career as a software developer at the individual contributor level and when their were layoffs the underperforming people were usually the first people to be laid off so there is some truth to this. There are exceptions of course like when an entire project is canceled.

At many tech companies salaries and stock options have gotten way out of control and many people have been wildly overpaid by any rational measure. If they were making low 7 figures they may find that people who are being hired for similar jobs now are not even making seven figures. It is unlikely that any company will offer them a much lower salary just because they know that they are unlikely to be happy in a position which pays a fraction of what they were making.

1. Will we be OK with our current expenses or do we need an intervention to reduce spending? How long can we realistically sustain this?

You have a $5 million dollar portfolio and it was just put into a 4% money market fund it would generate $200K a year and the other spouse is earning $60K a year. You will be fine financially as long as you do not do anything crazy.

It would be good to look at your investment asset allocation to make sure you are more conservative now since this money may need to last you the rest of your lives.

In your taxable accounts it would be good to set up your investments to not automatically reinvest any dividends, interest, or capital gains distributions so that money will be available for your living expenses if you need it.

3. Need some wisdom from other tech Megacorp bogleheads: How long of a career break is OK for someone to take in a senior role before it becomes impossible to get back into the game? Is it better to pursue other management roles in Megacorps or try building a startup in the current environment? Is the current portfolio a sufficient cushion to take the startup risk?

I am not sure where the official line is but you will soon be middle age if you are not there already so you need to be more conservative financially. You cannot afford to risk putting a lot of your money into a startup now.

Going to work for a startup would be fine, just don't put any of your life savings into it. Most startups fail and you cannot afford that.

4. Existential question: How do you successfully separate self-worth and income? At some point it would be nice to not care about income at all.

Consider getting couples and individual counseling. Also look for support groups for other laid off tech workers.

Limit or eliminate the use of alcohol or recreational drugs even if legal in your state since there is a lot of risk abuse with those at a time like this. Even if legal in your state some companies still test for marijuana in employment screening so stop that if you are using it.

If you moved to some place like Silicon Valley for a tech job and you do not find other another good tech job then consider moving back to where you might have family since especially with a 1.5 year old toddler being around family might provide a lot of support. Of course some families will drive you crazy so being a long ways away could be a good thing.

[HomeStretch]

Welcome to the forum.

Does the $5 million portfolio exclude home equity and college savings?

With your $5 million portfolio and one income of $60k, you will be fine until a new job is found (which doesn’t have to be high-paying). Likely the partner being laid off will receive severance and/or unemployment which should soften the initial financial impact. Are there any vested equity awards that will increase your portfolio?

Your withdrawal rate now based on the #s posted is 1.4% = ($130k-$60k)/$5,000k. Does the $130k in annual expense include everything - income taxes, payroll deductions for employee healthcare premiums, periodic expenses such as a new car or significant home repair/maintenance?

If you have any unnecessary items in your spending, it never hurts to trim while income < spending.

The existential question you asked is one that every person needs to answer for themselves. I find practicing gratitude, meditation, and reflecting on the positive good things in my life helps put into perspective the negative speed bumps in life.

[jarjarM]

First of all, you'll be fine one way or another. Take a deep breath and relax a bit and enjoy some time off with the kids. As long as your estimate for expense is accurate (accounting for some of the one-off spends like car buying and home repair and also health care premium and out-of-pocket cost), you can last for a long time (into your retirement).

Both of my skip and his manager got hit by the 2023 great tech layoffs. Both of them were in senior management position and took about 6 months to find a new position (one in startup and another in legacy tech). Given the current economy environment, it's expected to have a 6-24 months gap for those hard-to-find senior management positions. This is especially true if the position is less technical and more about direction and knowing the customers/industries (like PM/sales/sourcing). As to the startup environment, it's getting tougher right now with many of the VCs reviewing their book and making sure that there's viable exit strategies for their investments. The talk of ROI on AI is pretty heavy these days, unlike back in 2023 and that's the probably still the easiest presentation to get funding. What type of role (generally speaking) were you in?

P.S. I don't have an answer for 4 but keep in mind that at at age 40 and $5mil, you're in the top 2% of the your age cohort so you're doing extremely well even without the 7 figure income. DW gave up 7 figure RSU on the table to spend more time with the DS because there's no money that can buy back those precious time spent with one's family. Good luck and really take some time off before plotting your next course of action

[framez]

2. How to spend your days. You might say spend the AM doing the usual job hunt things. And then spend PM on personal activities: exercise, writing, walk in the park, art galleries etc. Just plan your leisure time as zealously as you do your working time. It's too easy to wind up watching TV (or yelling at the news).

You might also consider this opportunity to visit some of the places you have always wanted to go to, but never have. Those 3/4 week chunks. You probably have to keep in touch by email in case of job leads, but otherwise - time to enjoy that in life.

The time spent with your 1 1/2 year old will be very special. Don't miss that. Keep a diary of those experiences (it's mostly pretty boring, ofc, but there's wonder in it too).

Very good advice. Thank you.

Both of my skip and his manager got hit by the 2023 great tech layoffs. Both of them were in senior management position and took about 6 months to find a new position (one in startup and another in legacy tech). Given the current economy environment, it's expected to have a 6-24 months gap for those hard-to-find senior management positions. This is especially true if the position is less technical and more about direction and knowing the customers/industries (like PM/sales/sourcing). As to the startup environment, it's getting tougher right now with many of the VCs reviewing their book and making sure that there's viable exit strategies for their investments. The talk of ROI on AI is pretty heavy these days, unlike back in 2023 and that's the probably still the easiest presentation to get funding. What type of role (generally speaking) were you in?

Thanks for sharing your perspective on the current startup funding environment. I was in Engineering.

[smartspider1106]

I’m a career coach and have many clients take breaks. Used to be largely by choice but with all the layoffs in the last couple years, many have been forced to take breaks.

No one has regretted it to date! And anyone I’ve worked with who has wanted to find a role has found one, even with the gaps. As others have said, expect it to take some time, give yourself some grace, and most importantly, enjoy it! It won’t last forever and you’ll be glad you enjoyed it while you could.

[Ztx]

If your expenses are calculated correctly you can retire now and never work again. If you do that , I'd just bump up "cash equivalent" cushion to 1-2 years of spending.

If you don't want to fully retire yet, just get a simple job you'd enjoy (making enough to cover expenses) and "Coast FIRE" ( this way you let your portfolio grow without touching it).

Regardless of what you would do - you're in good shape!

[KlangFool]

Current annual expenses: ~130K

Annual Family Income: Low 7 figures in the last few years, about to become ~60K after layoff

framez,

Please use the following formula to verify your current annual expense. Please use all 2023 numbers:

Gross Income = Annual Expense + Annual Savings/Investment + Taxes

A) You know your gross income.

B) You know your annual savings/contribution to 401K/IRA/Taxable account

C) You know your taxes (Federal, State, Social Security, Medicare) from your tax filing and 2023 pay slips.

Annual Expense = Gross Income - Annual Savings/Investment - Taxes

KlangFool

[SnowBog]

i can't speak to the career thing, but as to your existential question: one of you was making low 7 figures, one was making 60k, and you ask how to successfully separate self-worth from income. do you really believe that one partner is a better human, more to be admired, whatever, than the other? if not, then there's your answer.

+1

To add to this, our household has a large income disparity as well. It was eye opening to sit down with a financial planner who was trying to sell us life insurance - and get an AUM fee... While we ultimately left the FA (and didn't buy anything from them)... The sobering point was when it was obvious that the lesser income spouse arguably needed much higher life insurance - vastly beyond "their income". The only reason that the higher income person was able to have the career/income that they did was because of the lower income spouse. If that spouse wasn't there, the career/earning potential of the higher income person cratered (or would do so assuming that the kids weren't sacrificed in the process, so a parent remain engaged with them directly).

That provided a - in our case - much needed "reality check". It was very clearly "our" income. And given that it was "our" income, that also provided a much healthier perspective.

As others have noted, assuming OP's expense estimates are correct, they could retire and never work again. This might be an "unexpected good thing" as it forces them to reasses the situation. When your head is down, the money is flowing in, and your spouse is keeping everything else together (maybe more than you had realized) - it's hard to appreciate - hard to realize there are other options.

OP - take time to enjoy discovering those options. Take time to enjoy the spouse and family. View this time through a positive lens.

[bd7]

The primary breadwinner in our family is about to be laid off from a tech Megacorp. They are in a relatively senior management position and finding a new role is proving to be very difficult in the current environment.

Does the million-dollar manager have an MBA or other advanced degree? How specialized is/was their management experience.

How do you successfully separate self-worth and income?

It can be tough if your peer group is based on similarly situated colleagues. People will judge you. You might need some new friends.

[srt7]

At 40/37 with $5MM, no debt and presumably that $60K income comes with health insurance, you'll be more than fine. Take a break and spend your time with the 1.5 year old. The only guarantee is your time with your kid at that age is never coming back.

[tjtv]

If the numbers are accurate then certainly you could never work a day again and be fine.

But is the really $130k rock-solid and inclusive of things like healthcare and taxes? With a salary like that, it's more likely than not that you're in VHCOL. You didn't mention things like rent/mortgage, so perhaps you have a paid off house - but then if so it would be good to quantify how much of the equity in that paid off house is included in your NW. If $3M of home equity is included in your $5M net worth, then the situation changes quite a bit. Your child is also 1.5years old and while you don't give a breakdown of what the childcare expenses are today, there's the potential for the expense to go up significantly as the child ages, and then what about the potential for a child #2 or #3?

[Wannaretireearly]

OP, you’ll be fine either way, but does $5M include or exclude your primary property value?

[framez]

We're currently renting in a VHCOL. The 60K income comes with health insurance.

[Wannaretireearly]

We're currently renting in a VHCOL. The 60K income comes with health insurance.

The nice thing about renting is the flexibility you have. Fairly easy to move to smaller/cheaper if really needed. If your $130k includes rent, then you already live lean and will be ok.

Take a breather. It’s rough out there and you have built a solid lifeboat.

[Valuethinker]

We're currently renting in a VHCOL. The 60K income comes with health insurance.

The nice thing about renting is the flexibility you have. Fairly easy to move to smaller/cheaper if really needed. If your $130k includes rent, then you already live lean and will be ok.

Take a breather. It’s rough out there and you have built a solid lifeboat.

This is absolutely the case. I love the way you have phrased it.

Invest in personal development. Maybe take some of those courses that you have always been putting off. Is this the moment to do an online course on Finance and Accounting? Because you never properly understood what Finance was going on about. Some technical area?

Also that time with the 1 1/2 year old. They change so fast! Little baby next door is now talking in whole sentences (just over 2 years old) even if they are partly gibberish.

I think at the Original Poster's level, it could easily be 1-2 years before they find a suitable role. They should focus on how they want to develop in the next role: what management or other skills they want to develop. What are their "jagged spikes" in terms of what are their key strengths and what environments will they best be able to deploy those?

[WWJBDo]

Just want to point out that $5M in tax deferred accounts is not the same as $5M in post-tax brokerage accounts.

If your assets are mostly pre-tax, then your annual withdrawal will need to be higher that $130k. I like this site to estimate the withdrawal I need to cover a specific annual expense. Input your state, select annual salary and test away.

https://smartasset.com/taxes/paycheck-calculator

[jarjarM]

We're currently renting in a VHCOL. The 60K income comes with health insurance.

Then you have plenty of flexibilities to either find a new position in the next 12-24 months or move out of the VHCOL area and retire for good. Since you're in engineering, I would say 6-12 months gap is fairly typical in those roles (there just aren't that many openings) but after 24 months it probably needs to explain to hiring team.

[unwitting_gulag]

4. Existential question: How do you successfully separate self-worth and income? At some point it would be nice to not care about income at all.

Focusing just on this... it's been my evolving view, that the ego or "self worth" is more about funds-accumulated (portfolio balance) than annual income. Income rises and falls, and varies from employer to employer, largely by fashions or circumstance or how one markets oneself. Especially at the higher income level, two persons of comparable skill and contribution, might command vastly different salaries. Income is evanescent; high today, zero tomorrow. It's also highly taxed... with how much one keeps, highly dependent on things like family-status.

But barring calamities in the markets, the portfolio endures. It accumulates through savings and CAGR. Employment, even if fine and remuneratively generous, eventually ends. The portfolio persists. One might take a low-paying job, say with emphasis on service or personal satisfaction or just an easy schedule... while the portfolio carries the weight of economic vitality.

Whether working full-time, part-time, retired or unemployed... we might wish to direct our material self-regard, to the extent that we're entangled in such self-regard, towards the portfolio, and not towards the annual W2 or 1099.

[White Coat Investor]

Total portfolio: ~5M

Current annual expenses: ~130K



1. Will we be OK with our current expenses or do we need an intervention to reduce spending? How long can we realistically sustain this?

2. Is there anything we need to do to prepare for upcoming unemployment?

3. Need some wisdom from other tech Megacorp bogleheads: How long of a career break is OK for someone to take in a senior role before it becomes impossible to get back into the game? Is it better to pursue other management roles in Megacorps or try building a startup in the current environment? Is the current portfolio a sufficient cushion to take the startup risk?

4. Existential question: How do you successfully separate self-worth and income? At some point it would be nice to not care about income at all.

1. Really? You're that rich and don't know the basic formula of when you're financially independent? You basically need <$3.5M to be FI and you have $5M. You're fine to retire NOW if you want. You can sustain this FOREVER.

2. Get severance?

3. Dunno. Months probably okay, years probably not.

4. It's a big blow to the ego for sure, but you can shelter it by remembering you're pentamillionaires.