The axe falls and I am prepared. What's next?

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Leemiller
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Re: The axe falls and I am prepared. What's next?

Post by Leemiller » Fri May 22, 2020 7:53 pm

I’m sorry to hear it but glad you are so prepared and have encouraged others to be so prepared.

The great thing is you don’t have to decide anything now! I would personally take the higher unemployment until July and then reevaluate. I might also see if there was work that interested me, paid or perhaps as a volunteer. Maybe even a fun part-time job when things are different - hopefully in 6 months or a year. Perhaps your wife can even work a bit more if needed, but I agree with others that you are in great shape for an early retirement.

simas
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Re: The axe falls and I am prepared. What's next?

Post by simas » Fri May 22, 2020 7:56 pm

KlangFool wrote:
Fri May 22, 2020 6:43 pm

2) I was unemployed for more than 1 year a few years ago. And, the severance is a lump sum. I am immediately eligible for unemployment benefits. I am reverifying this again.

KlangFool
Yes, that is how this works - with formal layoff you should be 100% eligible for unemployment regardless of severance or its amount. apply the date you have on the notice.

New Providence
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Re: The axe falls and I am prepared. What's next?

Post by New Providence » Fri May 22, 2020 7:57 pm

Hey man, I think that you are well-prepared. I wish you well.

New Providence.

JonnyB
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Re: The axe falls and I am prepared. What's next?

Post by JonnyB » Fri May 22, 2020 7:59 pm

Have you ever tried consulting? It allows you to keep your hand in an field you are interested in but without all the hassle of a regular job.

And I don't mean the 40-hour-a-week fake employee contractor. Do you have a reputation as someone who can parachute into an unfamiliar situation and come up to speed quickly? Become a smokejumper who parachutes into a company in trouble and pulls their bacon out of the fire. One or two months tops.

They are grateful for your expertise and compensate you accordingly. You don't have to get involved in company politics. You don't even care if the company succeeds or fails ultimately. You do your thing and then quickly exit with your fat check.

You are never anywhere long enough to get bored. You work on new things and learn new things every day. You have the freedom to do the jobs you like. Even the less fun stuff is easier to tolerate when you are making twice your old rate and you can leave any time you like.
Last edited by JonnyB on Fri May 22, 2020 8:00 pm, edited 1 time in total.

jjface
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Re: The axe falls and I am prepared. What's next?

Post by jjface » Fri May 22, 2020 8:00 pm

Just retire. I would.

Topic Author
KlangFool
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Re: The axe falls and I am prepared. What's next?

Post by KlangFool » Fri May 22, 2020 8:16 pm

dcabler wrote:
Fri May 22, 2020 7:52 pm
KlangFool wrote:
Fri May 22, 2020 6:17 pm
Folks,

So, it happened. I will be laid off by the end of June.

The basic financial stuff:

A) 3 months severance pay

B) 1 year subsidized medical insurance.

C) 1 year COBRA

D) 110K to 120K of the Emergency Fund

E) 1.35 to 1.4 million 60/40 portfolio

F) Late 50+ years old.

G) Annual expense of about 50K to 60K per year. (Total before wife's income)

H) My wife will continue working at 15K per year with good medical and dental insurance.

I) I had crossed the second bend points for Social Security. So, social security income for me and my wife combined is about 3K to 4K per month.

My question is

1) Is it really worthwhile for me to continue working? I worked in the IT area. If I want to stay in this area, I have to study 10 to 20 hours per week just to keep up with the latest technology.

2) If I do contract work, how much should I get paid before it is worthwhile for me to work?

A) I only plan to work 20 hours per week. Between unemployment and the $600 per week, I will get about $900 per week. Unless I am paid at $90 per hour or higher, it may not be worthwhile for me to work

3) Any other comment/feedback as to how do you decide whether you should continue working or just retire.

KlangFool
I've watched your posts over the years and you're a pretty conservative guy: belts, suspenders, elastic waistband + some velcro. I think you'll be fine.

I'm also late 50's, semiconductor industry. Wife not working, but expenses about a little over 2x what you show on your high end. But Portfolio a little over 2X yours and I've felt for a while now that I'm fine if what happened to you happens to me.

Only question - can you explain points B and C? Does C mean that they will pay for your Cobra for 1 year? And does B mean that they will subsidize your health insurance for the next 12 months after the 1 year of Cobra? If so, that's actually pretty sweet.

Where I live contract work is highly variable anywhere from $60 to probably $90 at the high end. But that's in my industry, not yours. Question is how long does your unemployment last and does it make sense to study during that time, then switch over to contracting after unemployment runs out? Then again, I think you're probably fine even if you never go back to work, but you might consider getting an IT job with the local or state government if all else fails.

Cheers and best of luck!
dcabler,

<<Only question - can you explain points B and C? Does C mean that they will pay for your Cobra for 1 year? And does B mean that they will subsidize your health insurance for the next 12 months after the 1 year of Cobra? If so, that's actually pretty sweet. >>

They pay for 1 year of subsidized medical insurance and then it switches to 1 year of COBRA.

<<Question is how long does your unemployment last and does it make sense to study during that time,>>

Normal unemployment lasted for 26 weeks. The $600 per week lasted until July unless the government extends it again.

<<you might consider getting an IT job with the local or state government if all else fails. >>

This does not work. They will go for a cheaper and younger alternative.

KlangFool

dvvader
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Re: The axe falls and I am prepared. What's next?

Post by dvvader » Fri May 22, 2020 8:18 pm

Hey KlangFool,

Sorry to hear about your layoff. I don't have much to input but if I've learned anything from my time lurking/posting here, it's that you would be one of the most prepared for such a situation. I wish you the best.

Any plans to adjust your asset allocation? Or will you remain at 60/40?

greenflamingo
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Re: The axe falls and I am prepared. What's next?

Post by greenflamingo » Fri May 22, 2020 8:19 pm

I’m sorry for this challenging situation for you.

My FIL is around the same point in career, maybe a few years past you. He lost a job about 8 years back. He took off 18 months and then got bored/found another job. Worked hard there for a few years, left and worked on his lawn and his sons house until the projects were done and he and his wife took all the vacations they wanted. Now he’s working again.

I don’t know the complexities of your field and all that means, but I’d wager there are places out there that will still appreciate experience.

Best of luck to you. It is good you have taken your own financial advice.

Topic Author
KlangFool
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Re: The axe falls and I am prepared. What's next?

Post by KlangFool » Fri May 22, 2020 8:21 pm

JonnyB wrote:
Fri May 22, 2020 7:59 pm
Have you ever tried consulting? It allows you to keep your hand in an field you are interested in but without all the hassle of a regular job.

And I don't mean the 40-hour-a-week fake employee contractor. Do you have a reputation as someone who can parachute into an unfamiliar situation and come up to speed quickly? Become a smokejumper who parachutes into a company in trouble and pulls their bacon out of the fire. One or two months tops.

They are grateful for your expertise and compensate you accordingly. You don't have to get involved in company politics. You don't even care if the company succeeds or fails ultimately. You do your thing and then quickly exit with your fat check.

You are never anywhere long enough to get bored. You work on new things and learn new things every day. You have the freedom to do the jobs you like. Even the less fun stuff is easier to tolerate when you are making twice your old rate and you can leave any time you like.
JonnyB,

Thanks for the suggestion. And, yes, I did when I was unemployed about a few years ago. I charged $100 per hour and earned about 8K from a project. I dealt with the owner of the company directly. I was helping him with marketing and product positioning.

KlangFool

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KlangFool
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Re: The axe falls and I am prepared. What's next?

Post by KlangFool » Fri May 22, 2020 8:22 pm

dvvader wrote:
Fri May 22, 2020 8:18 pm
Hey KlangFool,

Sorry to hear about your layoff. I don't have much to input but if I've learned anything from my time lurking/posting here, it's that you would be one of the most prepared for such a situation. I wish you the best.

Any plans to adjust your asset allocation? Or will you remain at 60/40?
I will remain at 60/40. My AA assume that I could be laid off at any time,

KlangFool

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KlangFool
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Re: The axe falls and I am prepared. What's next?

Post by KlangFool » Fri May 22, 2020 8:24 pm

Folks,

I just check my social security statement. My FRA benefit is 3K per month and my wife will get about 50% of 3K = 1.5K. So, our social security income of 4.5K per month cover about 100% of my annual expense.

My portfolio only needs to bridge the gap of about 10 years between now and FRA.

KlangFool

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arcticpineapplecorp.
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Re: The axe falls and I am prepared. What's next?

Post by arcticpineapplecorp. » Fri May 22, 2020 8:26 pm

KlangFool wrote:
Fri May 22, 2020 8:16 pm
<<you might consider getting an IT job with the local or state government if all else fails. >>

This does not work. They will go for a cheaper and younger alternative.

KlangFool
My condolensces on your loss. I know you've written about this many times and you've had your own pesonal experiences with layoffs in the past. Considering your financial carefulness along with your intelligence, I'm sure you'll do fine.

Regarding state/local government, that's not how it works (as someone who works for government). Perhaps this is different in civil service than non-civil service, but I was hired with several folks, some older, some younger. We all got the same starting salary because it is established by the union/contract. So too are the step increases along the way. This is not always great of course because some older folks making more (because they earned more steps) don't necessarily work harder/better than others. But it is what it is.

Don't discount a local/state government job. Will it pay as much? Hell no. But there may be other benefits (less stress than working for corporate gig, generally speaking), potentially generous vacation/sick pay, other benefits (pension/health insurance, etc), social and intellectual interaction (you can't rely on that at bogleheads :wink: ). I've had coworkers who got hired in their 50s and they worked for 5 years (that was the vesting period back then. It's 10 now) and left with a pension. It could give you some cushion, let your savings last a bit longer, etc.

Can I ask what job pays $15k and has good medical and dental?

good luck. let us know how it goes.
Last edited by arcticpineapplecorp. on Fri May 22, 2020 8:28 pm, edited 1 time in total.
"May you live as long as you want and never want as long as you live" -- Irish Blessing | "Invest we must" -- Jack Bogle

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whodidntante
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Re: The axe falls and I am prepared. What's next?

Post by whodidntante » Fri May 22, 2020 8:26 pm

You don't need to work anymore unless you want to spend more. But if you do, make it something you enjoy.

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KlangFool
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Re: The axe falls and I am prepared. What's next?

Post by KlangFool » Fri May 22, 2020 8:33 pm

arcticpineapplecorp. wrote:
Fri May 22, 2020 8:26 pm

Can I ask what job pays $15k and has good medical and dental?

good luck. let us know how it goes.
arcticpineapplecorp,

Local government job.

KlangFool

davidsorensen32
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Re: The axe falls and I am prepared. What's next?

Post by davidsorensen32 » Fri May 22, 2020 8:36 pm

KF, sorry to hear about this. It sounds like you were employed with [company name deleted by moderator Flyer24]. They announced massive today with similar severance terms. Firstly, I would try to look for work. Part time, volunteer, any work in the area where you have experience. If nothing else, start a blog, start a youtube channel etc. Keep your creative / technical juices flowing. Start a project in github to showcase your experience and creativity. Next, take care of your health. Third, and most importantly, you mentioned that you were from Vietnam (or some south east asia country I don't remember) . Is it an option for you to go to vietnam and spend the years between now and 62 ? This is to slow down your burn rate and come back to the US once you have SS.

crinkles2
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Re: The axe falls and I am prepared. What's next?

Post by crinkles2 » Fri May 22, 2020 8:38 pm

In my opinion, you are in an enviable position. If I were in your shoes, I'd retire today. Perhaps I'd slowly think about doing something I truly enjoy and find value in. But work for me, never has taken that place.

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Watty
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Re: The axe falls and I am prepared. What's next?

Post by Watty » Fri May 22, 2020 8:44 pm

Sorry to hear about your layoff, that is always hard even if you are expecting it.
KlangFool wrote:
Fri May 22, 2020 7:07 pm
I am looking for opinions from those that had gone down the same path.
I voluntary retired a bit less than five years ago just before I turned 59. My Social Security and expected expenses were very similar to yours.

At that point I had almost exactly half of the portfolio that you have but I had a paid off house.

You didn't mention what your housing situation is but financially you are more than fine to retire now. At least for me having a paid off house really helped my numbers since it really helped my expenses and my sequence of returns risk. I also consider my home equity to be a safety net if it is needed for long term care some day.

Here is the "Can I retire?" post I did back then.

viewtopic.php?f=1&t=167664

One thing I did on that was that I tried to calculate what my budget will look like when I am 65 since I would qualify for Medicare and as if I also started Social Security at 65. (I will probably actually start SS later.)

Once you know what you will need when you are 65 it is a lot easier to figure out what how hard it will be to get there.

After I retired there were a few developments;
a) I got lucky on the sequence of returns risk since the stock markets did well.
b) When I retired the Affordable Care Act looked pretty secure, not so much now.
c) I figured out that I could qualify for the ACA subsidy by carefully managing my taxable income.
d) The pandemic of course.

If you can find some work you enjoy that would be great but I don't see a lot for financial need for that. If you can't find paid work you like you might consider if a volunteer position would make sense. I don't know if there is some "Engineers without Borders" group like "Doctors without Borders".

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KlangFool
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Re: The axe falls and I am prepared. What's next?

Post by KlangFool » Fri May 22, 2020 8:45 pm

davidsorensen32 wrote:
Fri May 22, 2020 8:36 pm
KF,
Firstly, I would try to look for work. Part time, volunteer, any work in the area where you have experience. If nothing else, start a blog, start a youtube channel etc. Keep your creative / technical juices flowing. Start a project in github to showcase your experience and creativity. Next, take care of your health. Third, and most importantly, you mentioned that you were from Vietnam (or some south east asia country I don't remember) . Is it an option for you to go to vietnam and spend the years between now and 62 ? This is to slow down your burn rate and come back to the US once you have SS.
davidsorensen32,

<<Firstly, I would try to look for work. Part time, volunteer, any work in the area where you have experience.>>

Why would I want to do that?

<<Start a project in github to showcase your experience and creativity.>>

Why would I want to do that? I had 30+ years of track record on that.

<< Is it an option for you to go to vietnam and spend the years between now and 62 ? This is to slow down your burn rate and come back to the US once you have SS.>>

Why is this necessary? I have more than enough money to bridge the gap between now and 67 years old. I have 1.3 to 1.4 million with an AA of 60/40. Even if the stock market drop by half and does not recover for 10 years, I have enough money to bridge the gap.

KlangFool
Last edited by KlangFool on Fri May 22, 2020 9:02 pm, edited 1 time in total.

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KlangFool
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Re: The axe falls and I am prepared. What's next?

Post by KlangFool » Fri May 22, 2020 8:50 pm

Watty wrote:
Fri May 22, 2020 8:44 pm
Sorry to hear about your layoff, that is always hard even if you are expecting it.
KlangFool wrote:
Fri May 22, 2020 7:07 pm
I am looking for opinions from those that had gone down the same path.
I voluntary retired a bit less than five years ago just before I turned 59. My Social Security and expected expenses were very similar to yours.

At that point I had almost exactly half of the portfolio that you have but I had a paid off house.

You didn't mention what your housing situation is but financially you are more than fine to retire now. At least for me having a paid off house really helped my numbers since it really helped my expenses and my sequence of returns risk. I also consider my home equity to be a safety net if it is needed for long term care some day.
Watty,

I have a 300K 3.49% 30 years mortgage. If I pay it off, I save 15K per year of the mortgage payment. I still have to pay about 4.5K of property tax every year. So, it makes an insignificant difference. But, I do not like tying up another 300K into the house. And, I expect long-term high and hyperinflation above 3.49%to make the mortgage payment a bargain.

KlangFool

EnjoyIt
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Re: The axe falls and I am prepared. What's next?

Post by EnjoyIt » Fri May 22, 2020 8:55 pm

KlangFool,

Sorry for you termination. No matter how prepared you are, it always hits hard on the ego. But, as we all know, you knew this was coming and prepared yourself well. With that in mind I am confident you know your finances are in great shape and you have nothing to worry about there.

The question you ask I think is more about what you want as opposed to what you need. Whatever you decide to do, make sure you work hard on your health. The three legged stool you should work on now is eating well, exercising your body, and exercising your mind.

Me personally I think I would consider myself semi-retired. Like you, I would not look for work unless it was something that I was really passionate about. Instead I would work on my hobbies and my health.

If you don't mind, please continue posting about what you decide and your transition. I hope many of us who are younger take note how important is it to prepare for the inevitable. Many of us will find ourselves retired by force.
Last edited by EnjoyIt on Fri May 22, 2020 8:59 pm, edited 1 time in total.

bayview
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Re: The axe falls and I am prepared. What's next?

Post by bayview » Fri May 22, 2020 8:56 pm

EnjoyIt wrote:
Fri May 22, 2020 8:55 pm
KlangFool,

Sorry for you termination. No matter how prepared you are, it always hits hard on the ego. But, as we all know knew this was coming and prepared yourself well. With that in mind I am confident you know your finances are in great shape and you have nothing to worry about there.

The question you ask I think is more about what you want as opposed to what you need. Whatever you decide to do, make sure you work hard on your health. The three legged stool you should work on now is eating well, exercising your body, and exercising your mind.

Me personally I think I would consider myself semi-retired. Like you, I would not look for work unless it was something that I was really passionate about. Instead I would work on my hobbies and my health.

If you don't mind, please continue posting about what you decide and your transition. I hope many of us who are younger take note how important is it to prepare for the inevitable. Many of us will find ourselves retired by force.
+1

Great answer.
The continuous execution of a sound strategy gives you the benefit of the strategy. That's what it's all about. --Rick Ferri

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AerialWombat
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Re: The axe falls and I am prepared. What's next?

Post by AerialWombat » Fri May 22, 2020 8:57 pm

.....
Last edited by AerialWombat on Sat May 23, 2020 6:25 am, edited 1 time in total.

EnjoyIt
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Re: The axe falls and I am prepared. What's next?

Post by EnjoyIt » Fri May 22, 2020 8:58 pm

KlangFool wrote:
Fri May 22, 2020 8:50 pm
Watty wrote:
Fri May 22, 2020 8:44 pm
Sorry to hear about your layoff, that is always hard even if you are expecting it.
KlangFool wrote:
Fri May 22, 2020 7:07 pm
I am looking for opinions from those that had gone down the same path.
I voluntary retired a bit less than five years ago just before I turned 59. My Social Security and expected expenses were very similar to yours.

At that point I had almost exactly half of the portfolio that you have but I had a paid off house.

You didn't mention what your housing situation is but financially you are more than fine to retire now. At least for me having a paid off house really helped my numbers since it really helped my expenses and my sequence of returns risk. I also consider my home equity to be a safety net if it is needed for long term care some day.
Watty,

I have a 300K 3.49% 30 years mortgage. If I pay it off, I save 15K per year of the mortgage payment. I still have to pay about 4.5K of property tax every year. So, it makes an insignificant difference. But, I do not like tying up another 300K into the house. And, I expect long-term high and hyperinflation above 3.49%to make the mortgage payment a bargain.

KlangFool
Personally I too would get rid of the mortgage because I am a strong believer in the benefits of being debt free in retirement. But then again I do not expect hyperinflation. Your finances will be fine either way, and if you will be enjoying your retirement more holding the mortgage, then hold unto the mortgage.

WS1
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Re: The axe falls and I am prepared. What's next?

Post by WS1 » Fri May 22, 2020 9:01 pm

arcticpineapplecorp. wrote:
Fri May 22, 2020 8:26 pm
KlangFool wrote:
Fri May 22, 2020 8:16 pm
<<you might consider getting an IT job with the local or state government if all else fails. >>

This does not work. They will go for a cheaper and younger alternative.

KlangFool
My condolensces on your loss. I know you've written about this many times and you've had your own pesonal experiences with layoffs in the past. Considering your financial carefulness along with your intelligence, I'm sure you'll do fine.

Regarding state/local government, that's not how it works (as someone who works for government). Perhaps this is different in civil service than non-civil service, but I was hired with several folks, some older, some younger. We all got the same starting salary because it is established by the union/contract. So too are the step increases along the way. This is not always great of course because some older folks making more (because they earned more steps) don't necessarily work harder/better than others. But it is what it is.

Don't discount a local/state government job. Will it pay as much? Hell no. But there may be other benefits (less stress than working for corporate gig, generally speaking), potentially generous vacation/sick pay, other benefits (pension/health insurance, etc), social and intellectual interaction (you can't rely on that at bogleheads :wink: ). I've had coworkers who got hired in their 50s and they worked for 5 years (that was the vesting period back then. It's 10 now) and left with a pension. It could give you some cushion, let your savings last a bit longer, etc.

Can I ask what job pays $15k and has good medical and dental?

good luck. let us know how it goes.
I live in a different part of the country but I know every local government around here is starved for IT talent that can actually implement tough projects. It’ll be 9-5 and you have the means to not get pushed around...I know some folks are scared of a competent Bureaucracy but I like it

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KlangFool
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Re: The axe falls and I am prepared. What's next?

Post by KlangFool » Fri May 22, 2020 9:05 pm

WS1 wrote:
Fri May 22, 2020 9:01 pm


I live in a different part of the country but I know every local government around here is starved for IT talent that can actually implement tough projects. It’ll be 9-5 and you have the means to not get pushed around...I know some folks are scared of a competent Bureaucracy but I like it
WS1,

It is too dangerous for me to take a 9-5 office job now.

KlangFool

GoldenFinch
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Re: The axe falls and I am prepared. What's next?

Post by GoldenFinch » Fri May 22, 2020 9:07 pm

Klangfool I have always enjoyed your posts! I’m sorry that this layoff has happened. You were well prepared for this possibility and I wish you well in figuring out whether to retire or not. Best of luck and I look forward to your future posts.

bayview
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Re: The axe falls and I am prepared. What's next?

Post by bayview » Fri May 22, 2020 9:11 pm

I’d say do nothing for the next X months. Putter around the house. Drive your wife crazy. :D

One disadvantage to being a planner is that one can fall into a mindset of, well, always planning - relying on the ideas and thought patterns that one has been exploring non-stop for years, which can also create the belief that one can control more than is possible. Perhaps letting go will allow some interesting surprises to pop up, surprises both from within and from without.

You can afford to do this. Step off the treadmill for a while and enjoy life.

Best wishes.
The continuous execution of a sound strategy gives you the benefit of the strategy. That's what it's all about. --Rick Ferri

S_Track
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Re: The axe falls and I am prepared. What's next?

Post by S_Track » Fri May 22, 2020 9:14 pm

GoldenFinch wrote:
Fri May 22, 2020 9:07 pm
Klangfool I have always enjoyed your posts! I’m sorry that this layoff has happened. You were well prepared for this possibility and I wish you well in figuring out whether to retire or not. Best of luck and I look forward to your future posts.
+1

mathwhiz
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Re: The axe falls and I am prepared. What's next?

Post by mathwhiz » Fri May 22, 2020 9:21 pm

If you would like to work, you can choose to be picky right now. There is a HUGE revolutionary change right now towards remote work in IT. I'd look online for jobs you can do in the comfort of your own home. You have a huge nationwide job search to look at as a remote employee and you are in a position to choose projects for your personal enjoyment and not have to concern yourself with pay.

EddyB
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Re: The axe falls and I am prepared. What's next?

Post by EddyB » Fri May 22, 2020 9:22 pm

canadianbacon wrote:
Fri May 22, 2020 7:51 pm
KlangFool wrote:
Fri May 22, 2020 7:25 pm
ram,

There should be opportunities for me. But, it may not be worthwhile for me to take it. Those are the questions that I am trying to work out.

KlangFool
I think others have posted similar sentiments, but I think at this point the answer to your question is not financial but philosophical. What do you want to do with the time you have left?
I read somewhere that personal finance questions are “personal,” and indeed it seems everyone else’s responses are irrelevant.

Pomegranate
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Re: The axe falls and I am prepared. What's next?

Post by Pomegranate » Fri May 22, 2020 9:27 pm

KlangFool wrote:
Fri May 22, 2020 9:05 pm
WS1 wrote:
Fri May 22, 2020 9:01 pm


I live in a different part of the country but I know every local government around here is starved for IT talent that can actually implement tough projects. It’ll be 9-5 and you have the means to not get pushed around...I know some folks are scared of a competent Bureaucracy but I like it
WS1,

It is too dangerous for me to take a 9-5 office job now.

KlangFool
You mean cenobites will come and take you for that :confused

anakinskywalker
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Re: The axe falls and I am prepared. What's next?

Post by anakinskywalker » Fri May 22, 2020 9:28 pm

Sorry to hear about your layoff Klang. I'm glad you are ready and taking everything in stride.

Enjoy your life, and longer-term, focus your energies and time on something that engages your attention, gives you happiness, and makes the world a better place.

Anakin

go_mets
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Re: The axe falls and I am prepared. What's next?

Post by go_mets » Fri May 22, 2020 9:53 pm

KlangFool wrote:
Fri May 22, 2020 6:17 pm

My question is

1) Is it really worthwhile for me to continue working? I worked in the IT area. If I want to stay in this area, I have to study 10 to 20 hours per week just to keep up with the latest technology.

2) If I do contract work, how much should I get paid before it is worthwhile for me to work?

A) I only plan to work 20 hours per week. Between unemployment and the $600 per week, I will get about $900 per week. Unless I am paid at $90 per hour or higher, it may not be worthwhile for me to work

3) Any other comment/feedback as to how do you decide whether you should continue working or just retire.

KlangFool
Personally, I don't see the point of you working for the rest of the year.
Take the unemployment which is 39 weeks; the $600 is until 7/25; all subject to change

I am probably a couple years younger than you. Not in IT but close.
I don't plan on doing any work unless it is remote or unless there is an effective and safe vaccine.

I am learning Chinese. :happy
Keeps the mind engaged.
.

panhead
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Re: The axe falls and I am prepared. What's next?

Post by panhead » Fri May 22, 2020 9:54 pm

Triple digit golfer wrote:
Fri May 22, 2020 7:11 pm
Sorry to hear, but you are well prepared.

At the high end of $60k a year, your withdrawal rate is 4% even without your wife's income. How much would medical insurance be if your wife was unemployed?

That 4% will drop to less than 2% once you take SS.

I say enjoy your retirement!
This.
And don't take social security until 70, even if you need to spend down your portfolio.

As for a contracting position, if you find one that meets all of your criteria, work from home, etc, I think you can be flexible on the income. Why put a floor on it? If it's something you want to do, take less, if it's something you don't want to do, demand a lot or don't take the job. This is a very common strategy employed by contractors.

As for your actual numbers, I've been on this forum and reading your posts long enough to know that you know what the numbers say, but I'll comment anyway. You are apparently around 10 years or so from age 70. Without your wife, you are at about a 4% withdrawal rate for 10 years. With your wife's income it's even lower. 4% for 10 years should be a given to succeed. If it ain't, we got bigger problems. Once you start collecting SS, it should be a cake walk at your expense level.

Thanks for all you've contributed to the forum kangfool, you've prepared well because you knew you had to and have warned all of us it could happen to any of us at the drop of a hat. Now, do what you want, take jobs you like if they are interesting, take jobs you don't want only if they pay you stupid money. Enjoy, and keep us informed with how you're early/semi/whatever retirement is progressing!

Pan

fortunefavored
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Re: The axe falls and I am prepared. What's next?

Post by fortunefavored » Fri May 22, 2020 10:01 pm

+1 to retire. Take a job if something falls into your lap and you wanna do it.

You're good to go, all your work has paid off.

Tommy
Posts: 183
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Re: The axe falls and I am prepared. What's next?

Post by Tommy » Fri May 22, 2020 10:02 pm

KlangFool wrote:
Fri May 22, 2020 6:17 pm
Folks,

So, it happened. I will be laid off by the end of June.

The basic financial stuff:

A) 3 months severance pay

B) 1 year subsidized medical insurance.

C) 1 year COBRA

D) 110K to 120K of the Emergency Fund

E) 1.35 to 1.4 million 60/40 portfolio

F) Late 50+ years old.

G) Annual expense of about 50K to 60K per year. (Total before wife's income)

H) My wife will continue working at 15K per year with good medical and dental insurance.

I) I had crossed the second bend points for Social Security. So, social security income for me and my wife combined is about 3K to 4K per month.

My question is

1) Is it really worthwhile for me to continue working? I worked in the IT area. If I want to stay in this area, I have to study 10 to 20 hours per week just to keep up with the latest technology.

2) If I do contract work, how much should I get paid before it is worthwhile for me to work?

A) I only plan to work 20 hours per week. Between unemployment and the $600 per week, I will get about $900 per week. Unless I am paid at $90 per hour or higher, it may not be worthwhile for me to work

3) Any other comment/feedback as to how do you decide whether you should continue working or just retire.

KlangFool
Welcome to the club! I was layoff at 58 (same IT industry) and managed to find a full time job and work for 3 years more. But I told my wife that this is my last job. Very high chance it will ends in June. I'm sick and tired of idiots who now make majority in the industry. If I will need to work for the next 4-5 years till I get SS (if my wife income won't be enough) I'll go through contracts or will drive school bus. All what I need it not touch my investments till I get SS and let them grow. House paid off..

lgs88
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Re: The axe falls and I am prepared. What's next?

Post by lgs88 » Fri May 22, 2020 10:15 pm

KlangFool,

I've always appreciated reading about your conservative approach to wealth management, amid all the 100% stock go-go bulls of the Bogleheads forum. You helped me feel OK about taking some risk off the table. Glad to see you're well-prepared for this. Bravo, and good luck to you.

lgs88
merely an interested amateur

MathWizard
Posts: 4045
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Re: The axe falls and I am prepared. What's next?

Post by MathWizard » Fri May 22, 2020 10:25 pm

KlangFool wrote:
Fri May 22, 2020 6:49 pm
MathIsMyWayr wrote:
Fri May 22, 2020 6:43 pm
KlangFool wrote:
Fri May 22, 2020 6:17 pm
F) Late 50+ years old.

My question is

1) Is it really worthwhile for me to continue working? I worked in the IT area. If I want to stay in this area, I have to study 10 to 20 hours per week just to keep up with the latest technology.

2) If I do contract work, how much should I get paid before it is worthwhile for me to work?

A) I only plan to work 20 hours per week. Between unemployment and the $600 per week, I will get about $900 per week. Unless I am paid at $90 per hour or higher, it may not be worthwhile for me to work

3) Any other comment/feedback as to how do you decide whether you should continue working or just retire.

KlangFool
Sorry for the news.

1) Why not? Studying and learning is always good. Life is a process of experience. Studying and learning is an active part of experience. Game is not over until it is over!
Not if you are a Tier 4 / SME person studying to do a job.

<<Game is not over until it is over!>>

Not if you had played one of the biggest and most complex games in your life. And, everything else that you will be doing going forward is a child game as compared to what you had did before.

KlangFool
Sorry to hear about this. I am in IT as well.

I agree that there comes a point where you are the one to handle the most difficult problems, but also have to do lots of multi tasking.

I think that you are probably looking at extended time off, or early retirement.

Best of luck , and pat yourself on the back for how well you have prepared for this very situation.

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Ben Mathew
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Re: The axe falls and I am prepared. What's next?

Post by Ben Mathew » Fri May 22, 2020 10:31 pm

KlangFool wrote:
Fri May 22, 2020 8:50 pm
Watty wrote:
Fri May 22, 2020 8:44 pm
Sorry to hear about your layoff, that is always hard even if you are expecting it.
KlangFool wrote:
Fri May 22, 2020 7:07 pm
I am looking for opinions from those that had gone down the same path.
I voluntary retired a bit less than five years ago just before I turned 59. My Social Security and expected expenses were very similar to yours.

At that point I had almost exactly half of the portfolio that you have but I had a paid off house.

You didn't mention what your housing situation is but financially you are more than fine to retire now. At least for me having a paid off house really helped my numbers since it really helped my expenses and my sequence of returns risk. I also consider my home equity to be a safety net if it is needed for long term care some day.
Watty,

I have a 300K 3.49% 30 years mortgage. If I pay it off, I save 15K per year of the mortgage payment. I still have to pay about 4.5K of property tax every year. So, it makes an insignificant difference. But, I do not like tying up another 300K into the house. And, I expect long-term high and hyperinflation above 3.49%to make the mortgage payment a bargain.

KlangFool
Sorry to hear about your layoff. You have obviously given a lot of thought to this eventuality over the years. I think you are in good shape even if you choose to retire now. I know our philosophies would differ on how to manage the financials here, but here are my two cents:

- If the $50K-$60K of expense includes $15K of mortgage payments, I wouldn't count all of it as expense since some of it is principal payoff. I would count it separately, and include the equity of your house in your model. You may not want to draw on your home equity, but it's there as a cushion and it's good to know how much is there in case you ever need to tap into it--for example, by selling and downsizing.

- You might want to consider paying off the $300K 3.5% mortgage with the approximately 40% * $1.4 million = $560K bonds earning less in your portfolio.

- The emergency fund is not necessary when you are retired and have a large portfolio you can draw on.

I would pay off the mortgage, roll the emergency fund into my overall portfolio, and work out an allocation and withdrawal strategy for living off that portfolio combined with social security. A holistic approach along these lines will I believe allow you to draw the highest income with the lowest risk of bad outcomes.

Whichever system you decide to follow, I wish you the best of luck!

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BolderBoy
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Re: The axe falls and I am prepared. What's next?

Post by BolderBoy » Fri May 22, 2020 10:37 pm

KlangFool wrote:
Fri May 22, 2020 6:17 pm
E) 1.35 to 1.4 million 60/40 portfolio
I think you'll do okay if you "retire" and simply take on contract work from home, if it comes you way.

One thing I think you should do is gradually drop your AA -> 40/60 (or even 30/70).
"Never underestimate one's capacity to overestimate one's abilities" - The Dunning-Kruger Effect

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HomerJ
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Re: The axe falls and I am prepared. What's next?

Post by HomerJ » Fri May 22, 2020 10:40 pm

KlangFool wrote:
Fri May 22, 2020 7:13 pm
MathIsMyWayr wrote:
Fri May 22, 2020 7:02 pm
KlangFool wrote:
Fri May 22, 2020 6:49 pm
MathIsMyWayr wrote:
Fri May 22, 2020 6:43 pm
KlangFool wrote:
Fri May 22, 2020 6:17 pm
F) Late 50+ years old.

My question is

1) Is it really worthwhile for me to continue working? I worked in the IT area. If I want to stay in this area, I have to study 10 to 20 hours per week just to keep up with the latest technology.

2) If I do contract work, how much should I get paid before it is worthwhile for me to work?

A) I only plan to work 20 hours per week. Between unemployment and the $600 per week, I will get about $900 per week. Unless I am paid at $90 per hour or higher, it may not be worthwhile for me to work

3) Any other comment/feedback as to how do you decide whether you should continue working or just retire.

KlangFool
Sorry for the news.

1) Why not? Studying and learning is always good. Life is a process of experience. Studying and learning is an active part of experience. Game is not over until it is over!
Not if you are a Tier 4 / SME person studying to do a job.

<<Game is not over until it is over!>>

Not if you had played one of the biggest and most complex games in your life. And, everything else that you will be doing going forward is a child game as compared to what you have done before.

KlangFool
A typical sequence of graduate-level math and physics courses/studies:
1) Introduction to ... > 2) Advanced ... > back to 3) Introduction to ... > 4) Advanced ... and on and on ...
MathIsMyWayr,

I am an engineer. After you had built several multi-billion level system, the smaller system at 1 million or smaller is nothing to us.

Engineers are judged by what we built and designed. They are not formulas and theories.

KlangFool
Your attitude is terrible. My condolences on the job loss. You are well situated to handle it financially.

There's nothing wrong with working an easier job to make some cash. Many jobs in IT have challenges, and hurdles, and accomplishments. You could still contribute. But if you're not willing to work on something "beneath" your top-notch abilities, then don't.

It's good that you don't have to. Enjoy retirement.
A Goldman Sachs associate provided a variety of detailed explanations, but then offered a caveat, “If I’m being dead-### honest, though, nobody knows what’s really going on.”

Topic Author
KlangFool
Posts: 16133
Joined: Sat Oct 11, 2008 12:35 pm

Re: The axe falls and I am prepared. What's next?

Post by KlangFool » Fri May 22, 2020 10:43 pm

panhead wrote:
Fri May 22, 2020 9:54 pm


As for a contracting position, if you find one that meets all of your criteria, work from home, etc, I think you can be flexible on the income.
panhead,

Somehow, that is not consistent with my experience. It is normally the reverse in my case. If I ask too little, I will not get the job/contract. For the size and kind of project that I deal with, the amount that I charged is too insignificant to matter. If I asked too little, I am probably not good enough.

KlangFool

Katietsu
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Re: The axe falls and I am prepared. What's next?

Post by Katietsu » Fri May 22, 2020 10:47 pm

simas wrote:
Fri May 22, 2020 7:56 pm
KlangFool wrote:
Fri May 22, 2020 6:43 pm

2) I was unemployed for more than 1 year a few years ago. And, the severance is a lump sum. I am immediately eligible for unemployment benefits. I am reverifying this again.

KlangFool
Yes, that is how this works - with formal layoff you should be 100% eligible for unemployment regardless of severance or its amount. apply the date you have on the notice.
Just for the benefit of others reading this- it is state dependent. In some states, if you receive a severance, you are not eligible for unemployment for a certain amount of time or you might receive a very reduced amount. At least that was the case before Covid-19. I do not know if the CARES Act changed any of that.

Topic Author
KlangFool
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Re: The axe falls and I am prepared. What's next?

Post by KlangFool » Fri May 22, 2020 10:51 pm

HomerJ wrote:
Fri May 22, 2020 10:40 pm

Your attitude is terrible. My condolences on the job loss. You are well situated to handle it financially.

There's nothing wrong with working an easier job to make some cash. Many jobs in IT have challenges, and hurdles, and accomplishments. You could still contribute. But if you're not willing to work on something "beneath" your top-notch abilities, then don't.

It's good that you don't have to. Enjoy retirement.
HomerJ,

I had worked all the way from the helpdesk to my current level over 30+ years. So, I had done those jobs.

<<There's nothing wrong with working an easier job to make some cash.>>

There is nothing easy about working those low-level jobs. I had been there and done that. I have no illusion about them.

KlangFool

ClaycordJCA
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Location: SF Bay Area

Re: The axe falls and I am prepared. What's next?

Post by ClaycordJCA » Fri May 22, 2020 10:55 pm

Klang Fool,
I also very much enjoy your posts and am sorry you have been laid off again.

I assume your wife can add you to her group medical coverage once your COBRA expires or you will have the right to then convert the group coverage to a personal policy without regard to preexisting conditions. If those are not options, the uncertainty regarding healthcare coverage between now and Medicare eligibility at age 65 would concern me.

From an asset/expense standpoint, nothing is certain in this world but it seems to me with a planned 4% withdrawal rate for 10 years there is no need for you to go back to work. Well done!

My question is what do you want to do? I sense a reluctance on your part to retire. You write that you build things. Are you ready to stop building? Answer that question and I think you will answer the question of whether you should retire or look for other work. Best of luck to you, whatever you decide.

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Watty
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Re: The axe falls and I am prepared. What's next?

Post by Watty » Fri May 22, 2020 10:56 pm

KlangFool wrote:
Fri May 22, 2020 8:50 pm
Watty wrote:
Fri May 22, 2020 8:44 pm
Sorry to hear about your layoff, that is always hard even if you are expecting it.
KlangFool wrote:
Fri May 22, 2020 7:07 pm
I am looking for opinions from those that had gone down the same path.
I voluntary retired a bit less than five years ago just before I turned 59. My Social Security and expected expenses were very similar to yours.

At that point I had almost exactly half of the portfolio that you have but I had a paid off house.

You didn't mention what your housing situation is but financially you are more than fine to retire now. At least for me having a paid off house really helped my numbers since it really helped my expenses and my sequence of returns risk. I also consider my home equity to be a safety net if it is needed for long term care some day.
Watty,

I have a 300K 3.49% 30 years mortgage. If I pay it off, I save 15K per year of the mortgage payment. I still have to pay about 4.5K of property tax every year. So, it makes an insignificant difference. But, I do not like tying up another 300K into the house. And, I expect long-term high and hyperinflation above 3.49%to make the mortgage payment a bargain.

KlangFool
If you are right about that then that could work out very well if you are able to pay if off out of future wages which are also inflated but if you decide to retire now or in the near future then the math becomes different.

The reason is that you would have to pay of off out of your portfolio. By not paying it off you would have an extra $300K in your portfolio so it would need to be invested so that you have enough to pay off the balance some day as well as the interest and taxes. There are a lot of moving parts that would need to come together to make it work out well when you can't pay off the mortgage out of future wages.

There are endless threads on the "Should I pay off the mortgage?" question and no one right answer so I am not trying to reopen that can of worms paying off my mortgage seems to have been the right choice for me

In my case some of the deciding factors for me were;

1) With a paid off house we could live a frugal but comfortable lifestyle with just Social Security if we really needed to.

2) Not having a mortgage allows us to have lower taxable income so we may be able to do more Roth conversions in a low tax bracket, we may also have years when we will owe no federal income tax. ($40K in SS and $20K in taxable income = $0 federal income tax for an over 65 couple)

Having plenty of money buys you lots of options and time, you can put the question about paying off your mortgage on the back burner then reconsider it every few years.

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HomerJ
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Re: The axe falls and I am prepared. What's next?

Post by HomerJ » Fri May 22, 2020 11:00 pm

KlangFool wrote:
Fri May 22, 2020 10:51 pm
HomerJ wrote:
Fri May 22, 2020 10:40 pm

Your attitude is terrible. My condolences on the job loss. You are well situated to handle it financially.

There's nothing wrong with working an easier job to make some cash. Many jobs in IT have challenges, and hurdles, and accomplishments. You could still contribute. But if you're not willing to work on something "beneath" your top-notch abilities, then don't.

It's good that you don't have to. Enjoy retirement.
HomerJ,

I had worked all the way from the helpdesk to my current level over 30+ years. So, I had done those jobs.

<<There's nothing wrong with working an easier job to make some cash.>>

There is nothing easy about working those low-level jobs. I had been there and done that. I have no illusion about them.

KlangFool
If you have the skills you think you have, you can find a $60k job easy. In your neck of the woods, $100k jobs should be easy. Your attitude of "I only want to work on billion dollar systems" is silly. You're not that special. Million dollar systems take hard work and can present interesting challenges too.

But, because you saved well, you don't have to take a job you don't want and can retire instead.

You probably should.
A Goldman Sachs associate provided a variety of detailed explanations, but then offered a caveat, “If I’m being dead-### honest, though, nobody knows what’s really going on.”

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calvin+hobbes
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Re: The axe falls and I am prepared. What's next?

Post by calvin+hobbes » Fri May 22, 2020 11:01 pm

KlangFool wrote:
Fri May 22, 2020 10:51 pm
HomerJ wrote:
Fri May 22, 2020 10:40 pm

Your attitude is terrible. My condolences on the job loss. You are well situated to handle it financially.

There's nothing wrong with working an easier job to make some cash. Many jobs in IT have challenges, and hurdles, and accomplishments. You could still contribute. But if you're not willing to work on something "beneath" your top-notch abilities, then don't.

It's good that you don't have to. Enjoy retirement.
HomerJ,

I had worked all the way from the helpdesk to my current level over 30+ years. So, I had done those jobs.

<<There's nothing wrong with working an easier job to make some cash.>>

There is nothing easy about working those low-level jobs. I had been there and done that. I have no illusion about them.

KlangFool
If you are only willing to work under a very specific set of circumstances, then good luck finding those circumstances. By your replies, you already realize you can safely retire and have a myriad of reasons to not return to the work force. What other input are you looking for? Seems to me you already know the answer to your question.

Congratulations on achieving financial independence through careful planning, you’ve earned it.

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HomerJ
Posts: 14591
Joined: Fri Jun 06, 2008 12:50 pm

Re: The axe falls and I am prepared. What's next?

Post by HomerJ » Fri May 22, 2020 11:02 pm

Watty wrote:
Fri May 22, 2020 10:56 pm
Not having a mortgage allows us to have lower taxable income
This is the best reason to not have a mortgage..

Much easier to qualify for ACA subsidies, or do ROTH conversions.
A Goldman Sachs associate provided a variety of detailed explanations, but then offered a caveat, “If I’m being dead-### honest, though, nobody knows what’s really going on.”

Young Boglehead
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Re: The axe falls and I am prepared. What's next?

Post by Young Boglehead » Fri May 22, 2020 11:08 pm

I agree with Calvin and Hobbes. You ask a question about what you should do but seem to scoff at the idea of doing anything other than simply retiring right now, so it seems like you have your answer.

Fortunately, because of your ultra-conservative outlook, it looks like you’ll be just fine

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