Thoughts post layoff on retirement + side business

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boxerbali
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Thoughts post layoff on retirement + side business

Post by boxerbali »

Net Worth - 4.9M , Age 44 ( Married and 2 kids, WA)
~65% is in Equity ( 25% retirement account, 40% non retirement accounts) Investment mix in individual tech stock( AMZN , META, AAPLE, TSLA, MSFT + S&P 500)
~25% in real estate ( 15% is primary home, 10% in real estate investment)
~10% in cash

A side business which generates about 70K a year.
Yearly Expenses are around 140k.

Both of us lost our tech job recently ( 500K household income, we reached these income gradually )
and now actively looking. WIth that said, there is gap of 70K currently.

Have three thoughts.
1. 4M/70K = 57X + side business income = 140K. I don't have worry/stress too much about finding job immediately .
2. I need to figure out another business which generate 70K+ so that I do not have to touch investment or rely on job alone.
3. I need to actively looking for job as it easy compare to finding business which pays 70K

I do not hate corporate job but somehow I feel that I am mostly done with it. I can drag few year but beyond that could be challenging.

Now questions.

1. What right/wrong with above three thoughts ?
2. I am struggling to find business. So any suggestions are welcomed. Would starting something totally new at this age is CRAZY ?
3. Jobs pays easy money but comes with uncertainty. You can control a lot in your business and it pays long dividends. ?
tenkuky
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Re: Thoughts post layoff on retirement + side business

Post by tenkuky »

4. Reduce expenses from 140K to X.
That reduces the need to close the 70K gap.
Any possibility of that?

Plus with about 1.2M in taxable, what sort of interest/dividends is that spinning off per year to further close the gap?
Maybe take a deep breath and the number is less than first imagined.
That helps you decide which of the 3 options you really need.
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familythriftmd
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Re: Thoughts post layoff on retirement + side business

Post by familythriftmd »

boxerbali wrote: Sat Feb 10, 2024 1:17 am Net Worth - 4.9M , Age 44 ( Married and 2 kids, WA)
~65% is in Equity ( 25% retirement account, 40% non retirement accounts) Investment mix in individual tech stock( AMZN , META, AAPLE, TSLA, MSFT + S&P 500)
~25% in real estate ( 15% is primary home, 10% in real estate investment)
~10% in cash

A side business which generates about 70K a year.
Yearly Expenses are around 140k.

Both of us lost our tech job recently ( 500K household income, we reached these income gradually )
and now actively looking. WIth that said, there is gap of 70K currently.

Have three thoughts.
1. 4M/70K = 57X + side business income = 140K. I don't have worry/stress too much about finding job immediately .
2. I need to figure out another business which generate 70K+ so that I do not have to touch investment or rely on job alone.
3. I need to actively looking for job as it easy compare to finding business which pays 70K

I do not hate corporate job but somehow I feel that I am mostly done with it. I can drag few year but beyond that could be challenging.

Now questions.

1. What right/wrong with above three thoughts ?
2. I am struggling to find business. So any suggestions are welcomed. Would starting something totally new at this age is CRAZY ?
3. Jobs pays easy money but comes with uncertainty. You can control a lot in your business and it pays long dividends. ?
Sorry about your job losses for both!!

Looks like if you pretend you're FIRE and you're taking 4%, even just of the equity allocation, you still could live off $127k, not counting your side gig.
Maybe it's not all that necessary to hurry into another job, at least from a finance standpoint.
Does your side business have growth opportunity? could you just lean into that?
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Re: Thoughts post layoff on retirement + side business

Post by Outer Marker »

With a net worth of $4.9M, you could certainly retire, but not at your current lifestyle and level of spend. You'd need to downsize, perhaps move to a lower cost of living area, and trim expenses. I don't count my home as part of my investment portfolio, and I'm suspect of side investments in real estate, which tend more to be hobbies than serious business ventures. The concentration in individual tech stocks is concerning, and when the market comes off of its lofty perch, you could be in for a rude awakening. I'd consider selling a good portion of that now and increase your cash reserves, which you may need, and diversify the rest into index funds. 44 with two kids is pretty young to retire. I think at least one of you needs a real job with a steady income and health benefits. Very sorry that both of you experienced a job loss at the same time. That's rough.
HomeStretch
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Re: Thoughts post layoff on retirement + side business

Post by HomeStretch »

Sorry for the job losses. It’s good that you are assessing your options. You certainly have the resources to not make a rushed life decision.

Have you reviewed your portfolio to determine whether you can tolerably increase yield?

Can you lower expenses and maintain a desirable lifestyle if you retire now?

Have you and spouse claimed unemployment benefits?

If you want to maintain your current expense level and home, you will need additional income from either a self-employed business or another W-2 job (part time or full time). Taking another high-paying full-time job will allow you to reach your retirement number in fewer years than with a part-time job. Part-time jobs can have stress, and often offer low pay and no healthcare benefits.

Do you have college savings and long-term care insurance?
Wannaretireearly
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Re: Thoughts post layoff on retirement + side business

Post by Wannaretireearly »

Great posts and questions above.
OP: please take a breather. Double job loss is tough, but you seem to have built good assets. What area is the side business in? How much time/effort/investment per year does it take to yield $70k a year?

Perhaps do a full portfolio review here with the expected format.
I think about your current scenario often, if both spouse and I lost our jobs, what would it take to have 6 months off together to do whatever (travel, health etc)?
I think financially you’re at the point you can step off the hamster wheel (at least for a ‘sabbatical’) with over $4M liquid investments + side hussle.
“At some point you are trading time you will never get back for money you will never spend.“ | “How do you want to spend the best remaining year of your life?“
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Watty
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Re: Thoughts post layoff on retirement + side business

Post by Watty »

There is a suggested format for asking portfolio question and you will likely get better responses if you post your information in that format. It is only a guideline so that you do not need to follow it exactly.

viewtopic.php?t=6212

There is a lot about your situation which was not clear like if your side business was your investment property or if you have some other business too.

It was also not clear if your $140K year in expenses also includes income taxes.

You also did not mention if you got nice severance packages or not.

You also have almost $5 million in investments so if they are generating 3% in interest and dividends that would give you $150K a year just from that.

Owning the individual stocks is also risky especially since they also make up a large percentage of your index funds.
boxerbali wrote: Sat Feb 10, 2024 1:17 am 2. I am struggling to find business. So any suggestions are welcomed. Would starting something totally new at this age is CRAZY ?
It was not clear what your business is but a high percentage of small businesses fail and with your net worth you might not be motivated to work the long hours you might need to work to get it going.

Running your own business would also take a lot of time way from your kids and it likely will not be all that long until they head off to college.

You do not really need a high income from a business so unless it is some fun job based on your hobby it would not appeal much to me.

One of you getting a job with health insurance for the next few years would look real appealing to me.

When kids are young a lot of people want to be a stay at home parent but when they are teenagers there is also a lot to be said for having a stay at home parent because they they are teenagers if they have a lot of unsupervised time, especially in the summers, they stand a of risk of getting into alcohol, drugs, sex, and dodgy friends. There are lots of after school and summer daycare options for young kids but once they get into middle and high school finding supervision for them can be difficult. You do not want to be a helicopter parent but having a parent around can make a big difference.
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Watty
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Re: Thoughts post layoff on retirement + side business

Post by Watty »

boxerbali wrote: Sat Feb 10, 2024 1:17 am Net Worth - 4.9M , Age 44 ( Married and 2 kids, WA)
......
~10% in cash
Another thought. It sounds like you have $490K in cash. If you have a mortgage on your house or any of the investment properties then paying off mortgage could greatly reduce your yearly expenses. Of course the details matter a lot and a 2.5% mortgage might be worth keeping.

Again, there are a lot of details missing from your post so it will be hard to get good recommendations.
Topic Author
boxerbali
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Re: Thoughts post layoff on retirement + side business

Post by boxerbali »

tenkuky wrote: Sat Feb 10, 2024 7:46 am 4. Reduce expenses from 140K to X.
That reduces the need to close the 70K gap.
Any possibility of that?
That helps you decide which of the 3 options you really need.

5.5K is fixed cost ( Home mortgage + Child care). Want to leave child care as well. And yes there could be some opportunities with recurring cost ( insurance , subscription etc) that I am diving deep in credit card statements.
Topic Author
boxerbali
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Re: Thoughts post layoff on retirement + side business

Post by boxerbali »

Watty wrote: Sat Feb 10, 2024 11:09 am
boxerbali wrote: Sat Feb 10, 2024 1:17 am Net Worth - 4.9M , Age 44 ( Married and 2 kids, WA)
......
~10% in cash
Another thought. It sounds like you have $490K in cash. If you have a mortgage on your house or any of the investment properties then paying off mortgage could greatly reduce your yearly expenses. Of course the details matter a lot and a 2.5% mortgage might be worth keeping.

Again, there are a lot of details missing from your post so it will be hard to get good recommendations.
Primary home mortgage is 2.49% and investment properties at 2.99%. There is very little financial gain by paying off. I am not losing sleep yet with mortgage and it may change later but for now I like low mortgage and find opportunity of investment that gets better returns
Topic Author
boxerbali
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Re: Thoughts post layoff on retirement + side business

Post by boxerbali »

familythriftmd wrote: Sat Feb 10, 2024 7:49 am
boxerbali wrote: Sat Feb 10, 2024 1:17 am Net Worth - 4.9M , Age 44 ( Married and 2 kids, WA)
~65% is in Equity ( 25% retirement account, 40% non retirement accounts) Investment mix in individual tech stock( AMZN , META, AAPLE, TSLA, MSFT + S&P 500)
~25% in real estate ( 15% is primary home, 10% in real estate investment)
~10% in cash

A side business which generates about 70K a year.
Yearly Expenses are around 140k.

Both of us lost our tech job recently ( 500K household income, we reached these income gradually )
and now actively looking. WIth that said, there is gap of 70K currently.

Have three thoughts.
1. 4M/70K = 57X + side business income = 140K. I don't have worry/stress too much about finding job immediately .
2. I need to figure out another business which generate 70K+ so that I do not have to touch investment or rely on job alone.
3. I need to actively looking for job as it easy compare to finding business which pays 70K

I do not hate corporate job but somehow I feel that I am mostly done with it. I can drag few year but beyond that could be challenging.

Now questions.

1. What right/wrong with above three thoughts ?
2. I am struggling to find business. So any suggestions are welcomed. Would starting something totally new at this age is CRAZY ?
3. Jobs pays easy money but comes with uncertainty. You can control a lot in your business and it pays long dividends. ?
Sorry about your job losses for both!!

Looks like if you pretend you're FIRE and you're taking 4%, even just of the equity allocation, you still could live off $127k, not counting your side gig.
Maybe it's not all that necessary to hurry into another job, at least from a finance standpoint.
Does your side business have growth opportunity? could you just lean into that?
Business does not have growth opp beyond inflation + may be 5-10% on revenue. So not a lot on net income. Though, I may spend 40 hours in business working and save $840 a week in labor cost but really do not want to go that route as I believe my time can be better utilized by 1. Either job search and interview preparation 2. I may invest in different business and generate another income stream.
KlangFool
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Re: Thoughts post layoff on retirement + side business

Post by KlangFool »

boxerbali wrote: Sat Feb 10, 2024 1:17 am Net Worth - 4.9M , Age 44 ( Married and 2 kids, WA)
~65% is in Equity ( 25% retirement account, 40% non retirement accounts) Investment mix in individual tech stock( AMZN , META, AAPLE, TSLA, MSFT + S&P 500)
boxerbali,

How much of that 4.9M are in those individual stocks?

KlangFool
30% VWENX | 16% VFWAX/VTIAX | 14.5% VTSAX | 19.5% VBTLX | 10% VSIAX/VTMSX/VSMAX | 10% VSIGX| 30% Wellington 50% 3-funds 20% Mini-Larry
Topic Author
boxerbali
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Re: Thoughts post layoff on retirement + side business

Post by boxerbali »

KlangFool wrote: Sat Feb 10, 2024 5:46 pm
boxerbali wrote: Sat Feb 10, 2024 1:17 am Net Worth - 4.9M , Age 44 ( Married and 2 kids, WA)
~65% is in Equity ( 25% retirement account, 40% non retirement accounts) Investment mix in individual tech stock( AMZN , META, AAPLE, TSLA, MSFT + S&P 500)
boxerbali,

How much of that 4.9M are in those individual stocks?

KlangFool
Significant approximate numbers
AMZN 600k
TSLA - 800K
AAPL - 200K
META - 180K
MSFT - 150K
PLTR - 120K
HOOD - 80K

Another 5 small bets ( ~150)
EnjoyIt
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Re: Thoughts post layoff on retirement + side business

Post by EnjoyIt »

boxerbali wrote: Sat Feb 10, 2024 1:17 am Net Worth - 4.9M , Age 44 ( Married and 2 kids, WA)
~65% is in Equity ( 25% retirement account, 40% non retirement accounts) Investment mix in individual tech stock( AMZN , META, AAPLE, TSLA, MSFT + S&P 500)
~25% in real estate ( 15% is primary home, 10% in real estate investment)
~10% in cash

A side business which generates about 70K a year.
Yearly Expenses are around 140k.

Both of us lost our tech job recently ( 500K household income, we reached these income gradually )
and now actively looking. WIth that said, there is gap of 70K currently.

Have three thoughts.
1. 4M/70K = 57X + side business income = 140K. I don't have worry/stress too much about finding job immediately .
2. I need to figure out another business which generate 70K+ so that I do not have to touch investment or rely on job alone.
3. I need to actively looking for job as it easy compare to finding business which pays 70K

I do not hate corporate job but somehow I feel that I am mostly done with it. I can drag few year but beyond that could be challenging.

Now questions.

1. What right/wrong with above three thoughts ?
2. I am struggling to find business. So any suggestions are welcomed. Would starting something totally new at this age is CRAZY ?
3. Jobs pays easy money but comes with uncertainty. You can control a lot in your business and it pays long dividends. ?
Let me get this straight. You have $4 million in investments and a side gig that pays $70k/yr.

You spend $140k/yr some of which are two low interest rate mortgages which will be paid off.

The way I see it, if you can sustain your business for long haul, you don’t need to work another day in your life outside of your business. Congratulations.

On a side note. I am very concerned that the bulk of your portfolio is just a couple of stocks. With such holdings you can end up very happy or very sad.
A time to EVALUATE your jitters: | viewtopic.php?p=1139732#p1139732
KlangFool
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Re: Thoughts post layoff on retirement + side business

Post by KlangFool »

boxerbali wrote: Sat Feb 10, 2024 5:51 pm
KlangFool wrote: Sat Feb 10, 2024 5:46 pm
boxerbali wrote: Sat Feb 10, 2024 1:17 am Net Worth - 4.9M , Age 44 ( Married and 2 kids, WA)
~65% is in Equity ( 25% retirement account, 40% non retirement accounts) Investment mix in individual tech stock( AMZN , META, AAPLE, TSLA, MSFT + S&P 500)
boxerbali,

How much of that 4.9M are in those individual stocks?

KlangFool
Significant approximate numbers
AMZN 600k
TSLA - 800K
AAPL - 200K
META - 180K
MSFT - 150K
PLTR - 120K
HOOD - 80K

Another 5 small bets ( ~150)
Please add them all up and ask yourself how you could retire with so much of your 4.9M tied up with a few stocks. The reason that why I ask you to add them up is because it will give you a clear picture on how much of your total 4.9M is tied up in a few stocks.

You had won the game. You need to stop playing. Sell them down to not more than 5% or 10% of your 4.9m.

KlangFool
30% VWENX | 16% VFWAX/VTIAX | 14.5% VTSAX | 19.5% VBTLX | 10% VSIAX/VTMSX/VSMAX | 10% VSIGX| 30% Wellington 50% 3-funds 20% Mini-Larry
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Beensabu
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Re: Thoughts post layoff on retirement + side business

Post by Beensabu »

boxerbali wrote: Sat Feb 10, 2024 5:37 pm 5.5K is fixed cost ( Home mortgage + Child care). Want to leave child care as well.
boxerbali wrote: Sat Feb 10, 2024 5:40 pm Primary home mortgage is 2.49% and investment properties at 2.99%. There is very little financial gain by paying off.
If you sell the investment real estate, pay off most of the primary mortgage, ditch the child care (because you're both available now), and diversify out of individual stocks, you'll only need the side business bringing in $70k annually for a few years (with the extra going to build up cash) until the primary mortgage is paid off, and then your expenses will be ~$75k/yr. And $3.5m is more than enough for that for the rest of your lives even if the side business eventually fails or becomes not worth the effort.

Don't make life harder than it needs to be. Because yours could be super easy from now on if you let it.
"The only thing that makes life possible is permanent, intolerable uncertainty; not knowing what comes next." ~Ursula LeGuin
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SB1234
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Re: Thoughts post layoff on retirement + side business

Post by SB1234 »

Sell all individual stocks. And not just diversify but also derisk by having a nice chunk of fixed income. I would say at least 25-30%
You are already close to end zone and dont need to take as much risk.
superstition: belief that market will one day come around to your concept of fair value
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Re: Thoughts post layoff on retirement + side business

Post by av111 »

Would there not be significant tax liability if all individual stocks are sold? How can we justify losing fed tax, state tax out of the profits? That will reduce the net worth a lot
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SB1234
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Re: Thoughts post layoff on retirement + side business

Post by SB1234 »

av111 wrote: Sat Feb 10, 2024 6:55 pm Would there not be significant tax liability if all individual stocks are sold? How can we justify losing fed tax, state tax out of the profits? That will reduce the net worth a lot
Unless you have a way to offset the gains, this is not really a dilemma. everyone has to pay taxes on their gains.
Plus the markets has been known to reduce net worth much faster than taxes.
superstition: belief that market will one day come around to your concept of fair value
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Re: Thoughts post layoff on retirement + side business

Post by Outer Marker »

Watty wrote: Sat Feb 10, 2024 11:02 am You also have almost $5 million in investments so if they are generating 3% in interest and dividends that would give you $150K a year just from that.
If I read the OP correctly, it's not $5M in investments - 25% of that is the primary home and other real estate. $3.6M in investable assets does not seem like enough to retire on without making some significant changes.
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Re: Thoughts post layoff on retirement + side business

Post by whodidntante »

You are financially independent, and I agree you don't need to find a W2 job. You might decide you want to, but those are different things.

If this is the long term plan, monitor how things go and cut expenses when needed to reduce portfolio failure risk. Things like selling the house need to be on the table if you need to raise cash. Or earn more. I don't understand why someone so young would seriously consider retirement, but you certainly have enough money to coast FIRE or semi-retire. You could also fully retire if you will be sufficiently flexible with expenses.

I suspect you are suffering from burnout and disenfranchisement. Losing your job is a massive punch and it's normal for you to be seriously damaged by it. At least take some time for introspection before announcing to all your contacts that you're retired. Maybe talk to a few people you trust or a professional.

Please consider selling the single stocks if you have much money tied up in them. Idiosyncratic risk works both ways. Take your gains and diversify.
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Re: Thoughts post layoff on retirement + side business

Post by unwitting_gulag »

boxerbali wrote: Sat Feb 10, 2024 1:17 am Net Worth - 4.9M , Age 44 ( Married and 2 kids, WA)

1. What right/wrong with above three thoughts ?
2. I am struggling to find business. So any suggestions are welcomed. Would starting something totally new at this age is CRAZY ?
3. Jobs pays easy money but comes with uncertainty. You can control a lot in your business and it pays long dividends. ?
While assuredly there are financial reasons to delay retirement, to pare-down spending, to seek alternative employment and to buttress one's savings, psychological reasons may be even weightier. Losing one's job and declaring it to be retirement, may not differ financially from FIRE, but emotionally the difference is enormous! This happens whenever one's hand is forced by obtruding circumstance, rather than, something going to longstanding plan. I mean, was the OP seriously planning on retiring in his mid-40s? If not, some psychological remedy is warranted, is it not?

One possibility is to accept a lower-paying job, at least for say a couple of years. Even if there is zero capacity for additional savings, there are benefits:

* keep the Social Security credits going.
* don't dip into savings/investments.
* gain some practice with lower-key lifestyle.
* reassess, if one's career really does define one.
* kids grow up a bit more.

One supposes that, were "all else equal", but the OP were say 50-52 instead of 44, then the psychology of imposed-FIRE, if we call it that, wouldn't be so irksome. Thus the argument for biding one's time.
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boxerbali
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Re: Thoughts post layoff on retirement + side business

Post by boxerbali »

unwitting_gulag wrote: Sun Feb 11, 2024 3:19 pm While assuredly there are financial reasons to delay retirement, to pare-down spending, to seek alternative employment and to buttress one's savings, psychological reasons may be even weightier. Losing one's job and declaring it to be retirement, may not differ financially from FIRE, but emotionally the difference is enormous! This happens whenever one's hand is forced by obtruding circumstance, rather than, something going to longstanding plan. I mean, was the OP seriously planning on retiring in his mid-40s? If not, some psychological remedy is warranted, is it not?

One possibility is to accept a lower-paying job, at least for say a couple of years. Even if there is zero capacity for additional savings, there are benefits:

* keep the Social Security credits going.
* don't dip into savings/investments.
* gain some practice with lower-key lifestyle.
* reassess, if one's career really does define one.
* kids grow up a bit more.

One supposes that, were "all else equal", but the OP were say 50-52 instead of 44, then the psychology of imposed-FIRE, if we call it that, wouldn't be so irksome. Thus the argument for biding one's time.
You put it very well. I was planning to retire at 48-49 and do something my own to get me busy and generate some side income.( I have some itch for business v/s job. I ok working beyond 49 on my own business, not so much for job though) .

This recent layoff the made me think hard about pulling this plan 4-5 but early and curious about its feasibility . Financial reasons v/s psychological-emotional reasons comment hit me very HARD. I really want to retire on high note and NOT because I faced the layoff ( Later does not feel right for emotional reason). So there are my high level actions items.

1. Begin job search at equal or similar pay. Have willingness to take salary cut if necessary. Focus on low stress job and not so much on saving rate.
2. Do not stress too much if job search take a little longer.
3. Build another side business in parallel in next 1-2 years .( take a job that allows you to do this)
4. Try living low key life and see how it feels. Get idea on early retirement
5. Keep RE investment and Primary home as is.
6. Sell 20% of individual stock each year and put new funds in index. This will allow me to get into index and reduce RISKs in 4-5 year target which I have for FIRE. (I know boggleheads may want me to get out of individual stock faster)

Revisit this plan in 3 months when I have more time to reassess job loss and job search!
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Re: Thoughts post layoff on retirement + side business

Post by av111 »

SB1234 wrote: Sat Feb 10, 2024 7:29 pm
av111 wrote: Sat Feb 10, 2024 6:55 pm Would there not be significant tax liability if all individual stocks are sold? How can we justify losing fed tax, state tax out of the profits? That will reduce the net worth a lot
Unless you have a way to offset the gains, this is not really a dilemma. everyone has to pay taxes on their gains.
Plus the markets has been known to reduce net worth much faster than taxes.
I salute your clear thinking and wonder if you would sell when faced with the same dilemma. I think creating a huge tax liability and also changing the way you have invested in the past based on some internet forums advice could be a terrible idea
AV111
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Re: Thoughts post layoff on retirement + side business

Post by Outer Marker »

av111 wrote: Sun Feb 11, 2024 5:09 pm
SB1234 wrote: Sat Feb 10, 2024 7:29 pm
av111 wrote: Sat Feb 10, 2024 6:55 pm Would there not be significant tax liability if all individual stocks are sold? How can we justify losing fed tax, state tax out of the profits? That will reduce the net worth a lot
Unless you have a way to offset the gains, this is not really a dilemma. everyone has to pay taxes on their gains.
Plus the markets has been known to reduce net worth much faster than taxes.
I salute your clear thinking and wonder if you would sell when faced with the same dilemma. I think creating a huge tax liability and also changing the way you have invested in the past based on some internet forums advice could be a terrible idea
While you want to do what you can to minimize taxes, I don't think it's wise to let the tail wag the dog when it comes to making sound investing decisions and reducing risk - especially in the face of a job loss. Selling at today's all-time record highs (especially the tech high flyers held by OP) and paying the tax due may well be the prudent course. The tax liability is probably not "huge." Normal fed. capital gains rate is 15%, only on the gains, of course; I don't recall OP's state being mention, but apart from a few, probably not that bad. Don't let fear of paying taxes back you into having the market erase those gains for you.
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Re: Thoughts post layoff on retirement + side business

Post by Wannaretireearly »

boxerbali wrote: Sun Feb 11, 2024 4:43 pm
unwitting_gulag wrote: Sun Feb 11, 2024 3:19 pm While assuredly there are financial reasons to delay retirement, to pare-down spending, to seek alternative employment and to buttress one's savings, psychological reasons may be even weightier. Losing one's job and declaring it to be retirement, may not differ financially from FIRE, but emotionally the difference is enormous! This happens whenever one's hand is forced by obtruding circumstance, rather than, something going to longstanding plan. I mean, was the OP seriously planning on retiring in his mid-40s? If not, some psychological remedy is warranted, is it not?

One possibility is to accept a lower-paying job, at least for say a couple of years. Even if there is zero capacity for additional savings, there are benefits:

* keep the Social Security credits going.
* don't dip into savings/investments.
* gain some practice with lower-key lifestyle.
* reassess, if one's career really does define one.
* kids grow up a bit more.

One supposes that, were "all else equal", but the OP were say 50-52 instead of 44, then the psychology of imposed-FIRE, if we call it that, wouldn't be so irksome. Thus the argument for biding one's time.
You put it very well. I was planning to retire at 48-49 and do something my own to get me busy and generate some side income.( I have some itch for business v/s job. I ok working beyond 49 on my own business, not so much for job though) .

This recent layoff the made me think hard about pulling this plan 4-5 but early and curious about its feasibility . Financial reasons v/s psychological-emotional reasons comment hit me very HARD. I really want to retire on high note and NOT because I faced the layoff ( Later does not feel right for emotional reason). So there are my high level actions items.

1. Begin job search at equal or similar pay. Have willingness to take salary cut if necessary. Focus on low stress job and not so much on saving rate.
2. Do not stress too much if job search take a little longer.
3. Build another side business in parallel in next 1-2 years .( take a job that allows you to do this)
4. Try living low key life and see how it feels. Get idea on early retirement
5. Keep RE investment and Primary home as is.
6. Sell 20% of individual stock each year and put new funds in index. This will allow me to get into index and reduce RISKs in 4-5 year target which I have for FIRE. (I know boggleheads may want me to get out of individual stock faster)

Revisit this plan in 3 months when I have more time to reassess job loss and job search!
I like all these points. Well thought out imo
“At some point you are trading time you will never get back for money you will never spend.“ | “How do you want to spend the best remaining year of your life?“
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boxerbali
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Re: Thoughts post layoff on retirement + side business

Post by boxerbali »

Outer Marker wrote: Sun Feb 11, 2024 5:47 pm While you want to do what you can to minimize taxes, I don't think it's wise to let the tail wag the dog when it comes to making sound investing decisions and reducing risk - especially in the face of a job loss. Selling at today's all-time record highs (especially the tech high flyers held by OP) and paying the tax due may well be the prudent course. The tax liability is probably not "huge." Normal fed. capital gains rate is 15%, only on the gains, of course; I don't recall OP's state being mention, but apart from a few, probably not that bad. Don't let fear of paying taxes back you into having the market erase those gains for you.
Some of these investment were made 10+ years ago and I have not touched them. Returns are 4-5X and so I expect heavy taxes on them. I am ok holding some of them for next decade. My thinking aligns mostly with bogleheads but investment style and risk tolerance are slightly different.
Topic Author
boxerbali
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Re: Thoughts post layoff on retirement + side business

Post by boxerbali »

Wannaretireearly wrote: Mon Feb 12, 2024 12:15 am

I like all these points. Well thought out imo
Thanks!
KlangFool
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Re: Thoughts post layoff on retirement + side business

Post by KlangFool »

boxerbali wrote: Mon Feb 12, 2024 1:20 pm
Outer Marker wrote: Sun Feb 11, 2024 5:47 pm While you want to do what you can to minimize taxes, I don't think it's wise to let the tail wag the dog when it comes to making sound investing decisions and reducing risk - especially in the face of a job loss. Selling at today's all-time record highs (especially the tech high flyers held by OP) and paying the tax due may well be the prudent course. The tax liability is probably not "huge." Normal fed. capital gains rate is 15%, only on the gains, of course; I don't recall OP's state being mention, but apart from a few, probably not that bad. Don't let fear of paying taxes back you into having the market erase those gains for you.
Some of these investment were made 10+ years ago and I have not touched them. Returns are 4-5X and so I expect heavy taxes on them. I am ok holding some of them for next decade. My thinking aligns mostly with bogleheads but investment style and risk tolerance are slightly different.
boxerbali,

Do a thought experiment on yourself.

For that 2.5 millions on those individual stocks

A) If they drops by 80%, aka you lose 2 millions, what does that do to you financially?

B) If they double to 5 million, what does that do to you financially?

If you are being honest, you will say (A) matters to you. (B) will hardly make a difference.

If that is the case, what is the point holding on to them?

If you lose, it will hurt you financially. If you win, it won't matter. There are marginal utility to you.

When you won the game, you should stop playing...

KlangFool
30% VWENX | 16% VFWAX/VTIAX | 14.5% VTSAX | 19.5% VBTLX | 10% VSIAX/VTMSX/VSMAX | 10% VSIGX| 30% Wellington 50% 3-funds 20% Mini-Larry
life_force_prana
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Re: Thoughts post layoff on retirement + side business

Post by life_force_prana »

I like all your steps below but want to comment on 1 and 3. If you have had higher paying roles in recent past, its likely that you are seen as fit for similar roles even if you are willing to take lower earning/individual contributor roles, and in fact stress may not be lower with lower paying jobs, just pay is lower! Regarding side business, I would caution to not get sucked into sales pitches for franchise business ownership, most usually net you 50-80K annually after a LOT of work and stress (likely more than a high paying job, however those earnings are more tax efficient than W-2 income). But growing a side business organically maybe better option if possible.
----

1. Begin job search at equal or similar pay. Have willingness to take salary cut if necessary. Focus on low stress job and not so much on saving rate.
2. Do not stress too much if job search take a little longer.
3. Build another side business in parallel in next 1-2 years .( take a job that allows you to do this)
4. Try living low key life and see how it feels. Get idea on early retirement
5. Keep RE investment and Primary home as is.
6. Sell 20% of individual stock each year and put new funds in index. This will allow me to get into index and reduce RISKs in 4-5 year target which I have for FIRE. (I know boggleheads may want me to get out of individual stock faster)
unwitting_gulag
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Re: Thoughts post layoff on retirement + side business

Post by unwitting_gulag »

KlangFool wrote: Mon Feb 12, 2024 1:40 pm For that 2.5 millions on those individual stocks

A) If they drops by 80%, aka you lose 2 millions, what does that do to you financially?

B) If they double to 5 million, what does that do to you financially?

If you are being honest, you will say (A) matters to you. (B) will hardly make a difference.

If that is the case, what is the point holding on to them?

If you lose, it will hurt you financially. If you win, it won't matter. There are marginal utility to you.

When you won the game, you should stop playing...

KlangFool
If we stipulate an 80% drop, then essentially none of us would invest in stocks, thus foregoing the opportunity for riding the equity-market upwards. It becomes a head-for-the-hills frantic effort at self-preservation, instead of a patient faith in the vitality of markets.

As for the question of doubling, and how it matters financially, the answer might be: it actually "matters" zero, in terms of standard of living. But it matters vastly, psychologically. If I'm not making every reasonable effort to grow my money, I'm a dissolute and irresponsible steward of it. Maybe I shouldn't have it in the first place? Not always is the objective, to feed or house oneself. Sometimes the objective of money, is money itself...and the furtherance of that, necessitates the taking of risks. There is no "winning" of the game... the game is perpetual! Every incremental victory simply sets up the quest for the subsequent increment. If that means occasionally taking a loss, that is regrettable, but also inevitable.

Klangfool, please ask yourself this: suppose that you had $1B. What would you do? Would you stop investing? Would you put it all in TIPS?
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Re: Thoughts post layoff on retirement + side business

Post by KlangFool »

unwitting_gulag wrote: Wed Feb 14, 2024 1:33 pm
If we stipulate an 80% drop, then essentially none of us would invest in stocks, thus foregoing the opportunity for riding the equity-market upwards.
unwitting_gulag,

I do not see how a 80% drop on Lucent Technologies stock stop you from investing the stock market. Ditto on Enron. There is a significant difference on 80% drops on individual stocks versus the stock market.

KlangFool
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EnjoyIt
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Re: Thoughts post layoff on retirement + side business

Post by EnjoyIt »

unwitting_gulag wrote: Wed Feb 14, 2024 1:33 pm
KlangFool wrote: Mon Feb 12, 2024 1:40 pm For that 2.5 millions on those individual stocks

A) If they drops by 80%, aka you lose 2 millions, what does that do to you financially?

B) If they double to 5 million, what does that do to you financially?

If you are being honest, you will say (A) matters to you. (B) will hardly make a difference.

If that is the case, what is the point holding on to them?

If you lose, it will hurt you financially. If you win, it won't matter. There are marginal utility to you.

When you won the game, you should stop playing...

KlangFool
If we stipulate an 80% drop, then essentially none of us would invest in stocks, thus foregoing the opportunity for riding the equity-market upwards. It becomes a head-for-the-hills frantic effort at self-preservation, instead of a patient faith in the vitality of markets.

As for the question of doubling, and how it matters financially, the answer might be: it actually "matters" zero, in terms of standard of living. But it matters vastly, psychologically. If I'm not making every reasonable effort to grow my money, I'm a dissolute and irresponsible steward of it. Maybe I shouldn't have it in the first place? Not always is the objective, to feed or house oneself. Sometimes the objective of money, is money itself...and the furtherance of that, necessitates the taking of risks. There is no "winning" of the game... the game is perpetual! Every incremental victory simply sets up the quest for the subsequent increment. If that means occasionally taking a loss, that is regrettable, but also inevitable.

Klangfool, please ask yourself this: suppose that you had $1B. What would you do? Would you stop investing? Would you put it all in TIPS?
It is not that you are invested in the market. It is that so much of your wealth is in individual stocks. What’s worse, mostly in one sector. The recommendation is: stay in the market via index funds and get out of those individual stocks ASAP. Your 5 year plan may or may not work.

I can tell you I was invested in Lucent and had great gains back in the day. Eventually Lucent went bankrupt and I had nothing. This can happen to any one of your stocks.

5 years may be adequate time or it may not. You will need to pay capital gains eventually. You either pay them now or you pay them later, but you will pay them. Why not eliminate the risk sooner rather than later?
A time to EVALUATE your jitters: | viewtopic.php?p=1139732#p1139732
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Watty
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Re: Thoughts post layoff on retirement + side business

Post by Watty »

One thing that may not have been mentioned is that your mutual funds likely also own a lot of those same stocks which you own. You may have more exposure to those stock than you realize.

I agree with selling them, or at least a high percentage of each of them. Most of those companies are so large that they will have a hard time doubling in value again.

At 44 you are getting into middle age so it would be appropriate to be more conservative than if you were younger.
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Wiggums
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Re: Thoughts post layoff on retirement + side business

Post by Wiggums »

KlangFool wrote: Wed Feb 14, 2024 1:43 pm
unwitting_gulag wrote: Wed Feb 14, 2024 1:33 pm
If we stipulate an 80% drop, then essentially none of us would invest in stocks, thus foregoing the opportunity for riding the equity-market upwards.
unwitting_gulag,

I do not see how a 80% drop on Lucent Technologies stock stop you from investing the stock market. Ditto on Enron. There is a significant difference on 80% drops on individual stocks versus the stock market.

KlangFool
Very true. My two buddies pretty must lost their 501k when the telecom stock went to 98 cents. The market eventually recovered, but the company did not.
"I started with nothing and I still have most of it left."
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