Author Topic: At A Crossroads...  (Read 1949 times)

foghorn

  • 5 O'Clock Shadow
  • *
  • Posts: 4
At A Crossroads...
« on: September 04, 2017, 01:28:04 PM »
At a Crossroads…

Hello MMM Readers.

Here is my situation.  I was recently laid off from my job and find myself debating the next step in my life.  For many years I have tried to be a good saver and a spender of very little.  Now that I am unemployed I find myself searching for what to do next. 

•   Do I look for another Corporate America job and throw myself back into that world maybe one last time?

•   Do I use this as an opportunity to walk away from Corporate America and work at something else that has much lower stress, but likely much less pay?

•   Do I retire completely and tell Corporate America for go away and leave me alone?


My personal stats:

•   Male
•   Age 50
•   Single – Never Married
•   No kids (thank you vasectomy)
•   Live in Upper Midwest in a suburb of a major metropolitan area.


My financial stats – (Assets):

•   Debt Free
•   Total Net Worth = $2,775,000 (Incudes the details below)
        - House Value = $308,000.
        - Retirement Funds (IRA’s and 401K) = $1,600,000.
        - Taxable Accounts = $867,000 (Checking, Savings, CD’s, Bond Funds, Brokerage Account, etc.)  These accounts generate about $1,000 per month in Interest and Dividend Income which gets re-        invested.


My financial stats – (Monthly Expenses):

Property Taxes                           $307
Gym Membership                    $45
Groceries                                   $200
Cable TV / Internet                   $140
Homeowners Association Fee   $110
Property Insurance                   $106
Gas - Car                                     $90
Electric                                    $79
Car Insurance                            $67
Cell Phone                                    $58
Gas - House                           $56
Disability Insurance                   $54
Car Tabs                                   $38
Water-Sewer-Recycling          $26
Umbrella Liability Ins.                  $11
TOTAL                $1387

Starting in November 2017, I will need to budget about $500 per month for Health Insurance via COBRA or the ACA Exchange.  My essential expenses will then be $1887 per month.  I would also like to add in about $500 per month for unplanned expenses and having some fun from time to time. 

All told, I think I can plan on $2500 per month ($30,000 per year) to live a fairly comfortable lifestyle.


Bad habit – I like to drive a new car.  About every two years I trade in my current vehicle for a new one.  My last trade was about two years ago – and had I not lost my job, I probably would have done another car deal recently.  With that said, my current vehicle is fine.  It was purchased in 2015 (2016 model year) and has 21,000 miles on it. 

The House – My home is about 15 years old and will start to need some new items in the next few years.  All the appliances are original to the home; the furnace and AC are also original.  It will not be long before all of these will need to be replaced.

The idea of retiring is enticing, but frankly foreign to me.  I always assumed that I would work at least another 5 years at the job that I held (saving the entire time) and then leave on my terms.  My former employer threw a wrench into that idea and I now I am faced with decisions I did not plan on making at age 50.

I would appreciate the perspective of people on this forum who think about this stuff a great deal and have a point of view that I may not be considering.

Thank you.

tyort1

  • Handlebar Stache
  • *****
  • Posts: 1588
  • Age: 45
  • Location: Denver, Colorado
Re: At A Crossroads...
« Reply #1 on: September 04, 2017, 01:49:04 PM »
Based on the 4% rule, you can withdraw $96,000 per year and never run out of money, barring an event like the Great Depression.  Living on $30,000 per year you will never run out, period.  You aren't just FI, you're stinking rich!  Haha.  Don't waste another moment of your life doing ANYTHING you don't want to. 

One question - are your retirement and taxable savings in low-cost accounts like Vanguard?  You really should find out what the costs/fees are and make some changes if they are high.
Frugalite in training.

GenXbiker

  • Bristles
  • ***
  • Posts: 330
Re: At A Crossroads...
« Reply #2 on: September 04, 2017, 01:49:54 PM »
I'm about the same age - also a single guy.   Your expenses are a little higher than mine, but you are quite a ways ahead of me in your total retirement + investments.   People think I should go ahead and FIRE, so I would definitely go ahead and FIRE if I was you.  You're sitting well.

RWD

  • Handlebar Stache
  • *****
  • Posts: 1509
  • Location: Mississippi
Re: At A Crossroads...
« Reply #3 on: September 04, 2017, 01:52:44 PM »
You're planning on spending $30k/year and have ~$2.5 million in invested assets? You have no need to work for money ever again. $2.5 million can sustain about $100k/year in spending per the 4% rule and that's not even factoring in eventual social security payments.

What do you do now? Whatever you want!

foghorn

  • 5 O'Clock Shadow
  • *
  • Posts: 4
Re: At A Crossroads...
« Reply #4 on: September 04, 2017, 02:24:14 PM »
Hi Tyort1;

Thanks for your reply and your perspective.

Most of my Retirement Funds are with Fidelity Investments and I am in their managed funds program.  Basically, Fidelity manages my account (based on my Objectives).  They earn about 75 basis points for the cost of funds and their services.

The non-retirement funds are largely in CD's and bank accounts.  The dollars that are in Mutual Funds and Bond funds are low cost options.

Thanks agin for there input.

Fi(re) on the Farm

  • Stubble
  • **
  • Posts: 127
Re: At A Crossroads...
« Reply #5 on: September 04, 2017, 02:39:19 PM »
Is there something in life that you want to do? travel, ski, volunteer? You're set financially but now you need to figure out how you want to spend your time. With the amount you have saved, you could travel the world. I think you need to find what you're passionate about and focus on that.

tyort1

  • Handlebar Stache
  • *****
  • Posts: 1588
  • Age: 45
  • Location: Denver, Colorado
Re: At A Crossroads...
« Reply #6 on: September 04, 2017, 02:46:50 PM »
Hi Tyort1;

Thanks for your reply and your perspective.

Most of my Retirement Funds are with Fidelity Investments and I am in their managed funds program.  Basically, Fidelity manages my account (based on my Objectives).  They earn about 75 basis points for the cost of funds and their services.

The non-retirement funds are largely in CD's and bank accounts.  The dollars that are in Mutual Funds and Bond funds are low cost options.

Thanks agin for there input.

.75 is pretty expensive!  For contrast, I also have Fidelity and use their targeted retirement funds and only pay .1 percent.  One thing you'll find, as you spend more time on this site, is just how little value managed funds bring you and how much money they really cost you. 

You might also do some reading up on the Three Fund Portfolio, both here and on Bogleheads. 

I also think you have way to much $$ in cash and cash equivalents.  Maybe only keep 3 to 5 years worth of expenses on hand in cash, and the rest in a stock/bond split at Vanguard.  This will let your money keep growing while having a nice cushion for emergencies and/or market downturns. 
Frugalite in training.

marty998

  • Magnum Stache
  • ******
  • Posts: 4718
  • Location: Sydney, Oz
Re: At A Crossroads...
« Reply #7 on: September 04, 2017, 03:42:56 PM »
0.75% actually works out to be over $18,000 a year on $2.5m of investments.

Seems to be by far and away your largest expense.

Goldielocks

  • Magnum Stache
  • ******
  • Posts: 4352
  • Location: BC
Re: At A Crossroads...
« Reply #8 on: September 04, 2017, 10:12:50 PM »
Obviously you have the money to not have to work again.   But your question is bigger than that.

My two cents is this -- in order to make a positive change in your day to day, you need to find something that draws you to it.
In the meantime, look for another corporate america job a couple of days per week (casual-like, for now), then put it aside, and explore new hobbies, ideas, things to study or try new things to do. 

One big recommendation is to take up a regular exercise program commitment 2x per week, if you don't already have that happening in your life right now.    Try a couple of yoga classes or meditation --something very different, then try something else.   Then try a volunteer activity one day a week, and deliberately get together with friends you haven't seen one day a week.

Now we are up to 6 days, so you do what you like on the seventh.  Please note, taking a vacation away for more than a couple of days will not help reframe your thoughts, only to escape for a while and put the thinking about what you want in future on hold.

Eventually you will be drawn to something -- a new corporate job, a part time job, learning a skill, setting up a business, or a new non-paid adventure.


Where does this advice come from?  My personal experience with being laid off unexpectedly 2x in my career, when not FI, and then FIRE by choice about 6 months ago...   Adding the missing elements to my life when work went away made me much more aware of what I actually wanted or needed.

Oh,  and a reminder -- It really is about a business decision, not about you, when you get laid off.   I had a hard time internalizing that at first...

foghorn

  • 5 O'Clock Shadow
  • *
  • Posts: 4
Re: At A Crossroads...
« Reply #9 on: September 05, 2017, 11:08:41 AM »
Goldielocks;

Thank you for your message and your perspective.  So much of what your wrote hits home with me.  I guess that I have spent so much time and effort getting to this point (and was planning on a few more years of adding to the nest egg), that I am not really mentally prepared to move into FIRE.  I kind of had a plan in my head where I would work a few more years and use that time to save and also plan for the next steps.  Being laid off has accelerated all of that for me.

I do workout at least 4 days a week and that its a very important part of each day.  I need that energy burn in order to keep my head straight and also sleep well.  When I miss a series of workout I do not feel right. 

I need to explore what I want to "run to" now, rather than focusing on "running from" the work world.  As my former employer had made that choice for me, I can now explore what those things might be.  Like so many others, I guess I have been conditioned to work until age 65 - or - until I could not anymore.  I have options and flexibility now, but it just seems odd when most of my friends and peers are not in the same boat.  In fact that is part of the reason I am posting on the MMM forum.  You folks can understand, whereas none of my friends can.  Most of them are in debt and cannot relate to my situation.

Lastly, I agree that being laid off was a business decision as there were many of us let go on that ugly day.  But, it is hard to not take it personally.

Thank you again for your input.

 
 

Finances_With_Purpose

  • Stubble
  • **
  • Posts: 154
    • Finances With Purpose: deploying resources wisely to live vigorously
Re: At A Crossroads...
« Reply #10 on: September 05, 2017, 10:43:41 PM »
Goldielocks;

Thank you for your message and your perspective.  So much of what your wrote hits home with me.  I guess that I have spent so much time and effort getting to this point (and was planning on a few more years of adding to the nest egg), that I am not really mentally prepared to move into FIRE.  I kind of had a plan in my head where I would work a few more years and use that time to save and also plan for the next steps.  Being laid off has accelerated all of that for me.

I do workout at least 4 days a week and that its a very important part of each day.  I need that energy burn in order to keep my head straight and also sleep well.  When I miss a series of workout I do not feel right. 

I need to explore what I want to "run to" now, rather than focusing on "running from" the work world.  As my former employer had made that choice for me, I can now explore what those things might be.  Like so many others, I guess I have been conditioned to work until age 65 - or - until I could not anymore.  I have options and flexibility now, but it just seems odd when most of my friends and peers are not in the same boat.  In fact that is part of the reason I am posting on the MMM forum.  You folks can understand, whereas none of my friends can.  Most of them are in debt and cannot relate to my situation.

Lastly, I agree that being laid off was a business decision as there were many of us let go on that ugly day.  But, it is hard to not take it personally.

Thank you again for your input.

Foghorn, I totally feel for you (and have been there myself)!  I also agree 100% with Goldielocks - she says it so well.

This is the kind of issue I love thinking about and writing about!  Here's the #1 thing that has helped me personally, and it's a book that's written for exactly the situation you're in.  It's called Now What?: 90 Days to a New Life Direction (link/referral/reference: http://amzn.to/2eDY51K).  The exercises in there are invaluable.

There's another book, too, called SHAPE by Erik Rees that's helpful (link/referral/reference: http://amzn.to/2gJGc67).  It, too, includes some great exercises and things to think through.

Both of those encourage people to find their purpose and their next thing - and they give you a ton of tools to help understand what that thing might be.  I say this as someone who has spent tremendous amounts of time over the past few years trying to figure out my own life goals, purpose, direction, and so on.  For whatever reason, it has been very difficult for me, and those have been the most helpful tools.  (For most people, I think it's probably easier to figure out.) 

The great news: financially, you're free.  You can do whatever you want now.  So you can build a life that's extremely fulfilling. 

I strongly recommend that you think about how your life might best serve others as you find your next thing...you may well find it more fulfilling.  And serving others can come in many, many fashions (so don't think of it as limiting): everything from doing custom woodwork to encouraging people via a blog (my side hobby) to examining complex financial or biological models to advance human understanding of something.  "Others" need not be real people standing in your presence, in other words: you can do whatever you want to help people.  Often it's helpful to think of a problem you want to solve, or a method for solving types of problems. 

I'd switch places with you today, easily (as I still have to make money to live), for what it's worth.  And I'm eager to hear what you make of your life! 

human

  • Pencil Stache
  • ****
  • Posts: 756
Re: At A Crossroads...
« Reply #11 on: September 06, 2017, 04:08:15 AM »
Dude you could live off of 30k a year and give me 50k a year and be fine for eternity. I would consider dumping the managed accounts though but it's your money.

Acastus

  • 5 O'Clock Shadow
  • *
  • Posts: 78
  • Age: 55
Re: At A Crossroads...
« Reply #12 on: September 07, 2017, 12:10:51 PM »
If you spent $ 50k per year, you could probably fund yourself until full retirement on just your taxable money, and let the other 1.6 mil ride. You can do what you want at this point.

One note on expenses. You made too much money this year, but you can get ACA subsidies next year if you keep your total income < $45k. Lower income results in more subsidy, but we are talking 300/month at most, so don't kill yourself on it.  Pay attention to how you draw taxable money. Not all will be taxable, just the amount that has appreciated. Fidelity should be able to show you how to limit your taxable withdrawals.

DarkandStormy

  • Bristles
  • ***
  • Posts: 362
  • Age: 28
  • Location: Midwest, USA
Re: At A Crossroads...
« Reply #13 on: September 07, 2017, 12:57:30 PM »
You're FIRE.

Just get yourself out of the Managed Funds with Fidelity and go with low-cost index funds (Fidelity, Vanguard, and Schwab are all pretty cheap).  Your $867K is earning you 1% a year.  Move most of that into an index fund or a combination of stocks/bonds that you're comfortable with.

You're set.  More than set, actually.  Congrats!  Time to find what you like to do, what you're passionate about, etc. etc.  Your stash will more than fund anything you want to do - even a new car this year!
The Chase Trifecta:
Earn 50,000 Ultimate Rewards points with Chase Sapphire Preferred - $4k spending in 3 months.
https://www.referyourchasecard.com/6/2MOVOLZCEJ
Earn a $150 bonus with Chase Freedom Unlimited - only $500 spending needed in 3 months.
https://www.referyourchasecard.com/18/ENYF0FTS66
Earn a $150 bonus with Chase Freedom - only $500 spending needed in 3 months.
https://www.referyourchasecard.com/2/DBOP9XI9XT

Recommended Cell Servce - Google's Project FI: https://g.co/fi/r/THK0WX

jamccain

  • Stubble
  • **
  • Posts: 112
  • Location: Los Angeles
Re: At A Crossroads...
« Reply #14 on: September 08, 2017, 01:12:39 PM »
Goldielocks;

Thank you for your message and your perspective.  So much of what your wrote hits home with me.  I guess that I have spent so much time and effort getting to this point (and was planning on a few more years of adding to the nest egg), that I am not really mentally prepared to move into FIRE.  I kind of had a plan in my head where I would work a few more years and use that time to save and also plan for the next steps.  Being laid off has accelerated all of that for me.

I do workout at least 4 days a week and that its a very important part of each day.  I need that energy burn in order to keep my head straight and also sleep well.  When I miss a series of workout I do not feel right. 

I need to explore what I want to "run to" now, rather than focusing on "running from" the work world.  As my former employer had made that choice for me, I can now explore what those things might be.  Like so many others, I guess I have been conditioned to work until age 65 - or - until I could not anymore.  I have options and flexibility now, but it just seems odd when most of my friends and peers are not in the same boat.  In fact that is part of the reason I am posting on the MMM forum.  You folks can understand, whereas none of my friends can.  Most of them are in debt and cannot relate to my situation.

Lastly, I agree that being laid off was a business decision as there were many of us let go on that ugly day.  But, it is hard to not take it personally.

Thank you again for your input.

You're never really going to be mentally prepared...one day you just get too tired to go back to work and you retire.  What I mean is, you're always going to feel like you need to make another $100K before retiring. 

Couple of suggestions:

1.  Most important advice...try FIRE out for a limited amount of time.  Don't commit to anything, just try out being early retired for a period of time (6 months, 1yr, whatever).  You're not making any decisions about the future, you're just taking a break.  At the end of your "timeout" as I'll call it, you'll know where you are mentally.  If you are recharged and ready to go back to corporate america, you'll know.  If you are over that forever, you'll know.  You can relax during this period knowing you already have enough money, you're just proving it to yourself here. 

2.  Let something find you.  Once you're retired, work/opportunities will find you.  Don't jump on any during your timeout unless you consider it the opportunity of a lifetime.  After your "timeout" try something again (if you want).  If some interesting opportunity came along, try it out for six months.  Keep testing everything on small time horizons.  As hard as this is...stop having a 5 yr plan.  Instead point yourself to your true north and go off in that direction, adjust when you get off course. 

3.  Engage other people, once you're on the timeout.  Keep your social and professional network strong.  This will help with #2 and you'll find other peacocks like yourself.  Plus, you're going to need the interaction and know you'll have more energy for it.

4.  Read some books.  I suggest "So Good They Can't Ignore You".  It will do two things:  1) Debunk the "passion" myth.  2)  Get you to think about how to use your current skills to mold your work to something more palatable (I don't want to oversell it). 

5.  Don't apologize about liking to drive a new car.  You've done great.  98% of the people who might criticize that can't hold your personal finance jock.  You determine how you want to handle this expense in the future. 

6.  Be open to consulting or part time work after your time-out.  You don't have to work FT anymore unless you just want a big pile of money sitting there. 

6.  Do #1.  Try it out.   

foghorn

  • 5 O'Clock Shadow
  • *
  • Posts: 4
Re: At A Crossroads...
« Reply #15 on: September 10, 2017, 11:05:50 AM »
I would like to thank those of you that took the time to read my Case Study and reply with their thoughts, perspective and recommendations.  The input has given me so much to think about and consider as I look forward. 

I still struggle with this idea of FIRE.  I am a worrier by nature and have always used money as a barrier to the crap that life can (and will) throw at us.  I think that no matter how much money I have, "just a little more" always feels like the answer.  Work a little longer, save a little more.  Changing that mindset is hard for me - and considering I am thinking about this because of a lay off, rather than part of some well laid out plan makes it even more difficult.  I guess its is the emotional side of money - not the rational side.

I also need to look at a way to better deploy my Taxable Accounts.  Most of that money is sitting in super safe (and therefore low yielding) accounts such as Checking, Savings, CD's.  What I wouldn't give for 5% at the bank. That would generate enough income that I would not have to touch the principal.  Sadly, not the case.

Thanks again to all of you. 





Acastus

  • 5 O'Clock Shadow
  • *
  • Posts: 78
  • Age: 55
Re: At A Crossroads...
« Reply #16 on: September 13, 2017, 11:24:56 AM »
You are in a situation that a career coach may really make sense. I am kicking this idea around for myself. They are usually a waste of money. You can get many similar services for free at the local Job Center (formerly unemployment office). For simpler job changes, free is best. Cost is in the $5k-10k range, and they work with you until you land.  You have plenty of money, so no worries there. They are part guidance counselor, part therapist, part coach, and they have contacts.

Reading "What Color is Your Parachute?" with a focus on the life changing career change methods may give you some insight. There are several encore career books out there, as well.

Finances_With_Purpose

  • Stubble
  • **
  • Posts: 154
    • Finances With Purpose: deploying resources wisely to live vigorously
Re: At A Crossroads...
« Reply #17 on: September 13, 2017, 04:35:13 PM »
You are in a situation that a career coach may really make sense. I am kicking this idea around for myself. They are usually a waste of money. You can get many similar services for free at the local Job Center (formerly unemployment office). For simpler job changes, free is best. Cost is in the $5k-10k range, and they work with you until you land.  You have plenty of money, so no worries there. They are part guidance counselor, part therapist, part coach, and they have contacts.

Reading "What Color is Your Parachute?" with a focus on the life changing career change methods may give you some insight. There are several encore career books out there, as well.

Agree, but before dropping 5-10k, seriously: check out the 90 Days book I mentioned.  It's basically a career coach along w/ all the exercises he/she would run you through.  If nothing else, you'll get far more value from coaching once you put in the hours on that - and know far more about yourself.  It can't help but help you. 

You're in a great place: lots of opportunity awaits you!!!  For some inspiration, see this TED talk (which led me to that book).