Author Topic: $500K Sabbatical?  (Read 9918 times)

Unpaintedhuffhines

  • 5 O'Clock Shadow
  • *
  • Posts: 5
$500K Sabbatical?
« on: June 11, 2013, 01:13:28 PM »
Hi. Love the site, and obviously first post for me.

I'm 52, have about 1.5M in IRAs and brokerage accounts. Very high stress job in high tech sales management, and I'm about ready to pull the ripcord. With an annuity of about $26K /year, and DW making $45K/ year, I can safely withdraw a bit from the $1.5M and make things work, certainly if I just take off a year. DW is 100% supportive because she knows the impact this has on my health, plus I've been making the cheddar for quite some time.

My "problem" is that, for the past few years, I've made a lot of money, and I could continue in this job for a few more years. By a lot of money, I mean $400K-$500K / year (before taxes). I know, why don't I have more saved? Long story, but it's a combination of living the good life with paying down some debts. Plus, 5 years ago I didn't have anywhere near $1.5M. This year I will probably save about $200K (already saved almost $100K).

So, while originally I thought I'd just retire and be done with the rat race, lately I've thought about a sabbatical of about a year. Now, my company has no sabbatical program, and if you know much about high tech sales, you don't just step in and out of it all willy nilly. So I would likely never be able to command this kind of cash again, but I don't think I'd need to. Clearly I'd need to just quit my job.

My hesitation is this: how incredibly selfish of me! This is essentially a $400K-500K vacation! (Okay, maybe more like a $250K-300K vacation after taxes, but you get the point). While I'm almost certain I need this, the guilt is drowning me.  I feel I'm slipping into the One More Year syndrome...


SnackDog

  • Handlebar Stache
  • *****
  • Posts: 1276
  • Location: Latin America
Re: $500K Sabbatical?
« Reply #1 on: June 11, 2013, 01:20:18 PM »
If that salary includes commissions, you must be a good (valuable) salesman.  Tell them it is sabbatical or quit- their choice. You might be surprised at the answer.  I work at a fairly large company and have seen disgruntled (but otherwise well-performing) staff quit in anger and been *offered* six months off.

Are you sure you don't have enough to retire now?  $1.5MM should get you a solid $60K/year minimum; possibly more if you go with an annuity.

Zelda01

  • 5 O'Clock Shadow
  • *
  • Posts: 55
Re: $500K Sabbatical?
« Reply #2 on: June 11, 2013, 01:22:32 PM »
I'm all for people quitting jobs that make them sick. 

One thing I'd like to know... You talk about how much you make, and how much you have saved.  Can you talk about how much you spend in a month/year?

You might want to see what you would spend in your sabbatical year.  Also, if your spending was a certain amount, you might think "hmmmm... if I could cut spending a little, I wouldn't have to worry so much about jumping back into the work force."  In fact, maybe you would be done with the high-stress life.

We need more info :)


Unpaintedhuffhines

  • 5 O'Clock Shadow
  • *
  • Posts: 5
Re: $500K Sabbatical?
« Reply #3 on: June 11, 2013, 01:33:07 PM »
Good questions. I started tracking what I spent this year. Before that, and I was spending money without thinking (ack! If I'd been saving all these years like I do now!). I can very comfortably live on $100K/year, and this includes budget items like "misc - $10K" and "travel - "12K." Today, I spend zero time looking for deals, clipping coupons, and being frugal in general. If I were not working and traveling 70% of the time, I'd make more time for that.

We downsized our house in a big way about 18 months ago, plus just got the last kiddo out of college, so have changed our outflows significantly.

I have a financial advisor that I've used from time to time, and he's given me the thumbs up to get out permanently, which I may do, but mentally, telling myself that I'm taking a one year career break makes things a lot more palatable. And less risky.

And yes, I'm on commission. I have been very fortunate over the past several years. Actually, my whole life I've been lucky.

Eric

  • Magnum Stache
  • ******
  • Posts: 4061
  • Location: On my bike
Re: $500K Sabbatical?
« Reply #4 on: June 11, 2013, 01:53:01 PM »
Nowhere do I see how much you spend per year.  But you're 52.  You have $1.5MM and a working spouse.  You should retire yesterday, assuming you don't spend more than $60K annually, which is a shit ton of spending. (that is a 4% withdrawal rate on $1.5MM)

http://www.mrmoneymustache.com/2012/05/29/how-much-do-i-need-for-retirement/

You don't need a sabbatical dude.  You need to say fuck you and walk out the door.


Edit -- AND you also have an annuity?  And you have SS in 10 years.  What are you waiting for?
« Last Edit: June 11, 2013, 01:57:19 PM by Eric »

Frankies Girl

  • Magnum Stache
  • ******
  • Posts: 3607
  • Age: 83
  • Location: The oubliette.
  • Ghouls Just Wanna Have Funds!
Re: $500K Sabbatical?
« Reply #5 on: June 11, 2013, 02:18:05 PM »
With that much of a nest egg and the fact that your spouse makes 45K, I would have quit already... but then again, I also live on under 40K, so 45K seems like a splurge (not even counting the retirement accounts!!)

Saying that you can "live comfortably" on 100K is kind of laughable. I don't know of anyone that could NOT live comfortably on that - that is a rich and extravagant amount. Not sure what you spend that much on, but honestly, that's excessive and if you take a hard look at your spending habits, you could live pretty darn well on half that and never have to work at something you hate again.

(not sure if that qualifies as a face punch, but dude - this Is a site that promotes living frugally and ditching the silly spending and buying routines to get out of the rat race ASAP - so consider who your audience is... :D )

Unpaintedhuffhines

  • 5 O'Clock Shadow
  • *
  • Posts: 5
Re: $500K Sabbatical?
« Reply #6 on: June 11, 2013, 02:50:38 PM »
Haha - no worries on the face punch! I guess my point is that if I take a ridiculous number $100K/year) as a worst case scenario, that has all kinds of buffer built in, then I'm absolutely set for a year, and almost for sure forever.

And don't forget my DW who is fully supportive...actually, what she said was "hell yes you should retire! I need a wife!" Lol. Or maybe not lol!

Yeah, this is the kind of shove that I need. Funny, but all the friends that know me say "DO IT."

And in my industry, I know a LOT of people who would struggle living on "just" $100K / year. Kind of pathetic, but this one of the things I want to get away from....


Lans Holman

  • Bristles
  • ***
  • Posts: 276
  • Location: North by Northwest
Re: $500K Sabbatical?
« Reply #7 on: June 11, 2013, 03:49:03 PM »
As smart as it is for most folks to worry about the opportunity costs involved in a choice, beating yourself up about the money you're not making by taking time off seems pointless in your situation.  You've worked hard, saved, achieved financial independence.  Game over. 

tomsang

  • Handlebar Stache
  • *****
  • Posts: 1085
Re: $500K Sabbatical?
« Reply #8 on: June 11, 2013, 04:08:35 PM »
I think it is a tougher call than it may seem.  Depending how bad this is on your health, I think you should continue to work until you have a firm grasp on your expenses.  During this period of time you will improve your annuity, Social Security, and your Stache.  If you have been living the past 30 years spending a ton, you have developed some spending habits that may be hard to break.

When you retire, if you pull more out of your stache to maintain your lifestyle, you can scew up your financial future pretty severely.  If you spend the next 6 months getting your spending down to $80k and you feel good about your spending then you are probably good to go. 

Does your wife have a 401k, annuities, investments, etc.? Did you list your assets as a couple or are those just yours? Do you own a home, etc.  Post your budget and we will have a better feel on where you are at in your FI quest.

If you working one more year, helps your wife retire 10 years earlier would that change your outlook.

Sounds like you are very close.

Tom     

travelbug

  • Bristles
  • ***
  • Posts: 274
  • Location: Australia
Re: $500K Sabbatical?
« Reply #9 on: June 11, 2013, 09:22:45 PM »
I agree about looking very hard at your budget and what you actually want to do in retirement, then make a retirement budget.

If you have 1.5M invested plus 26k pa that gives you 86k pa pretty much guaranteed as income. Can you flex your frugality muscle a bit more to live with that?

Do you own your home? Have any debts?

Maybe do 6 months more, sock away as much as you can and then pull the plug. Or take a sabbatical. Maybe after a year you wont want to return. Does your wife want to retire with you? On this income I think you both could have a great time.

I know how hard it is to let go of that large income though. We have just decided to hang out for another 6-8 months to add a buffer to our figures and we are on similar incomes to you.

Good luck with your decision.

Zelda01

  • 5 O'Clock Shadow
  • *
  • Posts: 55
Re: $500K Sabbatical?
« Reply #10 on: June 12, 2013, 09:48:21 AM »

Another few questions I have...

You said a few things that caught my eye:  "My hesitation is this: how incredibly selfish of me!"  and  "While I'm almost certain I need this, the guilt is drowning me."

Do you feel your identity is tied up in being a high income earner, or being the primary breadwinner?  I'm trying to read between the lines of why you need this to be a "sabbatical," instead of an early retirement.  Or maybe it is that you having this an "all-or-none" option, is not sitting well with you? 

One thing about sticking around this forum is that you will realize that we are more impressed by people's saving and cost-cutting ability, and ability to be in charge of their financial situation, than we are of the dollar amount a person earns.  So it may help you change your mindset about making money vs being in charge of your finances.

Another thing... it seems like you have a huge voice in your head that says "I make $X," and a teeny voice saying "My health is going downhill."  That health voice needs to be louder.  You may think about which of these health situations you are in:
- Job stress is creating a life-threatening situation
- Job is causing illness that I may not bounce back from
- Job is causing illness that I will bounce back from once I quit the job.

If you are in one of the first 2 situations, you really need to start paying attention.  I had a previous job that put me into the 2nd category above, and my Dr said "If you are this ill now, imagine what you will be like at age 65?"  So I quit, but I should not have waited for my doctor to give me "permission" to quit.  I would have been better off quitting when my body started telling me it was time.

It sounds like you are trying to find someone giving you permission to quit.  Try to work it out so you are giving yourself permission.

aj_yooper

  • Handlebar Stache
  • *****
  • Posts: 1091
  • Age: 10
  • Location: Chicagoland
Re: $500K Sabbatical?
« Reply #11 on: June 12, 2013, 10:07:37 AM »
+1 to all comments, especially lhamo and Zelda01.  Jonesing to see your budget too and wondering if your finances are optimized.  You'll probably need awhile to straighten out stuff even if you decide to quit today.  As your wife thinks retirement is a good idea, she is probably concerned about your wellbeing a lot.

sdp

  • 5 O'Clock Shadow
  • *
  • Posts: 74
Re: $500K Sabbatical?
« Reply #12 on: June 12, 2013, 10:29:02 AM »
One of the most influential components of my financial plan is deliberately surrounding myself with people of like mind, this forum being one of them.  If you were to retire and deliberately surround yourself with people you really like that also are living on 40-50K per year (or WAY less) you could learn a lot from them and have a lot of fun doing it.  It sounds like with your high demanding job, out of default, you are  spending your time with people who are perpetuating your high level of spending. How much of your 100K is spent because of your job (I.E. home location, eating out, travel, car, clothes, vacations, ect...) In addition to figuring out your expenses over the next 6 months, also track why you spend the money, who around you influences the purchases, and who you spend the money with.  Everyone's situation is unique, but is also totally amendable.  It is easy for a lot of us to criticize someone else's 100K spending level, but then I have deliberately surrounded myself with family and friends who value NOT spending and having fun and going on vacations that are nearly free or are free.  Also I have deliberately chosen a place to live which is not super expensive.  My goal when I reach FI is to live on 25K/year and give 25K/year away- that will become my full time job!
   I am super excited for you!  it seems like you spend so much of your time and energy towards one thing right now-your job... If you retire early it will free up so much of your time, energy, and money to spend with your husband, your kids, your community, and to do so many more awesome things with/for so many people that would really benefit-- things that you can't even begin to dream up right now! 

NestEggChick (formerly PFgal)

  • Stubble
  • **
  • Posts: 238
  • Location: Boston-ish, MA
    • Nest Egg Chick
Re: $500K Sabbatical?
« Reply #13 on: June 14, 2013, 01:54:00 PM »
It seems to me that you're not asking if you can afford to quit your job as much as you're asking for permission to do it guilt-free. You seem to understand that you can afford to quit if you cut back on your expenses, and it sounds like you're willing to do that. (Personally, I believe that no purchase is more important than my health, so if you believe the same, cutting back should be easy.)

To me it sounds like you are struggling with two issues:

1) You feel like you're supposed to earn more money. After all, that's part of the American Dream, right? Always earn more, because more = better! Our society doesn't seem to have any grasp of "enough." I was speaking with someone who could easily afford to retire, but she says she needs more money to do so. I asked how much more and she didn't know - just more. I think you're the same. How much do you think you need? Figure out a number. Post your expenses on here and people will help you figure it out. Then you can see if you're already there.

2) You feel like you're supposed to work. I get that. I was once going to quit a job I hated to go to graduate school. I was miserable there. My roommate and boyfriend ganged up on me and convinced me to quit a month earlier. I felt weird about it - I'd never not worked. But I was so glad I listened to them! Society tells us we're supposed to work, but who's to say you can't follow a different path? If you really want to contribute something to society, I suggest you give yourself a deadline. Six months could be about right. Plan to give yourself some time to relax, de-stress, get your health back on track, etc. Then after six months, start doing some volunteer work once or twice a week, get a part-time job, or start a new career in something you love. Since you don't need the money, you can do anything! That way you'll be "doing something" and contributing to society, but you can do it at your leisure and only if you enjoy it.

You have great savings. Your wife is supportive. You're unhappy and sick. So why are you staying at this job? Because you feel that you should? What if you "should" be happy? In that case, quitting is the right move! A sabbatical just delays the inevitable and eases your guilt about the two issues I outlined. Quitting will let you move on.

RewardTraveler

  • 5 O'Clock Shadow
  • *
  • Posts: 27
Re: $500K Sabbatical?
« Reply #14 on: June 14, 2013, 03:53:11 PM »
I agree with all the suggestions to look at your current spending levels and understand the changes that will be required prior to giving up the means to pay for them.  $1.5 MM may seem like a ridiculous amount of money if you're used to living the MMM lifestyle, but if you aren't that $1.5 becomes $1.4 quickly and just goes downhill from there.  If you're planning on spending $100k in retirement you need at least $2.5 MM.

Another thing that hasn't been mentioned is retirement for your wife.  Is she working because she loves her job or is she working for the paycheck?  If she's working for the paycheck, it will take her 10 years to make what you do in one year.  Can you tough it out until you both can retire?  You'll probably enjoy working the next 2 years less, but if you both can retire the rest of your time should be more enjoyable.

Sometimes just knowing you have options can increase happiness.  Can you retire today? Yes.  Maybe knowing that can help ease some of the stress of working until you retire.

Joet

  • Guest
Re: $500K Sabbatical?
« Reply #15 on: June 14, 2013, 04:22:29 PM »
Going against the grain it sounds like one-more-year makes everything a lot easier. If your spouse only makes 45k, how much sense does that make if 'she' needs the $$?

Figure out how to live on your pension (when does that start?) + 2.5% of your portfolio. Since that probably isn't what you're used to making, clear 500k this year, boost your stashe to 2m, then see what the first quarter of next year brings. 6 more months maybe?

I spend a bit more than you I guess (10-11k/ mo) but don't save as much. A good year 100k, heh. Make it rain my man.

Unpaintedhuffhines

  • 5 O'Clock Shadow
  • *
  • Posts: 5
Re: $500K Sabbatical?
« Reply #16 on: June 14, 2013, 04:48:27 PM »
Where the hell has this forum been all my life? Lol. Good comments indeed.

Wife loves her job. She's said more than once that she can't believes she gets paid for what she does. (Editor in chief for a fitness magazine, two of her passions). She doesn't want to quit anytime soon.

I have begun to focus on my spending, tracking it pretty closely, and it is eye opening. I figure of all the things, that is where I have the most control: I can make good investments, but the market can go down. Only I can decide to go out to eat or stay home and have a nice home cooked meal; to go camping for a week or stay at the Four Seasons. Work friends spend uncontrollably. Personal friends are far more frugal. I am just as happy sitting on my back porch sharing a few cold beers with friends than having a $200 steak dinner at Ruth's Chris.

While my health is okay, it's just okay. I think it's the stress that is really hurting me, and those that are closest to me can tell that. I could lose 30 pounds, and certainly head to the gym more often.

The $26K annuity is effective now. It's an inheritance that was set up for us, and it's automatic (but no COLA).
 
By the way, when I say sabbatical, that's probably just semantics. My job doesn't allow it, so I'd just plain quit. I think I'm convincing myself that "sabbatical" doesn't sound as permanent as "retire." Which is true I guess. But I'd be leaving the workforce.

Yes, I do think I've fallen int the trap of feeling like I have to work. My father in law is 82 and still works 4 days a week. He will work until the day he dies, and I think if I told him that I was going to quit work ON PURPOSE, that he'd look at me like I had lobsters crawling out of my ears. Frankly, I have no idea why he is still working, and not enjoying family, traveling or whatever.

What I've told my wife is that I want to do to major things: 1. I want to get in the best shape of my life, and 2. I want to figure out what it is I want to do the rest of my life.  I figure I should plan on a year to do that.  Maybe it happens in 3 months, and maybe it takes another 15 years, but planning for a year seems about right.

Love the encouragement and strong advice here. These are excellent things to think about. 6 months and 16 days, but who is counting?

SwordGuy

  • Walrus Stache
  • *******
  • Posts: 8171
  • Location: Fayetteville, NC
Re: $500K Sabbatical?
« Reply #17 on: June 14, 2013, 06:57:16 PM »
And don't forget my DW who is fully supportive...actually, what she said was "hell yes you should retire! I need a wife!"

Yeah, my wife told me once, "In my next life, I want a wife."

I looked her straight in the eye and told her, in all apparent seriousness, "Honey, I love you SO much.  If that would make your life easier, why wait?  Let's move to the Middle East and I'll get you one NOW!"

Here I was willing to uproot and move to the far side of the world for her.  Can you believe that she didn't appreciate the sacrifice I was willing to make on her behalf?  :)


=========


On a related note, one of my soldier friends was stationed in Kuwait, liasing with a Kuwaiti army captain.   The Kuwaiti captain decided that he wanted a second wife so he made all the arrangements, picked her up from her parents, and brought her home one morning.  Then he went off to work.

He had neglected to mention any of this beforehand to his first wife.

When he got home from work, all his favorite possessions were in the front yard, burned up in a fire his first wife had set.  Apparently she was not amused.

He took the second wife back home to her parents directly afterwards.

If more women in the world had that kind of moxey, women wouldn't have to put up with so much crap from patriarchal societies.


travelbug

  • Bristles
  • ***
  • Posts: 274
  • Location: Australia
Re: $500K Sabbatical?
« Reply #18 on: June 14, 2013, 07:14:30 PM »
Good on you for weighing up all your options.

I posted before, but have been thinking about your situation and ours. I think that to get somewhere at the top of your field you need drive and it's tricky to let go of that competitive drive to hop off the treadmill.

Start the countdown!

FiveSigmas

  • Pencil Stache
  • ****
  • Posts: 566
Re: $500K Sabbatical?
« Reply #19 on: June 14, 2013, 10:43:38 PM »
Youíve done an amazing job getting a high income, and are saving an impressive amount of money, but are you actually living on your targeted budget right now?

Back of the envelope numbers (which make many assumptions that could be completely wrong -- please correct me if they are):

$450K salary (I know taking the mean of the range is a fallacy, but for argument's sake...)
-$200K savings (just to say again: Wow)
-$136K Fed. Inc. Tax
-$7K SS
-$7K Medicare
= $100K in expenses.

You may live in a state with state income taxes, so actual expenses may be a bit less? On the other hand, presumably, your company is also footing the bill for much of your healthcare + other perks, which you may have to pay for yourself in retirement/sabbatical (although maybe your wifeís policy will cover you?)

It seems like you may be making great progress on getting your expenses down, but you may not be there quite yet. I know itís hard to cut spending down to a post-retirement budget while still working a high-stress job, and itís natural to assume that itíll be easier once the stress dies down, but I know for me I need to prove it to myself. The only way I can guarantee that I can live on a budget is to actually do it. Ideally, Iíd want to be living at or below my expected budget for a full year before making significant life decisions that depend on it (even it makes the short term working experience harder).

happy

  • Walrus Stache
  • *******
  • Posts: 7186
  • Location: NSW Australia
Re: $500K Sabbatical?
« Reply #20 on: June 15, 2013, 09:30:52 AM »
If you wife wishes to keep working, then you have an income of 71k/year...so the extra 30k represents about 2% WR on your 1.5mill, which sounds fine. At some point your wife will stop work, so you will then need to find 74k a year to live on 100k : at 4%SWR this requires 1.85mill. If the markets are kind hopefully the 1.5 mill will have gotten there.

However this is the MMM forum and I would feel a whole lot more comfortable if you could demonstrate that you really can reduce your expenses substantially and maintain a good quality of life. Being able to live on reduced expenses with joy gives you a whole lot of life long freedom, come what may. Its your BEST insurance policy or margin of safety.

I agree that you need to listen to your nagging health voice...in your 50s, you are no longer bullet proof.  Take some notice before its too late. Don't wait until a heart attack is your wake-up call.

If you are having trouble with reshaping your self image and walking away...try some alternatives other than sabbatical, like "taking a break", "reassessing my options", "having a mid-life crisis", "semi-retired "," doing what I always dreamed of doing", "looking for a new challenge" ..etc.  What about " I've really mastered this technical whatever game, I'm really on top of this...now I need another challenge".

If you take a year off, and then get some work, you only have to generate 30k a year and between your wife, the 26k and that you will be meeting expenses.  If you cover expenses in this fashion for 5 years, your stash compounding at a conservative 5% will have reached the 1.85m.

Really though, I have to do the face punch now: Don't be greedy, don't be a wussy pants...cut your expenses... and pull the plug. If you want to work some more make sure its something that you love that makes your heart sing and won't damage your health.

Unpaintedhuffhines

  • 5 O'Clock Shadow
  • *
  • Posts: 5
Re: $500K Sabbatical?
« Reply #21 on: June 15, 2013, 10:58:20 AM »
To the question of are we living at my projected budget right now, the answer is almost, at least for the last five months. Good news is that we're tracking it. There are a few expenses (like a 350/month storage unit -- ack!) that I'll get rid of as soon as I have a few weeks to clean it out.) My company is pretty generous, even including $10K/ year to do financial planning.  I am tracking my expenses. Two months I've been under, three months over, but net I'm a little over on so far by about 5%. I also remember the times when I was living paycheck to paycheck (mid 20s). I'm pretty good when I've had to watch what I spend.

Fivesigmas, you're pretty close. Since I'm on commission, my income is pretty random, but 450 for this year is a pretty good estimate.  We live in texas, so no state income tax.

Happy - I like that idea. I'm just reassessing, or having a mid life crisis. I did tell my wife, either I take a year off or get a corvette and a 28 year old secretary...lol. She said "ahem. Why don't you give notice at work,"