I'm posting under a new account to maintain anonymity. I would like to get some input from this smart group of people since I'm definitely not a math wiz and need some outsider perspective.
I’m in my early 40’s, single, live in SF Bay Area, and I have a big decision to make in the coming weeks. I have a well-paid, cushy position at megacorp, but my department is going through a re-org and I’ve persuaded my interim manager to lay me off since I’m not overly keen on new leadership, change in scope for my role and generally tired of the corporate BS. I’ve been with the company over 15 years so my severance package will be a generous ~200k to 215k before tax.
While this chunk of money gets me closer to my FIRE goal, the reality of a layoff is scary. I’ve not had to look for a job in a long time and while I’m valued within my department, I’m not well networked and not good at interviews. As an alternative, I have an option to stay with the company working for a former manager in a different department who wants to hire me into a similar role.
Financial Summary:
401k: 696k
Taxable: 265k
Roth IRA: 39k
Home Equity: ~450k (Mortgage balance 409k, annual expense 39,600, rate 2.875%, maturity date 7/2031)
Planned FIRE expenses: 40-45k annually and paid off mortgage
Questions:
1. Take severance or not?
Option A – take severance and find a new job or consulting gig for a couple of years until FIRE. Risks – it may take me a long time to find a job/gig eating up my severance money; the grass is not greener (ie similar corporate crap with less pay, benefits and/or a lot less cushy)
Option B – take position with former manager. Downside – forfeit severance so longer time before FIRE; same corporate BS
2. I have estimated that with my current stache, current annual savings (86k) and a return of 5%, I’d have enough to pay off my mortgage and FIRE in ~March 2021. Does this sound right? Any suggestions on how to calculate the impact of the severance on time to FIRE given the unknown time to find a new job and salary amount?
3. I think social security will still be around in the future, but haven't factored it into my FIRE calculations. Should I factor it in, and if so how much? Using the ss calculator I came up with a rough estimate of ~18,700 annually if I take it at age 62, or ~25k annually if I delay until age 67.
4. My FIRE expenses of 40-45k includes a placeholder of 9,600 for medical, but this is a shot in the dark due to political uncertainty. How are others estimating this future cost?
5. Payoff mortgage at time of FIRE or not? If I don’t pay off mortgage early how do I calculate the amount I need in stache to cover it since this additional annual expense would only occur until 2031 vs the entirety of retirement?
Thank you!