Unexpected Job Loss

[GetOutEarly]

Hi All, first time poster...

Here's our situation. We were well on our way to a goal of $1MM (plus home equity), which would put us in a very comfortable position to leave our current jobs. We expected to be there in 2-3 years (pending no economic meltdown). That was the plan, anyway.

A week ago I found out that my position was being moved to another city where we have absolutely no desire to live, so I will be resigning and taking a severance package. Although I'm not certain at the moment, our income should be as normal (more or less) until late Fall, around October or November. Depending on my last day at my current company, I could be paid through 2017, and thus quite a bit closer to our goal than we are now. We tend to save 70% of our salary, but my salary accounts for at least 2/3 of our income.

So what about a new job? Unfortunately there aren't really open positions for my skillset in my current city at the moment, and I'm not sure when there will be. I may be able to land something around the time of my "transition date", in which case we would get a continuation of our standard income + severance, which would make 2017 quite nice indeed. But if that doesn't happen...that's our dilemma.

Assuming I'm not able to find work by the end of the year, we are considering our options. My wife has a good job, but again, it's only about 1/3 of our current income. We have a good bit of equity in our home, which has grown in value rapidly in recent years due to a very hot market. If we were to sell our home today, we would be in the $850M range for total assets, but with no place to live. We have been considering "retiring" to a much smaller town, where housing costs are at least 30% less than the city where we currently reside. But again, even if we drop our spending a good bit, it feels like a risk to head out to a very small town with $850M in assets, still needing to rent or buy a home, and likely needing to find some sort of employment to cover our living costs and not begin withdrawing from our retirement fund.

So here are a few scenarios:

1. Stick to the job hunt and try and redeem my previous salary, even if it takes a year or more. We would still be able to save and invest with only my wife's salary, but we'd be saving ~25% or less, down from 70%. Ouch.

2. Try and find work as soon as severance runs out, even if it pays significantly less. Honestly, I would still continue doing #1 above while working a different job.

3. Sell our home and rent locally while looking for jobs? Lock in good equity, knowing full well the market could continue to grow, albeit at a slower pace most likely.

4. Sell our home and move to the smaller town, but not having achieved our target of $1MM. This one seems the most risky to me, but we're fairly conservative.

Sorry for all the words, and I appreciate any feedback.

[former player]

Hi, and welcome.

Sorry to hear you are losing your job.  On the other hand, if you can still save 25% just on your wife's income, losing your job is no form of crisis.  Try to look forward, not back [insert further irritating advice about turning problems into solutions here].

Scenarios 1 and 2 look pretty similar to me.  Only you know your job market and location, and whether taking time off will affect your employability or whether it is better to keep a continuous employment record even in a less well-paid job.

My reading of your post is not only that you have absolutely no desire to move to keep your job but that I'm not picking up much enthusiasm for the "small town" option either, nor any indication of what you would do with yourselves if you did retire there.  Nor do I see any advantage in selling your current house while you are staying in your current location.

tl;dr: you don't have a financial problem, you have a "what do we do with the rest of our lives" problem, and we don't have enough information to help you with that.

[deborah]

There are a lot of people who decide on nice round numbers. So my first question is - is the $1mill a realistic figure, or are you already pretty well there? 15% from the goal doesn't appear to be that far to me.

If you REALLY do need to have the whole amount, you might want to look at how you can get to the total with one wage. Saving 25% rather than 75% would mean that you would be 6 years from your goal rather than 2 years, but like me, just about everyone who has retired in the forum has found that they actually don't spend as much as they thought they would once they are retired. Also, of you became a stay-at-home partner, there are a lot of things that you can do that will decrease your total expenditure. Making work lunches, for example, can reward you with a much bigger saving. It is worth reviewing your current budget to find how much you really could save. This has the added bonus of reducing your expenditure (and so the amount you need to retire), and making full retirement for both of you a lot closer.

[lbmustache]

I like a combination of 1 + 2. Get a lower paying job, and look for a better one in the meantime. Even if it's part time, it may be the difference between a 25% SR vs 35% SR or so.

I also agree with deborah that it seems to extend your timeframe by 4 years... so not completely catastrophic IMO.

[Laserjet3051]

With $850M of assets your nearly a billionaire and could afford to do anything your heart desires. Why the angst?

[Linea_Norway]

If you have an oversized house with high cost, you could sell it and move somewhere smaller and cheaper. But don't move to a smaller town without having a good vibe about it, then you might end up hating it. I guess this movement to a small town would have to wait until your wife has stopped working.

And see whether there are other costs in your live you could save.

[the_fixer]

850M is that a typo?

if not I do not understand what the problem is?

[GetOutEarly]

Thanks guys,

Yes, $850MM was a typo and it has been fixed. I wouldn't be hanging out here if I had that kind of cash!

And yes, just to clarify, this is not a financial crisis. Even if I never work another day in my life, we will still retire quite early for our age. However, my wife's job is really no more guaranteed than mine; we both work in cyclic industries where job security is always an issue.

I think it sounds best to work a lower paying job and try and get back in to a similar paying job as soon as possible. Even though $850M might be enough, again, we'd only have that after selling our home and would need to secure some sort of other living arrangements. We don't have those assets yet, except in home equity on paper.

I actually have a very strong desire to move to the small town for many reasons, I just don't think the time has arrived financially.

It is good to hear from Deborah that costs will likely be lower than expected once retired. I've always assumed as much, but you never know until you know. Ultimately we're just a bit conservative on this. We want a good cushion and I hope it doesn't mean too many more years to achieve what we've set out as our goal. But certainly, things could be worse.

[john6221]

Wait so you have $850 million million? You're almost a trillionaire?

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[Pigeon]

I would also  vote for the lower paying job.

As for expenses being lower sometimes that's true and sometimes it isn't.  Is healthcare for your family available through your wife's employer?

[doublethinkmoney]

Do you mean $850 thousand dollars? And 1 million dollars?

The "850MM" and "1MM" is throwing me off. What is MM mean?


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[sokoloff]

Do you mean $850 thousand dollars? And 1 million dollars?

The "850MM" and "1MM" is throwing me off. What is MM mean?

In finance (in the US), its common to represent million as MM.

[sokoloff]

If you REALLY do need to have the whole amount, you might want to look at how you can get to the total with one wage. Saving 25% rather than 75% would mean that you would be 6 years from your goal rather than 2 years

That's not how the percentage math works. Imagine the reduced salary is $100K and they save 25% of it and spend 75% of it. They save $25K/yr and spend $75K/yr.

With a higher savings rate and the same expenses, they are spending the same $75K/yr and saving $225K/yr for their savings rate to be 75%. This is 9x the saving rate in dollars.

[LeRainDrop]

Do you mean $850 thousand dollars? And 1 million dollars?

The "850MM" and "1MM" is throwing me off. What is MM mean?

In finance (in the US), its common to represent million as MM.

Right, I think OP means $850k ($850,000) and $1MM ($1,000,000).

[GetOutEarly]

Yes, sorry again for the Roman numerals typos -- never been my forte!

We want 1 million dollars. We have net assets of 850 thousand dollars, but about 35% of that is wrapped up in home equity. Sorry again for the confusion!

Yes, I would have healthcare coverage through my wife's employer.

[Bicycle_B]

First, the important stuff:  https://www.quora.com/What-should-be-the-abbreviation-for-million-M-or-MM

GetOutEarly, condolences about the disappearing job.  I lost mine a few years ago and have floated more or less job free ever since.  My stash is similar to yours:  maybe 425k per person (I'm single), home value nearly half the size of the stash, location in a city.  I totally sympathize with the quandaries of being right on the edge of enough but feeling like maybe it would be wise to pad the stash...can't claim to be an infallible fountain of answers!

Fwiw, one way I'd analyze your situation is to calculate your cost of living now, modify it by an estimate of the reduced cost due to relocating, and compare that to the income you would expect from your stash in the event of selling your current home.  If you have enough, you're free to move and not worry about getting another job.

Example:

current costs 16k housing, 24k all other expenses, total 40k; x25 = $1 million stash is needed.
estimate housing cost in small town 10k, all other expenses 24k, total $34k after moving; x25 = 850k stash is needed.
if it's realistic to have 850k after selling in the city, you're good to go.

Of course, you need real data to make these estimates (I made up data to give you a pleasant answer, don't use my numbers).  Or did you already do this, and the $1 million is a detailed projection of what you need to be safe moving to the small town?

[GetOutEarly]

I totally sympathize with the quandaries of being right on the edge of enough but feeling like maybe it would be wise to pad the stash...can't claim to be an infallible fountain of answers

It's good to hear others are out there on the cusp! We appreciate the advice, and that's more-or-less our plan. Make as much money as possible and realistically assess what we need versus maybe what we'd want in a conservative sense. In the end, knowing us, we'll probably still err on the conservative side, but it's good to hear the opinions of others on this site.

[AZDude]

I would vote for the "soft landing" or "semi-retirement" until you figure things out(where you want to live, etc). Find something not too stressful and work there while you think things through, knowing if the job becomes hellish, you can parachute out and not worry much. At this point, your stache is going to make more quite  a bit of money on its own(4% would be $34,000 a year). So you have plenty of options.


Good luck.