Take a Separation Package or Stay?

[cincystache]

I have about 5-10 years of mandatory work left before reaching FI at which point I plan to downshift into volunteer and/or part time or seasonal gig work. I don't really plan on fully retiring but would like to take mini-retirements and have seasons of rest scattered throughout the remainder of my career.

I've been with the same company my entire post-college career (14 years). I'm 37 with two kids (4 and 7). My spouse stays home for now until the kids are in school full time (2 more years).

My job is okay but I often feel trapped/burned out by it and I don't really want to climb the ladder. It is a large company with a lot of red tape and corporate BS. I make good money but not outstanding (100k + 15k bonus) the stress is higher than I'd like as is the physical toll on my body (lifting, standing, stairs). I have a masters degree in a stem field. I don't really care that much about staying in this field as I'm kind of bored/burned out after working in it so long and it doesn't really align with my values or interests anymore.

My work is offering voluntary separation packages totaling 1 year of salary + benefits.

What would you all do in my situation? Stick it out for 5-10 more years until reaching FI or make a change now with a long runway to find something else that pays the bills while we coast to FI? I'm leaning towards taking a package but I don't want to be foolish since we are still a ways off our FI goal. However, these opportunities are very rare and having that much runway would open some awesome opportunities for spending time with family etc. I would plan on ACA subsidies for near term health insurance needs.

Other possibly relevant details:
Annual Spending 65,000
Net Worth: 500k (85k home equity, 50k cash, rest VTWAX, only debt is mortgage 150k @ 2.8% 30yr fixed)

[dandarc]

I'd personally take a year's pay to leave in a heartbeat, but I'm a little further along the wealth accumulation than you are, no kids, a few years older.

How confident are you in your ability to find another job? Because you could wind up with a better job and a year's pay in hand and maybe an extended time off too. Only you know your specific situation, but I'd lean towards taking the package in a job that has you feeling burned out.

[six-car-habit]

 If you took the package, is the company essentially prepaying 1 years worth of their normal contribution to the health provider org,  with you  maintaining the  same standard of coverage as now ?

 Would your wife be amenable to starting work before the year runs out, if you took the package, instead of waiting 2 yrs ?

 Is this the best employer in the region, and will you be competing for scarce jobs in the area with current co-workers, when you start looking. ?

 If your future employment prospects are robust and inspiring, wife is willing to re-enter workforce earlier, and health coverage is continued... Take the package.  { unless there is a pension component in there - then perhaps reassess }.

[sailinlight]

Also consider that companies seem to be betting on a worse/longer recession in the near future. My company is talking about layoffs and has a hiring freeze; I hear many others do too, including yours. Depending on your skillset and experience, it may be rather difficult finding a new job quickly.

[cincystache]

Thanks for the replies so far, all great points.

@dandarc I'm confident I could find something that would cover our expenses but I'm not very confident I could match my current salary without moving. I could potentially switch fields and try something like technical sales which I think would be a good fit given my background (R&D and Engineering). I'd have to explore that a little more

@six-car-habit I think so, but I need to confirm the details and have a lawyer review the offer.
Wife is open to going back to work sooner although she's been out of the workforce for over 6 years and doesn't have a very marketable education or work experience so we'd have to figure out a good fit for her (ideally remote). We've talked about each working part time if we could make the numbers work and have more time with kiddos and each other so that is another option we're considering.
This is one of the better employers in the area and my commute is walking distance (by design) so I would certainly be giving up a pretty sweet situation in some ways, unless I could find something remote.
No pension to consider, I'm fully vested in matching retirement funds etc. I'm with you, taking the package seems like a good fit assuming job prospects for either (or both) of us are easy to secure.

@sailinlight good point, This is certainly a concern and I'm almost assuming that this will require a paycut of sorts which I'm willing to take as long as it comes with a job I dislike less. Some days I'd rather wait tables and be a bartender than look at another color-coded spreadsheet but I know the grass is not greener and those jobs have their equally (or worse) aspects.

[achvfi]

From all the info so far I think it is good opportunity. I think you should take the package.

I wish I had such option 3-4 years ago when I was burnt to crisp and was lacking much interest in work.

Keep your network close.
Prepare your finances by increasing your fixed income allocations for next few years. Move your cash to high interest savings or CDs or even vanguard money market funds.
Plan to keep up with your skills.

AND go for it.

[SweatingInAR]

A whole year of pay and benefits covered? I would do that in a heartbeat! However, that lump sum would tip me over my FIRE threshold. I would not have to go back to full-time work afterward.

• Relax for a few weeks and enjoy the time with your family
• Fully fund IRAs for the year if you haven't already
• Put all that remains into a money market account to cover your expenses over the coming months.
• Make a proper case study post to crowdsource trimming down your expenses. At $65k expenses, you probably haven't had much excess for investing after paying taxes and benefits. Drop that to $40k and you can save faster while needing less
• Update and/or make a LinkedIn account and say that you are "open to work"
• Reach out to any recruiters that have contacted you or your professional peers recently
• Browse job listings to get an idea of what you want to do

[trollwithamustache]

I'd take the package. Not enough info to say this for sure, but if they are offering packages they need to downsize... that leads me to think you can't assume you can get your XXX years there.

[Villanelle]

I'd take the package, give myself 3-4 weeks to decompress and then start looking for a job. (With the assumption that I likely wouldn't have an offer and begin work for at least another month, so that would be 2 months off, at least, so you'd get a significant break.) 

If spouse is open to it, you might both begin job searches, to see what comes up for whom, first. Could be they find a great job, could be you do, or could be you both find part-time work.   

[mspym]

Take the package. If they are offering them, that means that staying on is going to lead to significantly worse working conditions in the near future and a highly reduced chance that you will be able to ride this gig out till FI. Not to mention you are burnt out!

This is a good opportunity to find a role that's a better fit.

[charis]

I'm not FIRE (60-70% there), but I would definitely take a year's salary for a year of vacation to spend looking for another job.  Even if I didn't find another job in a year, I could then receive unemployment benefits (which would likely cover our basic bills even if spouse wasn't working).   Sounds amazing.

[Dicey]

Another vote for taking it with zero hesitation.

[ixtap]

Take the package and make sure you are aware of how it interacts with unemployment benefits.

[charis]

Take the package and make sure you are aware of how it interacts with unemployment benefits.

Generally you cannot qualify for unemployment benefits until the period covered by severance pay ends, but of course educate yourself on this beforehand.

[TomTX]

My work is offering voluntary separation packages totaling 1 year of salary + benefits.

Take it. 100% take it.

The first severance package is almost always by far the best one. Layoffs/headcount reductions are rarely just a single round.

[Omy]

DH was offered a severance package a few years before we were ready to FIRE. He declined (thinking that they would probably offer another when he was closer to FIRE). They did not, and he regretted not taking the package when it was offered.

His reasoning at the time was that if he still had to go find another job, he'd probably not find one that had the perks he was getting at the current job. In hind sight if he'd taken the package we probably would have realized that we could FIRE much sooner than we did.

So I'm a vote for take the package.

[zolotiyeruki]

Take the package.  A whole years' worth of salary and benefits for zero working?  From a progress-toward-FIRE perspective, this is a huge win.

Contrary to other posters here, I would not wait to start the new job search.  You don't know how long it'll take to land a job that is the right fit, and even if you find it right away, you can negotiate the start date to give yourself some time off if you want.

[charis]

Take the package.  A whole years' worth of salary and benefits for zero working?  From a progress-toward-FIRE perspective, this is a huge win.

Contrary to other posters here, I would not wait to start the new job search.  You don't know how long it'll take to land a job that is the right fit, and even if you find it right away, you can negotiate the start date to give yourself some time off if you want.

I don't think anyone suggested waiting (other than a few weeks to decompress) to start the new job search, just that OP should expect to be able to find a new job within a year.

[zolotiyeruki]

Take the package.  A whole years' worth of salary and benefits for zero working?  From a progress-toward-FIRE perspective, this is a huge win.

Contrary to other posters here, I would not wait to start the new job search.  You don't know how long it'll take to land a job that is the right fit, and even if you find it right away, you can negotiate the start date to give yourself some time off if you want.

I don't think anyone suggested waiting (other than a few weeks to decompress) to start the new job search, just that OP should expect to be able to find a new job within a year.

Perhaps I inferred incorrectly, then, and if so, I apologize.

[JupiterGreen]

Take the package. I'm also in the camp of people who think it will just get worse at your job.

Apply for other jobs. Delay the start date of your new job so you can spend time with family, decompress, make memories, catch up with old friends, and take lots of pictures. You need a break. Good luck!

[cincystache]

Wow, seems like an overwhelming majority vote to take it which was my gut reaction when I first heard about it. I've reached out to HR and expressed interest, hopefully I hear back soon. I'm thankful that although we aren't fully FI yet, being nearly halfway there gives us a lot of options. I'll post a full case study if/when I get approved. Thanks for all of the positive comments and advice.

[volleyballer]

I'm assuming you're taking about GM here? (no pressure to reply if you don't feel comfortable)

Can you parlay your education and experience on your resume to something more lucrative? Where do your skills transfer? Consulting engineering may pay you a premium if you came from a client company. (Although, I was once in consulting, and GM was not a fun client to work for lol)

[reeshau]

Take it from someone with a long time in the auto industry:  this will be the best offer.  If another round becomes involuntary, it won't be as generous.  And if you are so key that they won't let you go, then you know that as you think about your future prospects.

[iluvzbeach]

Here's another vote in the take the severance camp.  A year's severance + benefits is significant and you can't forget about unemployment either.  As others have said, this offer is likely the most lucrative and if you're unhappy now, how unhappy do you think you might feel when staffing is shorter than it is today?  Fewer people to get the same amount of work done.  No thanks.

[curious_george]

I would leave in a heartbeat without thinking about it.

Seriously where do I sign up for one of these 1 year severance packages. That would be amazing.

[TomTX]

I would leave in a heartbeat without thinking about it.

Seriously where do I sign up for one of these 1 year severance packages. That would be amazing.

Yea, I have an awesome job (SWAMI here) - but if I'm getting an offer of 1 year salary including benefits to leave.... I'll take it.

[mistymoney]

a paid year off is really a unique opportunity.

I could not let that go! I would jump on it. But then, that's me.

Plus - you'd get your 401k match with benefits?

[ixtap]

a paid year off is really a unique opportunity.

I could not let that go! I would jump on it. But then, that's me.

Plus - you'd get your 401k match with benefits?

You usually cannot defer severance pay, therefore no match.

[Dicey]

a paid year off is really a unique opportunity.

I could not let that go! I would jump on it. But then, that's me.

Plus - you'd get your 401k match with benefits?

You usually cannot defer severance pay, therefore no match.

Wouldn't that be a case of the tail wagging the dog? I wouldn't worry about missing the match one bit.

[Purple_Crayon]

Another vote for "in a heartbeat".

I've been saying this same thing to my friends for a year or two now (that if an opportunity arose like the OP's, I would take it in a second). Personally, I would take it even if it was 4 months pay to leave, let alone a year. However, as some others have mentioned here, I am pretty far along on my FI journey and feel my job skills are highly transferrable, which removes the possible fears.

[Finances_With_Purpose]

My work is offering voluntary separation packages totaling 1 year of salary + benefits.

Take it. 100% take it.

The first severance package is almost always by far the best one. Layoffs/headcount reductions are rarely just a single round.

This is an outstanding point. 

I would be more hesitant to take it, personally, without sorting out my place in the job market/lining up some promising job interviews (because you know you're hardly the only one doing this kind of jump right now).  But I would definitely take it if I thought that there was much chance that I might get chopped. 

With that said, it's often hard for folks to know that they're the one who might get chopped.  I don't know what to tell you there.   

I think the key, though, is to assess how hirable you are, especially with a severance as the last blip on your resume, rather than a smooth transition elsewhere - it does look like either you or they think that you're a low performer and/or you doubt that the company is doing well (and have signaled that you're likely to jump ship if that happens at New Co.).  It's a risk, but one well worth considering. 

I'm curious what you do. 

[dcheesi]

Jumping in late here, but: my brother took the "early retirement" package when it was offered, and told all of his reports that they should, too. The ones that didn't listen wound up being laid off within a year.

[charis]

Wow, seems like an overwhelming majority vote to take it which was my gut reaction when I first heard about it. I've reached out to HR and expressed interest, hopefully I hear back soon. I'm thankful that although we aren't fully FI yet, being nearly halfway there gives us a lot of options. I'll post a full case study if/when I get approved. Thanks for all of the positive comments and advice.

Any updates, OP?

[Zamboni]

You don't like your job. Your pay is middling, at best, with brand new graduates getting hired at nearly as much at many employers. Your kids are young, which is a good time to move, and you don't have a "two-body" problem because your wife is a homemaker. Are you very, very heavily invested in staying in your local area for family reasons? Happy wife, happy life, after all.

With or without the severance, you need to find something different.

Unless you feel like you have to stay in your location (bearing in mind that you never have to do anything), then please start a national job search immediately. Ideally while you are still employed, do the biggest blast of applications and networking you can manage. This will lead to better things.

[cincystache]

Update: The initial announcement was vague and while they said "all levels" they have since said it will focus on those closest to retirement age first so I will need to wait at least a couple more months to see if there are any left. My discussion with HR was essentially "don't count on it being an option" based on my high performance and relatively low level in the company... Seems like they want to cut more middle manager types and/or people coasting it out for a few more years, not those that actually do the work. Pretty disappointing but as a thought exercise, I got a lot out of it. It definitely showed me that I'm ready to leave as soon as I hit FI (don't plan on RE).

I'm grateful that I'm in a position to leave if/when I find a more attractive opportunity but finding that opportunity is a tough one.

@Zamboni You make a great point about leaving regardless of severance. It would take a lot to leave our current area (wife's entire family lives here, we love our community/school). There are other medium size midwest cities within a 2 hour radius that would probably work but it would be a tough sell to uproot and move beyond that at this life stage.

I'm leaning towards more of a career downshift instead of a lateral move I just don't know what to pursue and I'm too burned out to think about going back to school.

My current plan is to stay put at my job, stop caring/trying to outperform (recovering overachieving perfectionist here) , put as much as we can into taxable investments and cash (for flexibility and more options), support my wife in her efforts to return to the workforce part-time as early as this fall (younger kid starts pre-school) and reach FI ASAP. At that point I can pursue my "dream job" which is to work 20-30 hours per week for 40 weeks per year. I would try a bunch of part time jobs without having to worry about the money (bicycle mechanic, city park worker, short term rental administrator, adjunct professor, bartender/barista, home inspector, lab technician etc.) while getting either ACA healthcare or insurance through my wife's eventual employer. 

The thought of going from one full-time corporate job to another doesn't sound very appealing unless it comes with the severance or a massive increase in pay and decrease in BS which doesn't seem likely.

Feel free to offer other advice or different perspectives and again, thank you all for your insights. I'm grateful I found this community in my early 20s, truly life-changing stuff. Cheers.

[mistymoney]

Update: The initial announcement was vague and while they said "all levels" they have since said it will focus on those closest to retirement age first so I will need to wait at least a couple more months to see if there are any left. My discussion with HR was essentially "don't count on it being an option" based on my high performance and relatively low level in the company... Seems like they want to cut more middle manager types and/or people coasting it out for a few more years, not those that actually do the work.

what a buzz kill! I'm sorry they yanked your chain this way....Maybe if enough middle managers are not in a position to take the package it will trickle down to you.

Then again - I think a lot of people even if they are not in a position to retire, would take the package anyway and see where the chips fall, or just fool themselves that it will work out.

In any event - good luck on finding your next step, whatever that may be!