logistics of getting ready to FIRE, 6 month countdown. review and advice welcome

[MidWestLove]

greetings,

I wrote earlier in introductions as wanting to know "can I do it" , now coming to the point of how exactly do I do it as the time has come to make it real (due to layoffs)

"Can I" part ?
Us -  38/39 year old couple with 2 kids (4 and 1). I am the primary "bread winner" working corporate job making good income . Expenses minus childcare 35-38k a year, childcare stops at layoff time,  investments - 1,75 mln without college savings, paid off house, car, no debt. DW wants to continue to work part time (~13k take home after 403b deductions), and I think math wise the income we should be ok (38- 13= 25k need, 25 k from 1750k is 1.5% which to me is beyond safe and likely close to dividends alone on our taxable accounts). Let me know if anything is wrong in the above

now the part where I would welcome advice - how to do it?
Due to corporate politics and all of the associated junk, it happened that departure could be arranged through a formal layoff program which adds another 6 months of income as part of the transitions (roughly 100k before taxes). Now, I am sitting and thinking - is this my clue to do it or do I go for another IT leadership/management job ? I disliked the politics at the end in current place or the stress of constantly fighting for resources and to protect resources , all with the smile that means nothing.. 

If I  go for it, what should I be thinking about right now, besides below
?
- healthcare (layoff covers 6 months of COBRA including their premiums, plus option of going on my DW insurance, plus ACA options)
- simplification of all of the financial affairs (cancelling extra credit cards I used due to travel which I will no longer do , consolidating accounts into single place  vs having them in Fidelity, Vanguard , Schwab they way it happen to be right now, etc)
- simplification of life affairs (moving to a home we desire with less commute properties as we have a lot less commute now)

thank you 

[MidWestLove]

Thank you for suggestions and yes, it is two kids (not four), my typo.

I am looking into all of the above - healthcare costs through my spouse, whether ACA would consider it 'affordable' using the worksheets supplied. the coverages under ACA (we are likely to be in CHIP category for kids and very highly subsidized insurance for us if I stop working).

[Playing with Fire UK]

Have you seen financial sumurai's guide to engineering a layoff?

Arrange any check ups/meds/ that you can from your existing insurance.

Any client/colleague contact lists you would need if you went back or freelance [if this is within your contract or you don't care].

Plan a date to max any bonus/vesting/pay rise/tax year benefit

[RobFIRE]

With your figures you are well above the FIRE point. Even if neither of you worked you're still 750k above the $1m for $40k a year at 4% SWR. Then you have $750k invested should you want/need to cover kids' college fees in 15 years' time, plus a large buffer for any other costs.

If there's a good redundancy offer available I would be pretty tempted in your position.

Sounds like you just need to be clear what a typical healthcare cost would be if neither of you work, I'd assume you would go for a high-deductible plan, and make sure that doesn't significantly increase your costs (seems like if it would be around ~$5k a year or less it's not a material difference to your position).

As for the rest of the financial simplification, I would do it at my leisure once not working.

[Lucky Girl]

Seems like you are in great shape with so much socked away and low cost of living.  The one thing you don't mention in any detail is taxes/withdrawal strategies.  Given your very low income needs as a proportion of stache I would assume that it is not a problem.  May just want to do a little tax forecasting after you RE to get a better sense of what accounts to draw down from, whether you need to do a Roth Conversion pipeline, etc. 

Just curious, but what is your ratio of funds in taxable/pre-tax accounts?

Enjoy your RE--looks like you've earned it!

[Catbert]

I would go though each item on your pay stub to figure out /a/will you need it/how will you handle it in retirement and /b/how can you maximize it while your still working.  To give you a couple of examples:

life insurance:  will you need it?  How much coverage? Get it bought before you retire?
401k:   Adjust it so you contribuate the max for your last working year
Vision/Dental:  Should you buy after retirment?  If not, get as much work done before you retire.
Vacation/Sick Time:  what happens to it when you leave?  Paid out or lost?  Plan accordingly

Ask these questions and do this planning for each entry on your pay stub.  Then think of any free perks of your job you can maximize (e.g., free software/anti-virus for home computer)

[MidWestLove]

Thank you for all of the suggestions, will do

[homestead neohio]

With your figures you are well above the FIRE point. Even if neither of you worked you're still 750k above the $1m for $40k a year at 4% SWR. Then you have $750k invested should you want/need to cover kids' college fees in 15 years' time, plus a large buffer for any other costs.

+1  Enjoy!

Even if you only have 10% of that stash in a taxable account or Roth contributions and rest is pre-tax, you have > 5 years expenses covered to start a roth conversion ladder.  If your wife quit and you wanted all 40k from the stash, you might need 15% in taxable or Roth contributions, which you probably have.

[MidWestLove]

Sorry for reviving old post - I realized I never answered direct questions on Taxable vs Tax Advantages vs Roth breakdown. for us it is 45%/40%/15% which means I have 750k+ in taxable investments I can use before having to touch IRAs or Roth.

for Roth conversions, I am reading a lot of Gocurrycracker , an where taxable space exist will convert to Roth gradually

[Bateaux]

Your post isn't old.  I'm following with sincere interest.  We will FIRE in about 2 years, I'm 47.  Trying to be free by 50.  Watching the political landscape to see what shakes out.  Wanting to make it on a 3% withdrawal rate.  We're knocking at the door of 1.4M investments and about 300k in fully owned real estate.  Kids are 21 and 22.  Close to empty nest.   Keep us informed about how it goes.  I think you've got this.

[MidWestLove]

Thank you Bateaux, in that case I will continue to share or learn how to create a journal here.

for my original post
- 401k contributions are maxed out
- whatever medical work that could have been scheduled + dental was scheduled while employed
- reviewing 401k terms upon termination (very good plan, considering moving rollover ira to get access to Institutional share class of Vanguard)
- insurance would be through my DW

[mathlete]

Not much to add, but I find it encouraging that people can and do choose to have (or adopt, whatever your situation may be) kids in their mid to late 30s.

We're in our mid to late 20s and I thought we'd be ready for kids by now, but we're really not quite ready to "settle down" yet.

[fattest_foot]

I would go though each item on your pay stub to figure out /a/will you need it/how will you handle it in retirement and /b/how can you maximize it while your still working.  To give you a couple of examples:

life insurance:  will you need it?  How much coverage? Get it bought before you retire?
401k:   Adjust it so you contribuate the max for your last working year
Vision/Dental:  Should you buy after retirment?  If not, get as much work done before you retire.
Vacation/Sick Time:  what happens to it when you leave?  Paid out or lost?  Plan accordingly

Ask these questions and do this planning for each entry on your pay stub.  Then think of any free perks of your job you can maximize (e.g., free software/anti-virus for home computer)

Hopefully this doesn't hijack your thread, but how do people usually plan around sick time? I'm still a little over 7 years out from retirement, but I'm a federal employee and our sick time rolls over.

I've currently got 5 weeks of sick leave already stockpiled, and assuming I take an entire week a year, I'll have about 12 weeks saved up by the end. I don't think I can just take a few weeks of sick leave here and there "just because," but I can't really figure out how to burn it all up. At retirement, federal employees can roll that time into their retirement calculations, but without doing a full retirement I'm left with a bunch of earned time I don't know what to do with.

[geopter]

Hopefully this doesn't hijack your thread, but how do people usually plan around sick time? I'm still a little over 7 years out from retirement, but I'm a federal employee and our sick time rolls over.

I've currently got 5 weeks of sick leave already stockpiled, and assuming I take an entire week a year, I'll have about 12 weeks saved up by the end. I don't think I can just take a few weeks of sick leave here and there "just because," but I can't really figure out how to burn it all up. At retirement, federal employees can roll that time into their retirement calculations, but without doing a full retirement I'm left with a bunch of earned time I don't know what to do with.

Sort of helping with the hijacking -- I'm in a similar position with federal sick leave. I'm planning to maintain a high level of banked leave until near the end of my tenure, but then, I think I might spend the last few months transferring it to anyone who's in the Leave Share program due to hardship. Then I'll know it will go to good use, and I can imagine that people will be pleasantly surprised to see a big chunk of time coming from a stranger.

[MidWestLove]

"Not much to add, but I find it encouraging that people can and do choose to have (or adopt, whatever your situation may be) kids in their mid to late 30s.

We're in our mid to late 20s and I thought we'd be ready for kids by now, but we're really not quite ready to "settle down" yet."


you as a couple do what is right to you, as a couple - society/family expectations be ignored. historically the instinct was strongest the less you had , kids were your insurance for the old age , you have as many as you can as soon as you can (with 14 year old mothers), God takes what he may (through very high infant mortality) and remainder takes care of you because "this is how things are done". Grandma/grandpa by 30s (if you live long enough), dead by 50, unless you are woman in which case each childbirth is a near death experience.

the fortune of leaving in 20th-21st century in a first world if that we do have to force 1/2 of our population (women) into reproductive choices they do not want . we do not have to subject them to death from childbirth, we decreased infant mortality rate enormously through advances in medicine, and opened other choices. however, our patterns that are programmed/conditioned into us from hundreds and thousands of years are slower to change and catch up (same with diet , we eat like we work in the fields which we do not do anymore), thus the conflict. as a father of two girls, I love 21st century and choices it affords them, and will do everything to support them and defend their right to live their live their way (whichever it may be).

off the soap box - do what you feel right. majority of my friends have their kids in the 30s. will they be families with 5+ kids? no, probably not. are they all doing well (both kids and parents). yes, as far as I know..

in our case, my DW wanted to be 'ready', we wanted to see the world which we did, and truly enjoy two of us and our life together. with kids we love it even more but I would not wanted to skip that get to know and love your spouse part in attempt to have children right away. another piece for us is that we were not dating long  we were engaged 5 months after meeting each other.  So are our parents and we are going to celebrate their 50th wedding anniversary next year..
 

[MidWestLove]

"Hopefully this doesn't hijack your thread, but how do people usually plan around sick time? I'm still a little over 7 years out from retirement, but I'm a federal employee and our sick time rolls over."

Happy to have/host that discussion here - what do others do?

In my case, I will 'donate' what I am allowed to (since I am technically laid off, I think there were special rules around it) and the rest I will forsake.  As others mentioned I do not feel right using sick time when I am not sick  and look at this less as 'losing' anything and more as 'I was fortunate enough not to need it through being healthy'...

[Cassie]

The state I worked for would allow you to receive in cash a portion of your unused sick leave so have you looked into this option?