Advice? I have eight months before I am done!

Simple living, extreme early retirement, becoming and being wealthy, wisdom, praxis, personal growth,...
Post Reply
lilacorchid
Posts: 476
Joined: Sun Oct 16, 2011 3:20 pm
Location: Canada

Advice? I have eight months before I am done!

Post by lilacorchid »

I have decided to pull the plug and take my company's buyout (if they approve me to do so). I will be done sometime in January 2018 (tax reasons), which leaves me about eight months to prepare. I live in Canada and my husband has some extra health coverage through work as well.

Any advice on how to get ready these last few months? Firecalc gives me a 58% chance of making it to my pension with my current savings and spending structure if I never earn another penny. (Ha!)

I am excited and terrified. And I am just going to pretend they will approve me, though I won't find out officially until early/mid June.

:mrgreen: :mrgreen: :mrgreen:

Dragline
Posts: 4436
Joined: Wed Aug 24, 2011 1:50 am

Re: Advice? I have eight months before I am done!

Post by Dragline »

Go through all of your expenses and see what you can cut out now (and going forward) as "work-related" but no longer necessary. Ideally, you would take all of your bills for the past year and do this.

You will also need to look at your investmenst to decide if you need to shift to a more conservative portfolio now that you are leaving the "accumulation" phase. This may not be necessary, though, if you can just live on your husband's income. You may notice that the biggest "bogie" or unknown is whether you will have a large drawdown on your investments in your first few years of FI.

Read this article as a thought experiment: http://www.gocurrycracker.com/the-worst ... ment-ever/

And then this one: http://www.gocurrycracker.com/the-best-retirement-ever/

And plan a big party and invite all of us. Except we would rather come to Canada in the summertime. :lol:

George the original one
Posts: 5404
Joined: Wed Jul 28, 2010 3:28 am
Location: Wettest corner of Orygun

Re: Advice? I have eight months before I am done!

Post by George the original one »

If you have a desire for financial credit (mortgage, extra credit card, brokerage margin account), get it now before your employer knows you're leaving.

Use up sick leave & vacation leave.

jacob
Site Admin
Posts: 15907
Joined: Fri Jun 28, 2013 8:38 pm
Location: USA, Zone 5b, Koppen Dfa, Elev. 620ft, Walkscore 77
Contact:

Re: Advice? I have eight months before I am done!

Post by jacob »

Some companies will pay out saved up vacation at the current salary(*). Others will just cancel it away. This also goes for FSA (flex health account) and other "tax-free" accounts (parking or transportation). As an example, I had to go to the dentist (emergency) 5 days after I quit the quant job. I knew that health insurance would remain valid until the end of the month, but I did not expect them to take away the FSA money, so had to pay that out of pocket.

(*) I used to play hockey with a guy who had been with the "company" for decades and had 1-2 years (mid-hundred days) of vacation saved up accumulated back from the time he was a junior associate. He would get all that in $$$ at the senior rate if he quit. We're talking six figs.

lilacorchid
Posts: 476
Joined: Sun Oct 16, 2011 3:20 pm
Location: Canada

Re: Advice? I have eight months before I am done!

Post by lilacorchid »

@dragline - My 58% is based off that. I don't have many work expenses... I don't drive to work, own a second vehicle, or have to buy fancy clothes for work. So no real saving there other than the money I spend on coffee/snacks or lunches. And everyone is invited once I'm accepted! :D

@GTOO - Our finances are pretty set up I think. Our house is finances by HELOC for the most part. I have as much credit as I could want, with a card I like. My bank is good with good perks. And anything we couldn't get financed on just my husband's salary, we could pay cash using the HELOC. Does this sound crazy?

@Jacob - If I were retiring, this package would be much sweeter. I have not saved up enough vacation to have any "vested" (meaning it would cash out at retirement) due to having multiple surgeries and health problems over the years. I do need to check into when I lose my work insurance. I am thinking about getting my eyes done this fall to use up some more sick time and have my health plan pay for it as well. And I should have 9 weeks of vacation by the end of the year too, but I do plan to use up at leave five of those weeks.

---
On the relationship side, how do I deal with people asking my why for the next eight months at work? If I do get to leave with a package, people will know in the next two weeks or so. It's like I'm having a FIRE baby, but I can't just let my stomach speak for itself over the next few months! :mrgreen: I only worry about comments from my family more, but they are far away so I would only have to deal with their comments on holidays.

User avatar
jennypenny
Posts: 6851
Joined: Sun Jul 03, 2011 2:20 pm

Re: Advice? I have eight months before I am done!

Post by jennypenny »

"It just feels like the right time to take a break." No need to say more than that. If someone asks what you're going to do, don't be afraid to say "I don't know yet." A big mistake I made was thinking I needed to have an answer that would satisfy everyone. Looking back, I think it might have been easier if I'd been more honest and said I wanted to focus on the family for a while and see what opportunities came up -- simple and no room for people to argue with you. If they question how you can afford it, just say "We're set for now."

jacob
Site Admin
Posts: 15907
Joined: Fri Jun 28, 2013 8:38 pm
Location: USA, Zone 5b, Koppen Dfa, Elev. 620ft, Walkscore 77
Contact:

Re: Advice? I have eight months before I am done!

Post by jacob »

@lil - This wasn't even vested stuff. In my case, when I quit, my saved up vacation was paid out in dollars. Since I was contributing the max amount to my retirement account at the time, it spilled over the max allowed by the IRS (I know you're in Canada).. and my @#$@ fiduciary decided in their wisdom to open a taxable account to absorb the spillover monies... which I then had to fix subsequently by closing the new account ASAP.

I guess my point is ... don't expect your saved up "values" to fall into line in an expected manner. Also ... from the experience of having done this a couple of times ... I now prefer "switching things over" to retirement mode well in advance instead of trying to optimize after the fact. IOW, start acting like you're already retired sooner rather than later.

Do dry-runs .. the sooner the better.

BlueNote
Posts: 501
Joined: Sat Jun 08, 2013 6:26 pm
Location: Toronto, Canada

Re: Advice? I have eight months before I am done!

Post by BlueNote »

I'd be scouring my benefits plan fine print to see if there is anything I was missing out on.

Do you plan on travelling or living overseas? A lot of employer health care plans will cover all your inoculations ( Hep A/B, rabies, typhoid, encephalitis etc.). It's a bit of a long process to get all the inoculations so better to get started now with a doctors reference. Personally I'd get every low risk vaccination possible just in case.

I'd also have a plan for how to deal with my pension. Sometimes there's a lump sum option, other times you have to wait until 55 or older to access the amounts etc. Get to know all the options and do some analysis to get the best option. Definitely talk to your pension administrator to verify everything in writing.

I'd review my portfolio to make sure it is tax optimized for retirement mode.

Like Jacob says reconnoiter and rehearse , not sure what the first part of retirement will be like but like any major life change it will probably be challenging. I'd think that you'd potentially feel anxious, lonely, bored or regretful and it's best to try to prepare for that. I'd want to spend more time socializing so I'd try to find an outlet for that desire before I stop work.

black_son_of_gray
Posts: 504
Joined: Fri Jan 02, 2015 7:39 pm

Re: Advice? I have eight months before I am done!

Post by black_son_of_gray »

I'm not retired, so take this with a huge grain of salt - I'm just mapping your situation onto how I might handle it myself.

In the future, I personally am looking to transition into retirement by stepping down into a part time job in some area of interest where I can maybe pick up a new skill or learn about one of my hobbies. Looking for two days a week or so, for a year or two. 1) that'll let me weather early market downturns if they happen with a lower draw down. 2) I don't know how I'll handle a transition from relatively little unstructured free time to completely unstructured free time, so I want to slowly ease into that. 3) Same thing with easing into a less job-oriented social sphere.

My SO, who is FI, went through that transition from highly structured time to self-structured time and it took around a year or two for her to really get into the swing of things (and feel comfortable with the "careerlessness" while still in her working "prime"). She took up a part time job, learned some new skills, started freelancing at her own pace - She loves it now, and only does as much as she wants or is interested.

I think a lot of this depends on your particular personality/temperament, but it's worth considering what the transition will be. What do you have planned for Feb 2018?

IlliniDave
Posts: 3845
Joined: Wed Apr 02, 2014 7:46 pm

Re: Advice? I have eight months before I am done!

Post by IlliniDave »

I don't know if HELOCs in Canada work differently than they do in the US, but in the US they are renewed annually. This is transparent to the borrower except for when the bank opts not to renew them. When that happens the bank cancels the HELOC and the outstanding balance becomes due immediately (30 days). This can happen even with a perfect payment history. Typically it is a downward change in credit score which prompts it when the payment history is good. I don't know if employment status or changes in household income have a direct affect. A HELOC is a different animal than a mortgage or even a fixed home equity loan here.

Hopefully that is not the case Canada, but it is something I would look into to be safe. One friend who had a HELOC canceled without warning (luckily was only an inconvenience for him) had it with the Royal Bank of Canada (RBC-USA). I know in the US I would not count on a HELOC as a source of financing for important things that might come up in the future.

Even though I'm generally in favor of a debt-free lifestyle for myself I do have a "cash back" credit card. I sometimes wonder what will happen when my income plummets. The effective discount will be more significant then, and even though I don't weigh it in my planning, I would hate to lose it.

Post Reply