Laid off with 3 kids. Retire?

[OrganicRain]

Hi all,

Situation:
I just got laid off from my job. I got a small termination package of about 3 months of living expenses, after that I could collect EI if I still have not found a new job. Currently we have no debt, a paid off $300k house and $700k in Vanguard ETF's. NW= 1MM. I am 41, wife is 43 SAHM, plus 3 kids 8,10,12.

Questions:
Do I find another full time job? go part time fun job? or just retire all together?

I recently turned down a job offer because it seems to be too much responsibility for the pay level. I find I am being very picky in what type of job that I will accept, which is oddly enough a very difficult position to be in.....

Any thoughts, insights would be appreciated.

[billc]

1. Can you access the $700k w/o penalty (i.e. not in 401k)?
2. Can you cover your living expenses with income from investment + whatever you choose to do (possibly part time work, etc)?
3. Do you intend to pay for kid's college?

Assuming the answer to those questions is Yes, Yes, No then sure you should "retire", why not?

[Laura Ingalls]

[quote="billc"]1. Can you access the $700k w/o penalty (i.e. not in 401k)?
2. Can you cover your living expenses with income from investment + whatever you choose to do (possibly part time work, etc)?
3. Do you intend to pay for kid's college?

Assuming the answer to those questions is Yes, Yes, No then sure you should "retire", why not?[/quote

I agree and would add especially if you would downsize to a cheaper house at some point.

Dh and I were both laid off at 45 with a 9 and 12 year old. We both have done the fun job route and earn about 1/3 of our spending.

[steveo73]

Its your call but I would probably retire. The only issue I can see is your kids. I have 3 kids - 13, 11 and 4. They cost money and I find that the hard part to budget for.

[OrganicRain]

I am in Canada and will have access to about half the money until 55, other half is avail after 55 (would should have grown substantially by then)

Kids are tough to budget for...no doubt. That is where my dilemma lies. I don't want to come up short and impact them in a negative way..

[stand@desk]

I'd say retire..get passionate about a few hobbies and participate in them with your kids and in your kids hobbies too. And if a good offer comes up then go for it if it seems right.

[BeyondtheWrap]

You forgot to put your living expenses. Without that number, there's no way of knowing if you can retire right now.

[Hankaroundtheworld]

It seems to me a bit risky. If your living expenses are below 20k $ annually, you might be able to make it on your savings, but with 3 kids ... Of course, the ETF buffer allows you time to rethink about income generation, and may be choose something that would be a healthy balance between work and free/quality time with family. Or you can choose that only one parent takes on a job. Use that time before you lock yourself into a new job.

[George the original one]

Basically, you would have to make $350k last 14 years. I don't think you have enough to currently retire unless your expenses are far lower than average.

[OrganicRain]

Thanks for the responses so far.

We could get our living expenses down to 30k year - not including the odd "surprise" like braces, a leaky roof ect..

Couple more items in the mix:
- A 5 person family in Ont Canada with a 30k income would probably receive about $500-600 month in "low income" benefits until the kids are 18
- Additionally, there is a loophole to take some money out of the locked-in retirement account if your annual income is low. Has to be applied for every year.

Once we turn 61 a small gov pension would kick in, then a little more at 67. (assuming those programs are still in place)

[George the original one]

So 8.5% withdrawl rate for 14 years. Firecalc's default scenario suggests a success rate of only 68.7% and that doesn't include braces. You better keep working at least part-time.

[IlliniDave]

Fully retiring looks a little dicey to me. If you are confident of keeping you expenses at $30K or less, it seems like a part-time "fun" job that you could net $10K after tax would put you in a better position. At minimum I'd do that.

Another way of looking at it, given your age, if it were me, I'd target withdrawing $14K or less per year (2% of initial balance). At 55 or 60 I'd consider upping that to 3% if the funds hold up. And I say that as a single person with grown kids. I'm arguably more conservative than necessary. Withdrawing $20K would be around ~3% withdrawal. With history as a guide there's a good probability you could expect your money to last at least several decades at that rate.

[almostthere]

Based on what you have said so far, I think you are very close to stopping work but not quite there.

I'd take the next few years to reduce expenses further and figure out how to increase income from investments (or income from other sources) to all or a very large portion of your expenses.

As Laura Ingalls above pointed out, trading down houses would be a great place to start. The smaller the home, the smaller the related home expenses.

I stopped working at 42 with two small children, but I moved to low cost area and my income from index funds, one muni closed end fund, and one apartment covers all my expenses with money left over.

Keep your eyes one the prize, you are not far away, don't stop now.

[disconnected]

Sounds like you are really close. My best advice, take a breather and really think things through. Now might be a great time to give your life a jump start. Take a good look at your life from the ground up. Re-shape your life the way you want it to be. Now is the time to get things going your way.

You might be able to downsize \ trim the fat and make things work for you. I wish you the very best!! And please let us know how it goes!

[steveo73]

So 8.5% withdrawl rate for 14 years. Firecalc's default scenario suggests a success rate of only 68.7% and that doesn't include braces. You better keep working at least part-time.

Get your expenses down, work part time a little bit and the success rate would be much better. Plus that success rate isn't really that bad. There is a 70% of success. I'd think it is pretty easy to push that higher with a part time job or something similar.

On the topic of kids and retirement that is in my opinion the tough area. My daughter has braces and its costing us $5 grand over 2 years. My son has a friend whose parents are always inviting him out to some event. We can't let them pay and we can't always say no. I intend to be in a similar situation to the op in a couple of years and I would like to be able to retire or at least work part time.

[TheWanderingScholar]

I am not exactly most experienced in these cases, because of my inexperience. But I definitely say work part-time at the minimum to be safe.

[7Wannabe5]

I'm not sure how this would work in Canada, but I found that employing my own children and some of their friends to help with my small business had multiple benefits. I didn't have to feel obliged to reciprocate when wealthier parents took my kids on outings because I was giving their child a part-time job that looked good on college application or resume and also providing after-school snacks etc. OTOH, I will caution you to not expect to be off the parental dole until your youngest is at least 22. It's actually more difficult to plan for the occasional expenses or bail-outs once they are semi-independent. At one point, I just told mine that, as always, I wish to be of assistance and in-the-loop if they are having problems, but any financial help from me would be in the form of a loan at low interest rate moving forward. Not even half as difficult as switching them from breast to bottle.

[workathome]

I wouldn't feel comfortable on that. I think you'd want closer to 1 million invested to live off 30k/year. I think you need to reduce expenses to 30k *and* have at least 10k in supplemental income (more for braces, emergencies, etc.).

Though the government aid might get you pretty close! If you assume your expenses can drop in ~10 years or so if your children move out, and earn on their own, plus is there any form of social security?

You need to run the math on your actual expenses. I'd assume a real return above inflation of 2-3% to remain conservative. If your investments have a major drawdown in the next 5 years you might want to work again until replenished/they recover.

[jacob]

Aside from the money issue, unless retirement has been in the planning already, e.g. "I want to retire and I'm just going to wait until I get fired before I stop working", it's "risky" to consider retirement as solution to your future. Especially given the young age ... there won't be any automatic solutions of things to do instead of "going to work". You'll have to find your own meaning other than work. Any considerations about that aspect?

[ether]

I'd recommend just retiring.
Watch your kids grow up, you have the money, you deserve it.
Or take a mini retirement and stop working for 5-10 years, you have the savings.

My advice is to downsize the home as soon as possible. Taxes and Utilities will take up a sizable part of your retirement income.
The 3-4% rule doesn't take into account Social Security, so I recommend you use this site: http://www.cfiresim.com/input.php
Remember SS can get you up to ~$2500/month, even more if your wife worked too.

Also remember that if you become desperate, there is always SNAP, which can give you up to $200-600/month in cash benefits.

You'll be fine, take a decade off, watch your kids become adults, downsize when the kids move out, and enjoy the life you have built.
You did it, you're free, pull the trigger!