The following is a post by community regular JayCeezy who was able to successfully retire from his job with a healthy severance package. The post highlights the bitter sweet peculiarities of leaving one’s job of so many years. A large part of you will scream to hold on to what you know. But deep down it’s clear there’s nothing promising left and it’s time to go. I’m currently in Switzerland for the week so comments might be stuck in the hyper sensitive spam filter longer than usual. Hope you enjoy the post!
My worklife has come to an end. I am relieved, and happy. For a number of reasons discussed below, I preferred to be laid off instead of quitting. The difference between quitting and ‘getting laid’ was six months of living expenses. Nice~! This is not a book review. Plenty of experienced and high-traffic bloggers have already done so. And there are no *SPOILERS*. Buy the book, if the subject interests you. It is good to be frugal, but also good to support your satisfactions. Buy it.
It is hard to be patient. Readers of Yakezie blogs are self-selecting, and skew to those with a bias toward action and results. Financial Samurai’s book, “How To Engineer Your Layoff”, was a big help in making this happen. My biggest takeaways from the book involved guidance on persistence and relationships. Very useful in seeking any goal.
To be clear, this outcome was not my first choice. But it was the first choice of my available choices. My worklife had a shelf life; every worklife does, but often we don’t recognize it until we are past the expiration date. I hung on for a long time, keeping my skills and network current. But a growing realization that I had topped out in pay and responsibility, combined with shrinking opportunities everywhere, made acceptance easier.
I was hoping for a turnaround in the economy or that my employer would be bought by a larger firm, which would have opened up new possibilities for me. It just wasn’t happening. With my financial assets in place, it seemed like a good time to make an exit.
A layoff, instead of ‘retiring’, seemed like my best option. I had no idea of how to make it happen, as asking my Human Resources or Managers would have resulted in a ‘no’ and probably some hard feelings if I did not handle expressing my desire to leave in an appropriate way. I did a web search on the subject, came upon a review at Retire By 40, and bought the book. It seemed like just what I was looking for, a real-life example from someone who accomplished what I was setting out to do.
Already knowing what was in it for me, I now had to convince my employer that laying me off provided something for them. That was a frustrating issue for six months. But sometimes an exogenous event can create new opportunities, and a new situation was created when the company lost some contracts and didn’t win anticipated business. I had become unprofitable. Preparation, meet Opportunity!
My employer downsized from 400 to 125 people during the last six years, and now had no new work on the horizon. There had been an increase in drama and displays of temper throughout my company, always explained afterwards that people were “under pressure.” As an example, a Director-level employee was let go with a voicemail. Poor form, employer! The behavior always had an excuse, but not justification.
It appeared the owners now needed to put a shine on the balance sheets by getting rid of less-than-profitable heads. I was presented with an ultimatum, presented as an “opportunity,” for a new working arrangement, with a new (much lower) compensation arrangement. It was quite easy to say “no” to this, and my employer did not expect that. But they had painted themselves in a corner. I was happy to pick Door #2 and requested to be laid off. My company attempted to say I was resigning, but I wasn’t having it. I pointed out their own policy, and it was clear that it was a layoff. They then attempted to “go back to the way things were,” but I also wasn’t having that. Funny thing, my company didn’t have a Plan B for letting my skill set go. They put themselves in a bind (their words) and whatever the solution is will be quite costly for them. I hope they figure things out.
The average speaking rate is 100 words-per-minute. The average reading speed is 300 words-per-minute. Good readers double that. Reading delivers information efficiently, and fortunately I love books, and love to read.
Of hundreds of business strategy, personal finance, and performance improvement books, just a few stand out. The first book of this type I read as an adolescent was “Winning Through Intimidation” by Robert J. Ringer; the lessons involve how not to be intimidated. The most important one of all has been “The 4-Hour Workweek” by Timothy J. Ferris, which describes a flexible location-based lifestyle I have been living for the past five years. I have been “working from home” for many years, and while productive and saving the company the cost of overhead, I have to say Marisa Mayer is right. These books, among others, helped to change my life for the better.
The last book of this type I read, “How To Engineer Your Layoff”, allowed me a blueprint for putting the title theory into practice. With six months of living expenses I would not have received had I resigned, the results speak for themselves. Examples of relationships I would need to cultivate, persuasive arguments I would need to make, and real practical advice are all included and have paid for the book a thousand times over. Thank you for the book, Financial Samurai.
The Path To Retirement
Since my middle teens, I had determined that working to age 67 in a job I was ambivalent about was not of interest to me. I am not blessed with exceptional talent, work ethic, intelligence, or “secret knowledge.” So, I had to save and invest my way to an alternative, while making plenty of mistakes along the way. (Related: Why Not Just Try Harder To Get Ahead?)
The mistakes are all mine. But my three financial mentors (my father, a high-school teacher, and a more seasoned colleague), all saved me from wasting time and effort by avoiding even more pitfalls. I am in their debt, and have expressed my gratitude to them many times over the years; it was not my entitlement, they gave me a gift. It doesn’t cost anything to say “thank you.”
For a long time, I was fixated on a “Number” that I hoped would be a sufficient ‘nut’ to throw off the income I would need for the rest of my life. Funny thing; with time, wants become needs. And inflation has more than quadrupled since 1975. By the way, a great book on the subject is “The Number” by Lee Eisenberg; very readable, both anecdotal and factual delivery of information. Bottom line, that “Number” turned out to be a moving target and will continue to be so. Not a problem, but it is good to remember and act accordingly.
The Method Towards Financial Freedom
For most of us, the best and fastest way to accumulate the capital needed for Financial Independence is through work. I never had a great-paying, or high-profile job, like our host FS. But I did work a lot, trading time for money, and stuck to an investment discipline. There were times like when I got out of college and unemployment was 10.8% and inflation was 13%, when it didn’t seem to be working out. But perseverance and time are great advantages, when everyone else is giving up, spending stupidly as if this snapshot in time will last forever, and placing all value on the present at the expense of the future.
My investments have been in simple combinations of Equity Index, Intermediate-Term Bond, and Cash instruments. Nothing against Real Estate, Entrepreneurship, and that “X Factor”, but that was not part of my method. Those three, and Equities, are really the only methods to make the jumps in asset accumulation needed to achieve Financial Independence, because they involve Risk but also significant potential Reward. Assessing Risk changes quite a bit as one ages through the system. I’m now ready to stop working, and Risk is not compatible without a work cashflow and a decreasing time period in which to make up losses.
Eliminating Debt is also a big part of my method. In younger years, leveraging smart debt is a good risk because the upside is tremendous. At this point in my life, an extra few potential percentage points of return does not compare well with the potential for loss. With this in mind, eliminating any mortgage, car lease, or other debt service does two things; it reduces my need for cashflow, and eliminates the outstanding risk.
Execution Is Key
After a misfired attempt to leave the rat-race of work ended in humbling frustration five years ago, my wonderful wife and I are trying it again.
The layoff provided me the following advantages to a resignation.
• A formal Performance Evaluation (5 of 5 rating). This will be handy if I ever do need to re-enter a traditional worklife.
• Documentation that the separation is a layoff, not a resignation or termination for cause.
• Filing for State Unemployment Benefits is now expected. I filed the day after final separation, and was approved five working days later.
The annual 401(k) match for 2012 was not made until several weeks after my layoff. Coincidence? Doesn’t matter. I asked for that match, noting that I had worked through 2012 and it would be a shame not to receive the company-wide match, per policy and it has been received. It was not a huge amount, but certainly not small. I am converting my 401(k) funds into an IRA Rollover , as I have done each time I separated from an employer.
Badmouthing my former employer is not on my agenda, as the relationship was mutually fair and profitable until recently. Healthcare was not provided by my employer, so didn’t factor, and severance pay is not something my former employer has indulged in for years. The WARN Act requires 30 days notice for large organizations, but I received two days’ notice. This actually worked in my favor, as the employer-imposed deadline for my decision was intended to pressure me. But my mind had been made up for awhile to get laid off if possible, and it was very much a positive outcome to the situation presented.
One last piece of irony, that is both literally and figuratively delicious…my former employer just sent me a Starbucks card for $5; I won’t have to pay taxes on it, either. It made my wife laugh, and she suggested that I send it back because they might need it more than us. But I’m too cheap. Besides, they wouldn’t appreciate the joke.
My LinkedIn profile is closed, and I spent the weekend tossing decades of work-related files and documents. Liberating. Man, I hope I didn’t just jinx myself and those are yet another of my ‘famous last words’.
So What’s Next?
This is an open question. My wife has a business she is building, and after five years of hard work she is reaching some impressive goals. I do not have a specific plan for my time and effort, and am working on some possibilities. While trying to get something going (i.e. the usual hobbies, volunteer work, etc.), I have run into some headwinds. Turns out the world is not waiting for my amazing talent and personality to fill an obvious void, so I will have to find or create a place for myself going forward.
While I enjoy reading PF blogs, I could not produce the quantity and quality of content I see my favorites produce. I’m not going to move seamlessly into my next chapter. But I have learned that the “absence of bad” does not equal “good”, so simply not having to work anymore will not be enough. But it is a nice start. I am laid off! Thank you, I will accept your congratulations.