[USER]

TLDR: I’m nervous about our jobs, looking for a sanity check on how freaked out you’d be in my situation, and any advice for a plan to tackle potential unemployment.

My husband and I are at a company where we both have our IT jobs threatened.

He’s an information architect, I’m a manager of software engineers.

He’s 50, I’m 48. We were planning on working for 5 more years and downsizing our house and retiring early but now need to really figure out what to do.

Current situation:
Equity on house is about $350k
We have an $800/month truck payment, which we intend to sell ASAP as we have a 2021 vehicle that’s paid off and we don’t currently need two

His 403b is worth $680k, 457 is worth $152k
My 403b is worth $325k, 457 is worth $66k

His pension, which he can take lump sum is worth $175k
My pension, which I can also take lump sum is worth $93k
We have about $15k in Roth IRA’s each

$45k in savings
$11k in iBonds
$135k in brokerage account
No other debt

My salary is $165k, his is $175k
Our monthly expenses with house, insurance, and truck is about $8500/month.

He wants to sell our current house right away and just be done working.

I want us to work our asses of to stay the course for a few more years and continue to fatten up the IRA’s and brokerage account and not have to exhaust our pensions.

But the market is challenging and that may not be an option – I’m working on upskilling but am not excited at the prospect of re-entering the workforce as an Individual Contributor trying to keep up with 20 year old Software Engineers that can live on Mountain Dew and Adderall.

I also don’t want to sell the house immediately in case I do get a higher paying job that’s worth relocating for. Our children are adults and mostly out of the nest.

I’m willing to relocate though we do live in a relatively low cost of living area; just VERY high property taxes.

Other notes: he has had a kidney transplant. I’m very concerned about the cost of healthcare.

Where would you start?

[Jim]

One thing that might make you sleep better at night is for one of you to change jobs so that you’re not both at the same employer.

(Yes, there’s correlation across the industry, but that cross-company correlation is nowhere near as strong as within-company correlation.)

[Nick]

You make over $300k/year. Should be living on less that 50% of that and investing the rest. We live on about 35% of our income.

Get rid of that car payment.

Save of cars and pay cash. They are the biggest money suck from and investments.

Watch Dave Ramsey. Use that big income better.

[Valerie]

I don’t think you have enough money to retire right now. Definitely not at your current expense level, plus taking a hit on taxes and penalties if you pull from retirement accounts.

If I were in your position I would be job hunting.

Getting rid of the truck is a good start. If possible you could also downsize the house.

You didn’t say how much you owe on it or what the monthly payment is.

With your budget so high it seems likely there are other places to cut expenses as well.

$8500/month is $102,000 per year. Using the 4% rule you need $1M for every $40,000. You don’t have near enough saved to maintain your current lifestyle.

You have not quite $1.7M not counting the house equity (you need to live somewhere).

This give you $5600/month if no penalties for early withdrawal.

I would cut expenses, save more, and find another job.

[Amy]

My initial thoughts is that you only have 5 years to go or so. You seem to be doing reasonably well. Stay the course! Don’t sell the house, you have to live somewhere anyway.

Certainly upgrading skills is an option and can’t hurt.

It seems to me that both of you probably won’t get tossed at the same time if in fact either of you do.

And if you did then you would get a decent severance correct? ( btw if it happens definitely go to an emoyment lawyer immediately before signing anything!

Companies rip people off as a matter of course.

You will easily get 25% more just by going to a lawyer that will cost you a pittance compared to what you get from it. Just saying.) But I digress.

So with such a short time line until retirement you should consider if you can live on one salary if you had to?

Can you make changes so that you can? Switch cell plan to low cost provider, change home and auto insurance providers.

If you change regularly you will save a lot.( If you have CAA/ AAA get a quote from them for sure) I think you are worrying too much.

If the worst happens and you both lose jobs, would you be open to moving to a lower cost of living area.

Even moving an hour away from our home in the city, my hubby and I bought a great condo on the waterfront in a smaller town.

Great hiking and kayaking around our new home. So don’t worry, be happy.

Try to get serious about saving for retirement but don’t worry about stuff that hasn’t happened yet. And if you get a great package from your company in 3 or 4 years that is even better than working for another 5 now isn’t it?

Always a silver lining.

[Scott]

Getting rid of the truck is a good move. I would shave all unnecessary expenses before thinking about dropping the house.

You both have very marketable skills and will likely get fat layoff packages should it come to that.

Wait on taking the pension lump sum until you get laid off.

Start your job search now while you’re employed.

[Ting]

Do you work for private? Public tends to be safer at this time. Not sure since they allow you to contribute 493 and 457

[Megan]

I’d get rid of the truck, shave any expenses I could and just stock pile cash. Thats what we did when we saw a layoff on my husbands horizons.

He made 3x as me.

He worked on his resume but didn’t really apply for anything until he was out of work.

Then I made as much as I could while he made whatever was allowed before it hurt his unemployment and job searched.

We ended up ahead and happier than

[Jule]

I am with you. Keep working and aggressively save and invest. I really don’t see how taking the equity of the house and selling it is going to supplement your retirement in order to support your living expenses. That’s not enough to get you there.

[Ashley]

I’ll add this, I was very salty about moving back to an IT individual contributor role, but it’s actually turned out awesome.

I get to hunker down and just do my work and never really need to make any big decisions anymore.

It’s a nice change of pace and feels a bit like coasting.

[Sandy]

I think you first have to decide what is most important to both of you- maintaining your current lifestyle, making significant cuts or somewhere in between.

I’m guessing there is a compromise that you can reach. I’d start with the spending side of things to see how much you can bring it down and still spend on the things that bring you joy.

Then how much salary would it take to support this? And are you more comfortable working hard now and saving aggressively or working less now for longer?

Seems like you aren’t currently on the same page as to your goals so hash that out together first

[Sue]

Bank one of your salaries in full to index fund and only live on the other salary. Once it comes time to downsize, you will know how easy it will be to live on that downsized amount as full timers.

Definitely sell that 3rd vehicle and be on survival mode for the year.

Many have paid off their mortgage if done right (my adult son did with only a $130k and a mortgage of $$220k with home value at $550k) within 4 yrs.

Luckily, it was all talk with his IT and he’s still working with higher paying salary.

He just wants to work until whenever. He banks everything and doesn’t see any of it.

[Howie]

I would save more of that income in the next few years.
From a hedging point of view, if the pension is not a cash balance plan, I would take one as a lump sum and the other one as a payment from life.

If one has health issue you might want to look at surviving partner get 66% (not the 50%) since you can expect the survivor collecting for over 10 more years.

Now if your living expenses is under 10k a month, you need to figure out how much you will get with SS at age 62 plus the pension payment plus whatever you withdraw from the 403b.

You might be able to do retirement before 62 if you have plenty of cash to hold you say between the age 59-62.

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