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Author: JAM47 One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 5056  
Subject: Take Early Retirement? Date: 9/17/2007 9:26 AM
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I’m not sure this is the correct board to post this. I spend most of my time over on the Champion Funds boards.

My company was recently acquired and is in the process of merging with our acquirers. I’ve got 18 years into my company and an excellent track record of annual reviews and accomplishments. I have sort of risen to a level where my continued employment is highly questionable. A severance package has been mentioned, but none produced so far. The job I was most recently promoted out of has positions that are being filled by much younger personnel (I’m 60). I was not offered an opportunity to move back into that position even though the regions were shuffled and it could have happened if they wanted it to. I will speak to a lawyer about possible age discrimination, but don’t know if it applies in an acquisition/reorganization situation.

My company has no pension program, just a 3% match on 401K. I know they would absolutely not want me working for a competitor. How much leverage do you think I have? Can one take “early retirement” when there is no pension to work with? Can severance packages be worked out for multiple years with a tight non-compete, which I would consider? Otherwise, three months severance is not enough to keep me from going to work with a competitor.

Anybody been down a similar path?

Thanks
Jim
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Author: zol Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4387 of 5056
Subject: Re: Take Early Retirement? Date: 9/17/2007 9:55 AM
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Can one take “early retirement” when there is no pension to work with?

Only you can answer this question. What other savings do you have? Will they be enough to support your lifestyle in the years to come (20-30 years)?

Can severance packages be worked out for multiple years with a tight non-compete, which I would consider? Otherwise, three months severance is not enough to keep me from going to work with a competitor.

I can only speak for my experience in the tech industry. Severance packages usually limit people from working with the same company for the period that the package is supposed to cover but does not limit people to work with a competitor. There is non-disclosure agreements, of course. It could be different in other industries and in higher positions. Can you start looking for another position somewhere else?

- zol

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Author: Gingko100 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4388 of 5056
Subject: Re: Take Early Retirement? Date: 9/17/2007 10:06 AM
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As far as retirement, as someone else said, only you know if you can make it work.

Severance packages are usually lump sum, not "multiple year." They cut you loose with a flat fee and wash their hands of you - they don't want to keep paying you over time. That's mostly the point of a severance. They are also usually prorated based on one's seniority with company, and level of responsibility in the organization. A secretary with 5 years there would typically get a lot less than a VP with 10 years tenure for example. HR MUST set a consistent policy here or they open themselves to lawsuits. That said, it's somewhat negotiable for some of the small items like access to job placement services, etc. There's also usually a tight deadline for exercising any stock options ( a few months) so be sure you understand what that is.

As far as non-compete, I have never really seen that - or only at extremely high levels of an organization. There is of course a non-disclose policy.

Only you know what your company's package is and if it is a good offer. When I got laid off I ended up with nearly six months salary, plus my accrused vacation. I started consulting almost immediately, so it was a nice emergency cushion to allow me to start my own business. You could consider that route too - could you hang up your on shingle and continue to work in your industry?

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Author: ceallaigh Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4389 of 5056
Subject: Re: Take Early Retirement? Date: 9/17/2007 11:03 AM
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Jim ---

Not much help I can offer, but I went through this myself some years back. I wasn't in any kind of retirement position, but my employer (who had been acquired) offered a -much- more generous severance package than we knew would be offered by the new employer, so people were basically *hoping* to get downsized (other stuff involved, long story).

Sorry I can't be of any help in your decision, but I just wanted to wish you luck, and to tell you you certainly aren't alone in this -- it's happened to plenty of us!

Good luck!

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Author: VikingErik Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4390 of 5056
Subject: Re: Take Early Retirement? Date: 9/17/2007 11:12 AM
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Hi Jim,

My first thought is that you're overrating the severance package. There's a rough professional standard of one week of severance per year of service with the company. And several factors can multiply that, such as seniority of one's position, the company wanting to appear generous, or you having legal leverage against the company (such as an age discrimination case.) Invariably, severance packages include an agreement that you indemnify the company of any such legal claims. But at any rate, six months of severance pay is on the high side, and a year's pay would be about the most one would ever expect.

(Also consider this - why would they give you multiple years of severance pay, when they could just keep you employed for the same price instead, and still have your services?)

As Ginkgo says, severance is usually a lump sum. However, nothing stops you from simply investing the lump sum to create a stream of income for yourself. If the income from that and from your other savings (plus Social Security when eligible) is enough for you to retire on, you can do so.

And I think you know this, but just to spell it out: you're under no obligation to accept any severance package if you don't agree to any strings attached, such as a non-compete clause. If you don't already have a non-compete as part of your employment, you're free to decline the severance and take a new job.

Hope that helps,
- Erik

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Author: JAM47 One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4391 of 5056
Subject: Re: Take Early Retirement? Date: 9/17/2007 3:05 PM
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All very helpful, thanks. Let me throw out some more detail.

I am not ready to retire, either mentally or financially. I was planning on 3-5 more years full time depending on my salary and how well my investments do. They said they would offer 3 months severance (they also said the new owners only offer 1 week per 3 years worked). I am a VP level employee.

They basically blew it on my non-compete. It’s been in place for 10 years and is pretty much worthless. I will have no legal problem getting another job in close proximity to where I work now. That is why I’m so anxious to see the severance package—I know they will put tighter restrictions in it---I want to see how tight. I have a couple potential positions that may or may not be listed as off limits. I know I can always turn down the package.

There is a possibility of an age discrimination suit, but I want to have the severance package with me when I see the lawyer. The non-disclosure I am under does not include a non-solicit. Besides the potential positions mentioned above a competitor wants to open up in my area. I would be invaluable to them and therefore a huge threat to my current employer. Given that I may have a valid age discrimination and I can easily pull over a million dollars a year in profit from my current company, I wonder if I can get a couple years in severance. For that I would not sue and not compete with them. My background and degree allow me the flexibility to work in areas that would not be deemed competition, just not at the pay level I’m at now. So, if I could get a couple years severance (lump sum) and work a couple more years at maybe 75% current wage, I may get to retirement earlier than originally planned.

Of course I will listen to the attorney, but is this feasible or am I only wishful thinking.

Thanks
Jim

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Author: Gingko100 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4392 of 5056
Subject: Re: Take Early Retirement? Date: 9/17/2007 3:43 PM
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Given that I may have a valid age discrimination and I can easily pull over a million dollars a year in profit from my current company, I wonder if I can get a couple years in severance.
This is incredibly unlikely...if you were so valuable they would be willing to give you a package that is basically unheard of anywhere in corporate America, they would be keeping you.

You could sue them and hope you got this, but again it's unlikely. Smart negotiation may be able to bump you up from 3 months to 4 or maybe even 6, ut no way is it going to take you from 3 months to multi-year.

I ran an entire department with a HUGE construction budget that was a driver for an enormous amount of sales growth at my old company - but it didn't mean I got much of anything special for severance. I took the 6 months and was quite happy to have it. All the years I had felt invaluable to my old company, it was quite humbling to know I wasn't really. That's part of th mental adjustment about a layoff. It is indeed hard.

It's a bad spot to be in, but I would suggest (based on my own experience) that you take the max you can, scrutinize your finances and modify your budget now to put yourself on a hard-times budget while job searching, and loook forward not back. Start talking to colleagues in the industry about what's out there and be prepared to make a move.

It may mean working a few years longer than you had planned to get to retirement, but maybe you will find a great new job that you will like better.

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Author: JAM47 One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4393 of 5056
Subject: Re: Take Early Retirement? Date: 9/17/2007 4:48 PM
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Ginko

I realize I forgot to tell you to sugar coat it, but………… Seriously, I thank you for the honest reply. Why are they letting me go? Maybe my ego is in the way here, but I don’t know unless it’s the age and salary level thing. I’m at least 10 years older than anyone they are keeping and a little better compensated than most. I know the company was not aware (and maybe still are not) of the competitor who wants to open up in the area where I used to be a branch manager. I grew that office 12 fold in 5 years and it won office of the year 4 years in a row. I did that through relationships I built in this community over 35 years. The relationships are still there and many of the employees would (I believe) follow me.

I recently have had two companies inquire about me for CEO/President positions, but both would require distant relocation. I’m a family man first and with all of my children, grandchildren and aging parents within 30 miles---I’m not going anywhere.

If the severance package isn’t good enough or is too restrictive, I’ll politely decline and take the best job available for me and my family.

Even though it hurts, as you point out, to realize that they do not think I’m invaluable, I am not the vindictive type. I will not take a job just to stick it to them (although I’m not above using that possibility for a little leverage) 

Jim

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Author: Gingko100 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4394 of 5056
Subject: Re: Take Early Retirement? Date: 9/17/2007 5:52 PM
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Maybe my ego is in the way here, but I don’t know unless it’s the age and salary level thing.
This is indeed quite likely.

I hope you understand that I really didn't mean that just because they were laying you off you weren't valuable to them - or inherently in and of yourself. Just that one of the horrible mental adjustments of a lay-off is that a company you have been loyal to, and poured lots of hours into, and to which you have brought huge returns can turn on a dime and toss you out. Change of guard. Change of management. Cleaning house so the new CEO can bring in their preferred people. Whatever. It's cold. And not always rational. But there it is.

Go defensive. Look for the best job possible (if you are already getting offers you are bound to get more). Look forward. But unless you love negotiating (and I know peple who do, although I am not one of them!), it's probably not worth it to haggle over this a lot. Strong negotiating is a good idea, but if it doesn't work out, leave it behind and move on.

PS - I love working for myself in that I know I won't ever have to fire myself until/unless I quit to be a barista.
:)

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Author: SeattlePioneer Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4395 of 5056
Subject: Re: Take Early Retirement? Date: 9/17/2007 9:14 PM
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<<
If the severance package isn’t good enough or is too restrictive, I’ll politely decline and take the best job available for me and my family.

Even though it hurts, as you point out, to realize that they do not think I’m invaluable, I am not the vindictive type. I will not take a job just to stick it to them (although I’m not above using that possibility for a little leverage) 

Jim
>>


"Don't get mad. Get even"


More than even, preferably. And all with the greatest regret.


I love it.


Too bad it doesn't happen to more companies who cut people out.



Seattle Pioneer

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