Warning - Long PostI've been lurking on this board for the last couple of months and I'm fascinated by the knowledge found here. I read "Your Money or Your Life" many years ago as well as "The Wealthy Barber" and others. I just finished "The Joy of Not Working" because the recommendations of this board. I really like the ideas presented here and wish they were available 30 years ago. I wouldn't be in the predicament I'm in. I have been reading the messages on this board from the beginning but have had to jump ahead because of the events of the past week. If I'm going over ground already covered, I apologize.BackgroundI'm a 53-year-old engineer who has generally LBMM although I haven't actively pursued RE. (Where was REHP, Intercst, Hocus, etc. back in 1974 when I needed them?) A divorce in 1992 de-railed plans to retire at age 56. A subsequent reassignment and salary reduction in 1993 further delayed retirement plans of any kind, much less the RE variety. In my locality, jobs in my specialty are scarce and, since I refused to move away from my school-aged children, I sucked it up and made do. I gradually worked my way back into good graces and am currently making about $75K which is pretty good for this area.2001Company fortunes have declined because of the bad economy and mismanagement at the top. We were told last week that a 20% reduction in workforce is required. We gray-beards meeting the company's 80 plan (age + years of service = 80) have been offered an "early out" package. Health insurance will continue in early retirement and funding of the ESOP will be guaranteed. About half of the required work force reduction could be accomplished if everyone took advantage of it. Of course, not everyone will. If I pass on the offer, I take my chances along with everyone else. At my age and salary level, I feel especially vulnerable.I have until May 16 to decide.The deal is further complicated by the fact that even though employment ends in May, only a small portion will be made available in August and the remainder will be paid in April of 2002. Since I will be 54 in April, I will have to put it all into an IRA and set up a SEPP to avoid the 10% penalty.BTW our retirement plan is an ESOP and not a 401k.In April I will have $614K in the ESOP. In addition I have and IRA with $50K and mutual funds and individual stocks of $75K. The expense side of the equations is as follows.I will have to get from June to April using my mutual funds and stocks.I have a mortgage payment of $730 (including taxes and insurance). I still pay child support on my 14 year old son. My two older children are in college on good scholarships.My retirement goal had been to have $5000/mo after tax. That would pay for traveling and finance other hobbies and interests. Some will say that's too much and some say not enough, but hey, it was a goal to shoot for.After the offer I met with my financial planner. She said that I could set up a SEPP for $56K/yr. This calculates to about $3500/mo after taxes. I can live on this if I cut out some of the frills. However, this is a far cry from the 4% safe withdrawal.She also suggested that I set up a home equity line of credit to act as a safety net to pay for expenses between now and April. She doesn't want me digging into my stocks right now.As I see it, I have the following options.Do nothing. Suck it up. Wait it out. Take my chances. Keep my job and ride this out. This seems like a dangerous strategy with too much downside potential and little upside potential. Company stock to fund the ESOP keeps going down.orTake the deal and try ER on $56K/yr. This doesn't seem sustainable but would give me the chance to evaluate ER.orTake the deal and take the time to find something better. I live in a university town and I'm qualified to teach on the undergraduate level. So "something better" doesn't have to be restricted to the kind of job I have. But it might be awhile before something turned up. Then I could continue on my path to a satisfactory, if not early, retirement.orTake the deal and a find a less challenging, albeit, lower paying job and supplement my income with a SEPP. I've already pursued this idea this weekend and think I've found an emergency backup job. This would lessen the need to drain savings until April but,long term,it jeopardizes satisfactory retirement.If there is anyone out there who has read this far, I congratulate you and would ask for your thoughts and advice.TRNT
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