At times, we are all probably faced with the idea of switching our jobs or even career to achieve a higher salary or a higher level of happiness. Right now I am pondering that question.
Recently, Mr. SSC switched companies for a myriad of reasons, which included a horrible boss, lack of job satisfaction, and a relatively low salary as compared to peers. He called it the trifecta… if any one of those were ok, he could’ve dealt with the other two factors. Anyways, since Mr. SSC and I are in the same industry with similar job functions, it has made me wonder if I should look around also. I mean, Mr. SSC got a 40% pay increase, with an additional 10% yearly bonus target. That is a lot of dough! And, I know that his company is looking for people with my set of skills. So even if I could get a 20% raise, with that 10% bonus also… well that seems like it could really give us a big push towards early retirement!
I’ve been thinking about this a lot lately, because my contract with my current company eded this month, so I’m free to look around (although my job is secure, so no need for me to look.) And, if I plan to make a move, I need to do it sooner than later, since I will want to be in the new company long enough to be fully vested in their 401k matching (typically 3-5 years). I know you all are thinking “Move! Move! Move! That is a lot of money you could make!!! DO IT NOW!” But – here are my reasons for waiting:
1) I like my job – my boss is great, and the work is great. Sometimes it get a little slow, but overall, its not bad. On a scale of 1 to 10, I think my job satisfaction is at a 7.
2) I have a gym at work. I know, seems lame. But I love working out and with toddlers at home, the only time I have is at lunch
3) I have some great friends at work.
4) I am comfortable here!
5) I am fairly paid (unlike Mr. SSC was before his new job)
6) My commute isn’t horrid (relative to Houston commutes). If I move to any other company, the commute would be ridiculous, and we would have to look into getting a morning nanny to get the kids off to school, so that Mr. SSC and I could leave for work at 5:45 to beat rush hour, and we still wouldn’t get home until almost 5pm.
So you can see – I have some good reasons, and some lame reasons for being complacent and staying at my company. Most of my reasons obviously deal with having a good work/life balance… time to stay healthy, not a stressful workplace, commute is manageable, and I get home in time to spend some time with my kids.
For kicks, I thought, I would investigate the lynchpin — What if I made a lot more money? Let’s say that I make enough that Mr. SSC and I can save $2000 more per month (a 30% raise for me), and I get another $10,000 for my yearly bonus. I know – that sounds like a ton of moolah! So – I pulled out my trusty spreadsheet and ran some calculations…. And I was shocked. Seriously, open-mouth, slack-jaw shocked. It didn’t make a huge difference. Only SEVEN months earlier. Huh. With that much extra cash, I would’ve thought it would trim over a year off! Right now, we are targeting April 2019 with $1.1 million. The new numbers showed us able to retire in September 2018. But, since yearly bonuses in our industry are paid out in the early Spring, we would end up working until April 2019 anyways. Interesting… let’s play around to see what the driving factor is in our retirement date, since upping our savings doesn’t seem to matter too much. First, we will look at investment return.
So in the previous calculations, I assumed a 7% return, through equity growth and reinvested dividends. Let’s see what happens to our retirement date if I assume some different numbers… still ending with a goal of $1.1 million.
At 4%: July 2019
At 5%: May 2019
At 6%: April 2019
At 7%: April 2019
At 8%: March 2019
At 9%: February 2019
Crazy? Looks like no matter what the market averages the next few years, we will be retiring in mid 2019!
But – now let’s look at what adjusting our ‘planned’ retirement income does. I’ll reset investment return to a flat 7%. Currently, we are looking at spending $200,000 to pay off a house. Leaving us with $900,000 to pretire on, and last us until we are 60 and the 401ks come into play. Recall, right now, we have a $65,000/year budget planned. Let’s assume some new simplified budget numbers, still assuming $200,000 is needed for the mortgage:
$965,000 ($55k/yr) = August 2018
$1,030,000 ($60k/yr) = January 2019
$1,100,000 ($65k/yr) = April 2019
$1,170,000 ($70k/yr) = June 2019
$1,240,000 ($75k/yr) = September 2019
So, if we wanted to retire a full year earlier than planned, we would have to readjust our retirement budget to ~$46,300. Right now, I know Mr. SSC is staring at this thinking “Hell, I’ll work for another year to have $20k more a year!”. I agree – having a cushion is nice, especially when you have two very young kids.
In all, I know that we will be fairly conservative with numbers and padding our budgets and such when calculating our retirement date. I anticipate we will have a problem with being too conservative, and maybe work a little bit too long. And since I like comfortable – I think I’ll stay at my current job!