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Should I stay, or should I go?

Should I make the leap?

Should I make the leap?

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!

7 thoughts on “Should I stay, or should I go?

  1. Even Steven

    I like the post, I think about this type of “Early Retirement Problem” all the time. When I updated my numbers to adjust for a couple things it’s tough to make a huge dent, when I put in a few projected calcs, I want it to shoot out with bells ringing and tell me I will be retiring by the end of the month! Instead it moves a touch, have a plan or general guide is the most important as you get closer to the final month/year is when I really plan to see what life is like with some practice early retirement, like living off one salary or a one week vacation at home to see if I like walking to the store to get groceries.

    1. SSC

      I know! When I get bored, I try to figure out how I can retire next week. Yeah – don’t think I’m going to win the lottery 🙂 Sometimes, though, the type of calculations I ran this time don’t work in my favor, because then Mr. SSC sees that making some random $300 purchase doesn’t really effect us in the long run.

  2. Mrs. Maroon

    What an interesting experiment. Deep down we all know it, but your example above solidifies that the most powerful partner in finding financial freedom is TIME. Now then, that’s also the variable most of us would prefer to minimize. I know we would like to! Even more importantly though, the experiment also gives hope that anyone in the world can do this – no matter the size of their paycheck. Given enough time, a small bit of savings can transform someone’s future.

    Also, stick with your current job! Sounds like it fits you very well. The extra money might make a small dent in your long-term goals. But achieving that success really doesn’t mean anything if you’ve lost yourself and value in your life getting there.

    1. SSC

      I think I’ll stay with my current job. It is a good fit – and I don’t want to just spend my life chasing a bigger paycheck. Sometimes I think I get too carried away with the whole idea of saving, saving and saving… and just focus on the future, and not the present. At least my kids tend to bring me back to the present and remind me of how much value my time has, and I find myself thinking more and more that my time is definitely worth more than some extra money.

      1. Mrs. Maroon

        Since Mini Maroon 2 made her debut I think more and more that time is our most valuable asset. We are willing to sacrifice some stuff now so that we can enjoy our time even more fully at retirement. But sacrificing time to get there isn’t worth it to me.

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