You’re Fired! The sad reality is that most people get fired at some time in their career. The bad news for people in their 50’s is that this can be terminal to your retirement plans too.Implicitly we all know it’s hard to get a job at this age. In addition to age bias, compensation becomes an issue. If you do get another job it’s likely your income trajectory has changed. In the economy today it’s more fragile than ever for folks this age but there are some things you can do right now to help mitigate the pain from job loss.
How Job Loss Can Happen to You
- A merger with a competitor
- A corporate downsizing
- A new boss (or boss’ boss)
- A division reorganization
- A strategic review/repositioning
- A corporate/division de-layering
My all time favorite doesn’t make the sense these do: “A consultant said so”.
In any case, few people have any influence over these types of events. Even the CEO can be affected by job loss.He has a boss and terrible employment options too.
Unless you are the owner, you live by the sword.
The problem is that your retirement is on very fragile footing if you are 50. Most people this age need several years of uninterrupted earnings and savings to retire nicely. I know this was my plan.
If this happens early in an economic expansion you have hope. Right now it doesn’t feel like good time to be out of work—as if there is ever a good time.
In either case it makes sense to have a very detailed plan for what to do.
Here’s my high level plan to survive and thrive after you’re fired:
1. Have a Low Cost Location as an Alternative Place to Live
Having an alternate place to live serves several functions:
- You increase your runway before you deplete your savings.
- You change your environment to one where you better control expenses.
- You put yourself someplace where you can focus without distraction.
- You disengage from the mindset of your old tribe.
- You meet new people who can give you different perspective.
So, take a fresh white piece of paper. Think of where you may want to live. Then go to Numbeo’s Cost of Living Comparison. Compare where you currently live with where you may want to.
My rule of thumb is that the number they display is about 40% of what it will cost my family. I have a wife and two elementary school aged kids. The 4 most important things to compare (in order) are: rent, food, utilities, and disposable income.
Rent and utilities are obvious. They are the most important expenses you will have except for transportation and food. Presumably you will be able to quickly lower your transportation costs.
Disposable income will give you an idea of how “rich” you will feel relative to the local population. This can give you comfort on your ability to splurge. Also, total index costs don’t always exist and you can use this number as a benchmark.
I suggest you aim for $1500-$2000 per month. This will mean you may end up spending $3750-$5000 per month when normalized for a family.
I live on this site and I always had a tab on Chrome open with it. I have looked at many cities tons of times to compare different costs. It’s fun to do.
You will find some expenses aren’t perfectly correct. But the bias is likely to exist across all of the data. You can test your assumptions later.
2. Have Two Years of Savings in at Least Two Different Bank Accounts Than You Usually Use
I run my household expenses from three bank accounts I have accumulated over many years. Two accounts are really active for my wife, our household, and me.
I opened two additional checking accounts to put savings dedicated to my contingency plan. These accounts have no other connection to me financially —credit cards, lines of credit, etc. They earn virtually no interest either.
To these banks I am a customer in good standing. I check balances online. I have tested their wire transfer capabilities.
Here’s the bombshell: I had some outstanding credit card debt and lines of credit while I funded them. This debt ranged from 5.99% to 17.99%.
Most financial planners would revolt at this idea. They would call this reckless or uneconomic, or plain stupid. But I decided to manage my debt while I built my contingency fund.
I did this for the sole purpose of having certainty of my fallback plan. The interest expense was just a cost of implementation.
Should anything have happened during the savings period I would have had some amount of money in the bank. Had I been paying the debt down first I may not have had anything to fall back on.
A plan is about peace of mind. It’s personal. It has tradeoffs and costs.
Today this debt is extinguished and I have my contingency savings. These accounts are isolated from my daily activities. I am never tempted to touch them.
I have wired money in and out. I have built a solid track record with two new financial institutions.
It’s almost like I have built an alter ego I can assume if I need to.
3. Have Alternative Entrepreneurial Ventures Incubating
I have a day job I really enjoy. The sad truth is that it can end for me any day. I have little control over this and so do most corporate employees.
I’d go so far as to say that the longer the run you have had at your job, the higher the likelihood is it will end.
Also, accumulated savings earn nothing today invested in safe assets.
I believe my early “retirement” will likely require me to have an income. My choices will be that I can work for a much reduced wage or on projects I love. I choose the latter.
I have considered working for non-profits and in my industry (at a much reduced rate). These choices don’t thrill me.
They also tie me down geographically. This is a deal killer for me. I want to be free to travel and live where I want, especially where I can get good value.
So I have decided to look for things to work on that excite me. For me this is building online businesses, buying established online businesses, investing/improving real estate, and consulting.
My goal has been to aggressively invest my time and build these incomes sources. I treat my capital as a very scarce resource. I never touch my contingency fund.
I would like to build as many income streams as possible. I don’t want them to be correlated to each other. I’m sure they all won’t be equally productive.
I could easily fill up my day pursuing my interests. I now have income from several of these activities every day. I keep looking for new ideas and improving existing ones.
Today the tables have turned for me. I make the choice to go to work for my employer or devote my full time to my side hustles.
That’s pretty cool!
4. Prepare the Narrative For Your Job Loss and Departure
If you have worked for any significant time in one profession you likely have a public image and deep private and personal connections. This is doubly true if you have a long tenure with one firm.
We have all seen the looks on the faces of those who have been fired. We have watched them go doe eyed to outplacement services to get help. We have gotten their sheepish calls to have a cup of coffee or lunch.
This is a rough way to be thrust prematurely into “retirement”. It’s painful to watch.
Conversely, I have seen people end long careers on their own terms. They have announced their plans well before their departure. By the time they leave they having everything sorted out and in order. The company even begs them to stay a touch longer.
Some are so well prepared they scarcely have time for a celebratory party before they move on to the next chapter of their life. They are already living their new life in their minds while they finish up.
This is how I want to ride into my corporate career sunset!
Unfortunately, on my first attempt to leave to corporate world I failed at this. I had chosen a more entrepreneurial activity—consulting— and I did not prepare my story well.
I had a very high profile job. People knew well my position. I had earned a reasonable amount of respect for myself. People close to me knew I was deeply unhappy. But my story didn’t really make sense to those around me.
Why give up all of the obvious trappings of success? Why give up the steady income? Why give up?
My best answer was that I wanted to be more of an entrepreneur. I wanted to be my own master. I wanted the unlimited upside working for myself.
But I became “That Guy”—the one who was either calling for lunch or always free. I was in the same industry and looking for business. It was a difficult transition. The conversation always came back to why I left a great job.
My personal life was even more blurred. I was living in the same apartment and hanging out with all of the same friends.
I never established a decent narrative.
Nine months into this experiment I was offered a job 7000 miles away. I was to build a new division. My family could experience a new culture. This part of the world was in rapid growth mode.
While shocked, people were excited for me. Friends of my wife had spent time there and spoke glowingly about it.
I can honestly say the enthusiasm was unanimous. I think some folks were even jealous.
This was a totally transformative event for me. I shamelessly posted updates from exotic airports and hot spots on Facebook. Now I was having fun!
Finally I had a narrative that was exciting. It was believable and credible. In a sense I rescued some part of my dignity.
My wife knew my struggle and had the most succinct appraisal, “Moving overseas is not failing”!
The best narrative comes from knowing the outcome and working backwards. If you have the plan, you have the narrative.
5. Do a Walkthrough of Your Departure and Repositioning
Recently I took my family on vacation to a city I would like to be my first stop in my new life. I positioned the visit to this city as the second week of a 2 week vacation. I booked a great hotel that was the same brand as the first week of the trip. My wife and kids had a list of things they wanted to do and places they wanted to see.
I had an additional agenda item in that I wanted to see if I could actually live there.
Since this city is a wonderful vacation spot I could see if my family would like it. I also could explore the facets of the city that would be important for longer term living- schools, business climate, and housing.
I had checked Numbeo so many times I knew the line items by heart. I contacted a local relocation service and utilized their free resources and I spoke to them about others questions. I watched YouTube videos on a variety of local events.
Suffice it to say that I believe I had done everything I could do except visiting. So I did.
Fortunately, it has all of the things I need to be happy:
- It’s in a dynamic growing region.
- There are great private schools that are not expensive.
- The housing alternatives are terrific.
- There is an active business community centered on technology.
- My family can easily live on $4000 per month here.
My walkthrough included visiting two schools, three rental houses, two co-working spaces, and a bunch of local coffee shops and restaurants. I checked prices relentlessly. I spoke to locals at every opportunity.
For many people the departure to another city will have a lot more hassles than it will for me. Since we have recently relocated we are traveling light. De-cluttering and disengaging is an art that requires a great deal of thought and planning.
If you have not relocated recently this can be daunting. There are a lot of moving parts. It’s only easy once you have done it!
My wife is an expert on the household piece of this and I have tackled the financial/economic side. These are really just details. It’s the mindset that is critical.
The End Result
All 5 of the steps I described are complex. They each raise at least as many questions as I have tried to discuss:
- How can you be sure of the location you chose?
- How can you develop a contingency fund when you were cash flow negative?
- What are the best ways for to develop an income stream?
- I don’t think my “narrative” will be believable.
- What are the mistakes people make in relocating and repositioning?
These questions and many more can be tackled one at a time. Make the commitment to make a plan. Create certainty for your own situation. Peace of mind is a wonderful foundation for making great things happen.
I have spent thousands of hours and thousands of dollars researching the plan I have outlined. I have developed resources to tackle many of the obvious questions.
My most valuable advice has come from my mentors as they speak from true experience. I’m happy to share our collective wisdom with you. Our No Nest Egg Retirement Plan Community is the place to learn. Click here to get started.
Ian Bond is a private banking senior executive with over three decades of experience in wealth and asset management with Goldman Sachs, Credit Suisse, and Citigroup. He has built major businesses on four continents.
Despite his professional responsibility for assets over $100B and revenues over $1B, after the 2008 crash Ian was personally going broke. Within five years he destroyed his debt, became an expat in 2014, and built multiple streams of income to fund his imminent retirement. Ian is also the founder of MyRetirementRehab.me created to help other executives and professionals rehabilitate their finances and make a prosperous, enduring retirement a reality.