Tomorrow is February 1st, which is fourteen months from the day that I expect to leave my job financially independent & retired early (FIRE by Fifty). I thought I would close out each month between now and then with an update on my plans and the key activities I am focused on in my preparation.
First, I will note that the stock market has been very volatile over the last month. Although I have always been a long-horizon investor in my decision making, I tend to watch the market results every day. Especially the stock of the company I left a few years ago, because I have a lot of their stock options in my portfolio. Financially, I’m certainly independent today, but a 2008-type crash would have me moving into retirement with a lot less enthusiasm (and likely a concerned DW).
As a result, my key activity over the last 30 days has been building cash reserves, so that I can weather any storms that come our way. The plan we worked out with our financial advisor is that I build a cash reserve equal to a three years of our expected annual spending plan. That way we can hold tight in a down market. The good news is that I’ve been able to sell about 2,000 options at a very good price, as my former Megacorp finished 2014 solidly and is up 3.8% already in January. Good news for me, but strange because they are not doing well and laying off many former colleagues.
Additionally, I’ve been getting a handle on the details of my work benefits at my current Megacorp. I priced out identical medical insurance to my current plan through our state’s healthcare exchange. I wanted to know exactly what my cost would be next year as I leave a company with a great healthplan. (Regardless of your politics, you have to admit that ACA/Obamacare is a great enabler for those of us looking to retire early). In addition to healthcare, I also checked into dental coverage and found the same Delta Dental coverage I currently have.
Curiously, while my Megacorp employer claims that the value of the company coverage to our healthcare benefits is $18,000 a year, I found that I could buy comparable (if not identical) coverage for about $8,000 more. Works for me.
I’ve also been looking into the company’s 401k and annual bonus incentive. The company operates on a calendar fiscal year, but 12/31 doesn’t always sync with key financial payout dates. My FIRE escape date is 4/1/16 and what I found out is that I will be fully vested in the company match for the 401k when I’ve been with the company for exactly 3 years. That will be 2/11/16. Also works for me.
Annual bonus payments get paid out on 3/15 every year and the company has a “must be present to win” policy which means that you have to be employed on that date to get your bonus check. I didn’t see that policy on the company website, but I innocently asked some of the managers on my team about how it worked when they were talking about bonuses. They told me that every year there is a rush for the door on 4/1 for employees who turn in their two weeks notice on 3/15 to get their bonus deposit. Also works for me.
So here is my checklist for January of my last full year of working:
- Establish your FIRE date – on what exact date when will you retire early?
- Check against key payout dates at work to make sure you don’t leave money on the table
- Understand future healthcare coverage needs and factor the costs into your spending plan
- Build cash reserves to cushion 3 years of retirement spending against market swings
It’s becoming more fun to work my plan as I get closer to my FIRE date. I’m looking at 2015 as my last full year of work and will slide through the final 90 days when 2016 arrives. I made a 15 month calendar for my wall at work and highlighted my FIRE date in FIRE Engine Red 🙂
Image Credit: American Advisors Group CC License Flikr