My Story

Too Old to Hire, Too Young to Retire

It was February 24th, 2014. That was the day it happened to me. I was downsized with eighteen of my co-workers. Most of us had been with the company for fifteen years or more. I had been with the law firm I worked at for almost twenty-six years. I was fifty-four years old and just like that, I was a member of The Brown Parachute Club.

To say that I felt angry and betrayed is an understatement. Is this what I get for twenty-six years of loyal service? Without delving too far into the details, the law firm I worked for had suddenly found itself with a large financial deficit. The company needed cash and many of us earning the bigger paychecks (who were also, coincidentally, the older employees) became expendable.

At the time, I had planned on working at least ten more years before even thinking about Retirement. This illustrates the fallacy of Retirement Planning. You do as you’re told. You stash away the maximum allowable amount every year in your 401k or IRA. However, what do you do if you are suddenly out of work, and still ten years away from Retirement? I don’t remember attending a seminar on that subject, so I started this blog to hopefully provide some answers to that question.

The title, The Brown Parachute Club, is a tip of the hat to the legendary job-seeking guru Richard Bolles. His book, What Color Is Your Parachute? is a classic in the field of job-hunting. I have the 2012 edition. He updates and publishes this book every year. For the past 45 years! Now that is an amazing track record! His “Job Hunter’s Bible” is full of great information on how to find a job. More importantly for us in the “Over 55 Club”, it also goes into great detail on Finding Your Mission in Life (Appendix A). Essential reading if you are looking to reboot your career.

The Brown Parachute Club is the name I gave this blog for a reason. If you are allowed to retire from your job, it is said that you receive a “Golden Parachute” as part of your retirement package. If you’re let go from your job before Retirement, you get a “Brown Parachute”. As I mentioned before, the phenomenon of not making it to the finish line is being largely ignored by the financial industry and career planners.

However, according to a New York Times article, Laid Off, With Retirement Almost in Sight, there are over 2 million of us between the ages of 55 and 65 in this crappy club. Now you understand why I call it The Brown Parachute Club! Not only that, according to this article, the average time that someone 55 or older was unemployed was 52.2 weeks! Over 1 year!! Not only that, over 210,000 of us have given up looking for work entirely! If you do find a job, you’re looking at a pay cut of 30% or more and dropping to the bottom of the seniority ladder. Aren’t those some rosy statistics? To make matters worse, this article was published on January 6, 2012. Do you think that things have improved or gotten worse since then?

It occurred to me that a blog on this subject, with a potential audience of over 2 million people, might be worth writing. Since I was laid off, I have tried several different opportunities to start a new career. I drove for the ridesharing companies Uber and Lyft for a while. It is a lot of fun, and I got to meet new people every day. I provided a valuable service for folks, offering a valuable alternative to taking the bus or having to call a cab. I began driving for Uber & Lyft in November 2015. However, driving 6 hours per day (6am – 9am and 4pm – 7pm) took a toll on my car and my body. So, I recently started to look into alternative sources of income.

I’ve decided to make this a weekly blog, at least for now. These are some of the topics I plan on covering. CareerProductivity, Lifestyle, Side Hustle, and Work from Home articles. Then, with all the unexpected time you have on your hands, Volunteering and why you should consider doing it. And finally, as my readership increases, I hope to feature a Letter of the Month from one of my readers. It will tell their story and how they are dealing with early (forced) retirement.

That’s it for now. I hope you have enjoyed My Story. Please come back to learn more about the plague that is infecting the older job force in this country. Also, to hear how we can all help each other, by sharing opportunities and new ideas. I truly believe that we can enjoy this chance we have been given, to reboot our careers, and truly enjoy our remaining years in the workforce.

UPDATE: (Silver Lining! After searching for work that would allow me to maintain my semi-retired lifestyle and generate a REAL income, I was finally hired by Global Discovery Vacations! So Never Give Up!) 

If you like what you’re reading on TBPC, please leave a comment and share the website with your friends. Until next week, may your parachute fully deploy, and may you have a soft landing!

 

The Rule of 55

One Option You May Want To Check Out!

(Author’s Note:  I originally wrote this article not long after I launched TBPC. However, because of my association with Primerica at that time, I wasn’t able to publish it.  Since I have broken ties with Primerica, I can now post it.  I hope you find it enlightening and enjoyable.  – JL)

You’ve just been laid off from a job you’ve held for over 20 years.  This is no seasonal or temporary layoff.  This is the big “See ya, wouldn’t wanna be ya!” layoff.  You are suddenly a member of The Brown Parachute Club.  Now, what do you do?

Like everyone, you have certain financial responsibilities that were being met by your paycheck.  Just how are you going to meet those obligations now?  If you’re lucky, there will be a Severance Package.  And sure, there’s Unemployment Insurance, but that’s only going to pay you a small fraction of what you were earning.  Also, Unemployment payments will only begin once your Severance payments run out, so no double-dipping.

Well, this dark, horribly ugly cloud, does have a silver lining.  If you have been diligent with your retirement savings and have built a nice little nest egg, that egg can save your bacon.  What I am talking about here is raiding your retirement plan to pay off all of your debt.  I know this flies in the face of everything you have heard about retirement planning.  However, this isn’t retirement planning, it’s financial survival.  It’s just an option you may want to consider.

Full disclosure here.  I am NOT a Financial Advisor and I do NOT hold a Securities License.  That said, I can only tell you what I did.  I decided that paying off all our debt would be a great way to get a fresh start and reduce financial stress during the unemployment period.

Now for the bad news.  Paying off all of your debt by raiding your 401k may seem like a great idea, until you take Mr. Taxman into consideration.  Since the money I wanted to withdraw to pay off our debt had never been taxed, I was in for a cataclysmic shock.  The total amount of money I had to withdraw to pay off all of our debt had over 1/3 of it going to pay taxes!  Yikes!  The government will always get their cut.

After I finished channeling our Founding Fathers, by railing against the injustice of taxes and the tyranny of the crown, I realized it actually could have been a lot worse.  When I was researching whether or not to pull the trigger on this major reallocation of my retirement funds, I came across a little known rule.  The Rule of 55.

Apparently, the phenomenon we are experiencing, being laid off before retirement, is such a prevalent problem the IRS is giving us a break.  They have come up with a rule that allows you to withdraw money from your qualified retirement plan, WITHOUT having to pay the 10% penalty.  After the financial kick-in-the-teeth you just received from paying those taxes, this probably seems like small potatoes.  However, it will keep you from having to cough up thousands of dollars more to Uncle Sam in penalty fees.  Always a good thing.

Now for the second disclaimer of this article.  I recommend that you contact your tax specialist to verify whether you qualify for this exception.  You have to be 55 years old (or older) in the year that you are laid off from your job. You also qualify if you turn 55 in that year.  For more information about this rule, click on this link to view the IRS Topic 558 document.

It is completely up to you whether you choose to employ this debt reduction option.  I just know that since we have paid off our debt, there is a great relief and peace of mind that comes with knowing we are debt-free.  Our only bills each month now are food, gas, insurance and utilities.

Hopefully, this article has given you something to think about. As you face the uncertainty of early retirement, it’s nice to know you have some options.

If you like what you’re reading on TBPC, please leave a comment and share the website with your friends. Also, if you would like to be notified of new posts to this blog, please click on the “Follow” button in the lower right corner. Until next week, may your parachute fully deploy, and may you have a soft landing!