Should I quit my job?
April 15, 2019 11:25 PM Subscribe
I have come into a significant amount of money, and am thinking about quitting my job. What are some of the things I should be thinking through before making the decision?
I am currently working in a profession that I chose because of earning potential and a misguided notion of what the profession would actually entail. I am only a handful of years into my career, and as I suspected from very early on in grad school, this job is not the right fit for me. I find myself unnecessarily stressed a lot of the time, exhausted after work, and find the content of the work itself dissatisfying.
Now, the money. A few months ago I came into over a million dollars. I haven't done anything with the money since it's come into my hands, but I am seriously thinking about quitting my job. I would like to take time to figure out what I would like to do. This might involve a few years of volunteering with different community organizations, and potentially, if it seems right, another stint at grad school. Ultimately, I would plan on returning to the work force, hopefully with a job that feels like the right fit for me and that adds rather than takes away from my quality of life. Is there anything I'm not thinking about here? Or other things I should be thinking about before I make this decision?
Extra question: how do I explain to people why I'm quitting?
I am currently working in a profession that I chose because of earning potential and a misguided notion of what the profession would actually entail. I am only a handful of years into my career, and as I suspected from very early on in grad school, this job is not the right fit for me. I find myself unnecessarily stressed a lot of the time, exhausted after work, and find the content of the work itself dissatisfying.
Now, the money. A few months ago I came into over a million dollars. I haven't done anything with the money since it's come into my hands, but I am seriously thinking about quitting my job. I would like to take time to figure out what I would like to do. This might involve a few years of volunteering with different community organizations, and potentially, if it seems right, another stint at grad school. Ultimately, I would plan on returning to the work force, hopefully with a job that feels like the right fit for me and that adds rather than takes away from my quality of life. Is there anything I'm not thinking about here? Or other things I should be thinking about before I make this decision?
Extra question: how do I explain to people why I'm quitting?
You may or may not be interested in this, so take it or leave it, but: for a million dollars, and with some good scouting, you could get, say, two rental properties in Philly that make $3000/month each. (I recommend Philly because it's currently undervalued and is rapidly appreciating, and in general it has lower property prices than elsewhere on the East Coast, while still having fairly high rents; I did a whole lot of research before purchasing my Philly property, and I now own a property with the specs in the first sentence.) You'd be able to buy them outright without having a mortgage, which would mean that aside from maintenance, you'd have pure profit each month (call the profit $5000, so $60k/year), as well as the growing equity as the property values appreciate (tens of thousands a year). Frankly, if I were you, I'd stick with my job another couple of years and buy 5 or 6 properties (via mortgages) in a market like Philly, and quit my job when it was clear that things were stable and profitable, and then you'd really be set for life.
I say this because I think that having an income stream like this would be enormously helpful as you start to explore what you want to do. You could obviously do something similar by investing in the stock market (say, Vanguard), but then in years when the market goes down (as it may soon), you're left with nothing to live on. The nice thing about rental property is that the monthly income is relatively insulated against recessions as people still need a place to live regardless (in fact, potentially more people want to rent during a recession than when the economy is great). The only downside is that this would involve either moving to Philly (or wherever) to take on the light job of managing your property, or paying a property manager 10% to do it (which I believe is tax deductible and which may be well worth it for you). This would give you tons of stability and freedom to take your time figuring out what you want to do - if anything paid.
I say that because, frankly, in my opinion, as someone with too many degrees and who has had a dilemma similar to yours: grad school is largely a waste of time, and almost all jobs are largely boring. That's why they pay you - because most of the time, you wouldn't do it otherwise. With a million dollars, why not create a situation where you don't *have* to work, and so are at liberty to do what you are passionate about, for free, and deploy your skills charitably with things that interest you. The best way to do this is to create a solid income stream for yourself, and I would suggest property in a rapidly-appreciating market with high rental incomes. MeMail me if you'd like to discuss further.
posted by ClaireBear at 12:36 AM on April 16, 2019 [18 favorites]
I say this because I think that having an income stream like this would be enormously helpful as you start to explore what you want to do. You could obviously do something similar by investing in the stock market (say, Vanguard), but then in years when the market goes down (as it may soon), you're left with nothing to live on. The nice thing about rental property is that the monthly income is relatively insulated against recessions as people still need a place to live regardless (in fact, potentially more people want to rent during a recession than when the economy is great). The only downside is that this would involve either moving to Philly (or wherever) to take on the light job of managing your property, or paying a property manager 10% to do it (which I believe is tax deductible and which may be well worth it for you). This would give you tons of stability and freedom to take your time figuring out what you want to do - if anything paid.
I say that because, frankly, in my opinion, as someone with too many degrees and who has had a dilemma similar to yours: grad school is largely a waste of time, and almost all jobs are largely boring. That's why they pay you - because most of the time, you wouldn't do it otherwise. With a million dollars, why not create a situation where you don't *have* to work, and so are at liberty to do what you are passionate about, for free, and deploy your skills charitably with things that interest you. The best way to do this is to create a solid income stream for yourself, and I would suggest property in a rapidly-appreciating market with high rental incomes. MeMail me if you'd like to discuss further.
posted by ClaireBear at 12:36 AM on April 16, 2019 [18 favorites]
Please do NOT buy property with your money, unless you have a good understanding of finances, valuations and risk. You need to have a good grasp of your finances and jumping head first into property (highly risky, highly leveraged, undiversified) is a financially poor choice. There's a lot of discussion in the previous comment about profit, but no discussion of yields or risk.
There is a lot of material in the financial independence (FIRE) movement which is relevant to your situation. Basically, its a style of living in which people save up and keep their expenses as reasonably minimal as possible, in order to have a early retirement.
You may not need to keep your expenses minimal, but you may be interested in people's ideas about early retirement: what to do, will I get bored, do I have enough money, if I get out of the rat race now can I get back in, how do I invest my money, what is the 4% rule, insurance for early retirees, where to live etc.
Reddit financial independence forum is a good place to start but may be a bit overwhelming.
There was a question recently about what to tell people about early retirement, especially if the person is really young. I thought the best answer was, "Oh, I'm now freelancing, less hours I know, but I'm much happier now."
Madfientist has several excellent podcasts about early retirement planning specifically:
- Michael Kitces – The 4% Rule and Financial Planning for Early Retirement
- James Clear – Atomic Habits and Building a New Identity After Retirement
- Mad Fientist – Valuable Lessons from My Second Year of Freedom
posted by moiraine at 1:32 AM on April 16, 2019 [44 favorites]
There is a lot of material in the financial independence (FIRE) movement which is relevant to your situation. Basically, its a style of living in which people save up and keep their expenses as reasonably minimal as possible, in order to have a early retirement.
You may not need to keep your expenses minimal, but you may be interested in people's ideas about early retirement: what to do, will I get bored, do I have enough money, if I get out of the rat race now can I get back in, how do I invest my money, what is the 4% rule, insurance for early retirees, where to live etc.
Reddit financial independence forum is a good place to start but may be a bit overwhelming.
There was a question recently about what to tell people about early retirement, especially if the person is really young. I thought the best answer was, "Oh, I'm now freelancing, less hours I know, but I'm much happier now."
Madfientist has several excellent podcasts about early retirement planning specifically:
- Michael Kitces – The 4% Rule and Financial Planning for Early Retirement
- James Clear – Atomic Habits and Building a New Identity After Retirement
- Mad Fientist – Valuable Lessons from My Second Year of Freedom
posted by moiraine at 1:32 AM on April 16, 2019 [44 favorites]
Just to support my comment above (edit window closed), as an illustration, buying two properties for US$ 1 million and getting a pure profit of US$ 60,000/ year is only 6% in yield. There are better returns in index funds for a lot less risk. Please speak to a financial adviser before making large purchases.
posted by moiraine at 1:52 AM on April 16, 2019 [20 favorites]
posted by moiraine at 1:52 AM on April 16, 2019 [20 favorites]
Make a plan to figure out how you can use that money wisely. Someone I know inherited a fair amount of money, a bit less than that, and was dead broke at the end of 7 years or so because the person had never created any kind of a spending plan and just kind of did what they wanted without thinking ahead much until they looked up and went, oops. I'm poor again. Shit.
If your goal is to never work again (which I would find boring but lots of people enjoy never working for money and have way more hobbies than I do), that probably requires a different approach than having a goal to skip work for several years while you decide what career, profession, or boring basic job might satisfy you. If you aren't sure yet, that is fine, too. Regardless, make a plan that helps protect the money you are not using for day-to-day life.
I once quit a job after getting enough money from my mom to pay my housing costs for 6 months. It gave me the cushion I needed to quite a staff job and become a freelancer to see if that would work for me. I told my boss that was why I was quitting, and he told everyone else and later I regretted telling him or anyone else that. People are often odd about money and not always as happy for your good fortune as one might expect. If I were doing it again, I would not share that info. I would simply say the thing that companies say all the time: A new opportunity had opened up that was going to let me (become a freelancer, world traveler, stay-at-home X, start graduate school, or simply take a break from working for a while) and I had decided to take it. Congratulations, and good luck!
posted by Bella Donna at 2:48 AM on April 16, 2019 [8 favorites]
If your goal is to never work again (which I would find boring but lots of people enjoy never working for money and have way more hobbies than I do), that probably requires a different approach than having a goal to skip work for several years while you decide what career, profession, or boring basic job might satisfy you. If you aren't sure yet, that is fine, too. Regardless, make a plan that helps protect the money you are not using for day-to-day life.
I once quit a job after getting enough money from my mom to pay my housing costs for 6 months. It gave me the cushion I needed to quite a staff job and become a freelancer to see if that would work for me. I told my boss that was why I was quitting, and he told everyone else and later I regretted telling him or anyone else that. People are often odd about money and not always as happy for your good fortune as one might expect. If I were doing it again, I would not share that info. I would simply say the thing that companies say all the time: A new opportunity had opened up that was going to let me (become a freelancer, world traveler, stay-at-home X, start graduate school, or simply take a break from working for a while) and I had decided to take it. Congratulations, and good luck!
posted by Bella Donna at 2:48 AM on April 16, 2019 [8 favorites]
JZig is totally right about the health insurance part and also the isolation part of working solo. MeMail me if you ever need tips about how to fight that isolation.
posted by Bella Donna at 2:51 AM on April 16, 2019
posted by Bella Donna at 2:51 AM on April 16, 2019
A million dollars is enough to quit your job and persue your interests. It's a great freedom. Planning to do something meaningful is also idea imo. Enjoy and don't feel guilt quitting.
However, totally meet with a financial advisor. Buying all property is a bad idea, because if property values drop, you lose a lot of your wealth. A financial advisor can help you diversify your investments and make a spending plan.
posted by Kalmya at 4:34 AM on April 16, 2019 [6 favorites]
However, totally meet with a financial advisor. Buying all property is a bad idea, because if property values drop, you lose a lot of your wealth. A financial advisor can help you diversify your investments and make a spending plan.
posted by Kalmya at 4:34 AM on April 16, 2019 [6 favorites]
Short answer? Yes. Longer answer, yes after you have a plan to manage the money and deal with insurance, etc.
Talk to financial advisers, read up on managing money, and take your time. Park the money somewhere safe for now, do not spend any significant chunk of it or buy anything flashy, etc. Stick to your current lifestyle and level of spending (or, you know, dial it back if you're spending beyond your means currently).
Unless you have a burning desire to study something, I'd forget about grad school or whatever.
You mentioned volunteering with community organizations. Let me suggest a twist on that - find an organization you believe in that offers health care and work for them. You can afford to take a low salary, but if you're U.S. based the healthcare is still very important. A million dollars is a lot of money, but if you ever have a significant health issue without insurance, it could eat up quite a bit of that.
Since your interests and so forth aren't part of your details it's hard to suggest anything specific. If it were me, I'd be looking at social justice organizations or animal (cat) rescue, or some combination of the two. But something that leaves enough time for painting and reading.
Extra question: how do I explain to people why I'm quitting?
You've decided you'd like to do something else. Whatever you do, I would avoid disclosing this to anybody you don't deeply, deeply trust. And even then...
Note that I'm looking at your situation as a person who's nearing 50 and expects to be part of the workforce until somewhere north of 70. If I'm lucky I might be able to retire for 10, maybe even 15... minutes.
posted by jzb at 5:00 AM on April 16, 2019 [4 favorites]
Talk to financial advisers, read up on managing money, and take your time. Park the money somewhere safe for now, do not spend any significant chunk of it or buy anything flashy, etc. Stick to your current lifestyle and level of spending (or, you know, dial it back if you're spending beyond your means currently).
Unless you have a burning desire to study something, I'd forget about grad school or whatever.
You mentioned volunteering with community organizations. Let me suggest a twist on that - find an organization you believe in that offers health care and work for them. You can afford to take a low salary, but if you're U.S. based the healthcare is still very important. A million dollars is a lot of money, but if you ever have a significant health issue without insurance, it could eat up quite a bit of that.
Since your interests and so forth aren't part of your details it's hard to suggest anything specific. If it were me, I'd be looking at social justice organizations or animal (cat) rescue, or some combination of the two. But something that leaves enough time for painting and reading.
Extra question: how do I explain to people why I'm quitting?
You've decided you'd like to do something else. Whatever you do, I would avoid disclosing this to anybody you don't deeply, deeply trust. And even then...
Note that I'm looking at your situation as a person who's nearing 50 and expects to be part of the workforce until somewhere north of 70. If I'm lucky I might be able to retire for 10, maybe even 15... minutes.
posted by jzb at 5:00 AM on April 16, 2019 [4 favorites]
Quitting the job you don't enjoy is moving away from something. You don't know what to say to people because your plans for moving towards something are not well defined. Sit tight, if you can, while you identify the next thing more specifically. See if you can go part time.
If you follow the 4% rule, which is popular, you'd have 40,000/year and adjust it for inflation, and it will basically have the same buying power. 40K year has a status value; be sure you're okay with that status. Nobody thinks they care about their social status, but everybody else does care.
Social Security retirement money is dependent on work income. Social Security Disability requires that you have worked for 20 of the last 40 quarters. Check on the details, but build into your planning something for disability. People get hit by buses, metaphorical and real.
Get professional, fee-based, financial advice. As soon as possible.
Some people like going to school; grad school is not a terrible idea. Volunteering may not provide enough structure and interest.
posted by theora55 at 5:34 AM on April 16, 2019 [5 favorites]
If you follow the 4% rule, which is popular, you'd have 40,000/year and adjust it for inflation, and it will basically have the same buying power. 40K year has a status value; be sure you're okay with that status. Nobody thinks they care about their social status, but everybody else does care.
Social Security retirement money is dependent on work income. Social Security Disability requires that you have worked for 20 of the last 40 quarters. Check on the details, but build into your planning something for disability. People get hit by buses, metaphorical and real.
Get professional, fee-based, financial advice. As soon as possible.
Some people like going to school; grad school is not a terrible idea. Volunteering may not provide enough structure and interest.
posted by theora55 at 5:34 AM on April 16, 2019 [5 favorites]
A million dollars is, sadly, not in "quit your job and travel" territory.
It's enough that you could set it aside for retirement and not need to contribute more, that is, you could live off of your present earnings without need to save.
Alternatively, the 'early retirement' rule of thumb is that you can draw it down at about 3% per year, if you want it to last your lifetime. That's $30k/year, with no employer health care. It'ss enough to move to Kansas and never travel, for the rest of your life, but.
In addition to moraine's links, hie thee to Bogleheads, and read their collective wisdom on managing a windfall. Step 1: hurry up and do nothing for a while.
posted by Dashy at 5:45 AM on April 16, 2019 [15 favorites]
It's enough that you could set it aside for retirement and not need to contribute more, that is, you could live off of your present earnings without need to save.
Alternatively, the 'early retirement' rule of thumb is that you can draw it down at about 3% per year, if you want it to last your lifetime. That's $30k/year, with no employer health care. It'ss enough to move to Kansas and never travel, for the rest of your life, but.
In addition to moraine's links, hie thee to Bogleheads, and read their collective wisdom on managing a windfall. Step 1: hurry up and do nothing for a while.
posted by Dashy at 5:45 AM on April 16, 2019 [15 favorites]
I have a friend who started, with her husband, an early tech company. They sold for 25 million more than a decade ago, and they later divorced. She was 50. She has a core of financial planners and is not flamboyant, but has a lifestyle she wants to maintain (apt in NYC, home in London she received from the marriage, first-class travel, etc.) and she does everything she needs to to maintain the capital. She focuses on preserving capital and lives off investments. You are not in this situation, unless you want to live extremely simply.
Keep in mind that if you quit working and quit contributing to Social Security for the rest of what would have been your working life, you will not have that safety net should your financial plans not work out.
Also agree with Dashy. I'm staring at retirement, with more than a million in investments, and hesitating to retire. Cityboy and I want to be able to continue living in a similar middle class fashion, occasional travel and indulging grandchildren for many years to come. And that's with knowing Social Security is also there for me.
Not sure where you are in your life - do you own property? Have children? Your question makes me suspect not. Without income how will you live off your investments if you want to get married, buy a house, send a child to college? A million is a lot of money, but it's not that much.
posted by citygirl at 7:00 AM on April 16, 2019 [2 favorites]
Keep in mind that if you quit working and quit contributing to Social Security for the rest of what would have been your working life, you will not have that safety net should your financial plans not work out.
Also agree with Dashy. I'm staring at retirement, with more than a million in investments, and hesitating to retire. Cityboy and I want to be able to continue living in a similar middle class fashion, occasional travel and indulging grandchildren for many years to come. And that's with knowing Social Security is also there for me.
Not sure where you are in your life - do you own property? Have children? Your question makes me suspect not. Without income how will you live off your investments if you want to get married, buy a house, send a child to college? A million is a lot of money, but it's not that much.
posted by citygirl at 7:00 AM on April 16, 2019 [2 favorites]
If you follow the 4% rule
The 4% rule is based on the idea that you have roughly 30 years of life left, it's not safe for someone in their 20s or early 30s. It's also based on an era of American exceptionism, which may not be a safe assumption going forward.
While a million dollars sounds like a lot of money, it's not enough to retire on at that age, unless you're willing to take a lot of risk should you develop an expensive illness or cause an accident that leaves you liable for a lot of damages. It would also mean not building up the safety net of Social Security.
If you hate your career, by all means, pivot into something you do enjoy (and maybe take a year now to travel while you're young), but I'd encourage you to find a career you do like for at least 10-15 years.
posted by Candleman at 7:10 AM on April 16, 2019 [9 favorites]
The 4% rule is based on the idea that you have roughly 30 years of life left, it's not safe for someone in their 20s or early 30s. It's also based on an era of American exceptionism, which may not be a safe assumption going forward.
While a million dollars sounds like a lot of money, it's not enough to retire on at that age, unless you're willing to take a lot of risk should you develop an expensive illness or cause an accident that leaves you liable for a lot of damages. It would also mean not building up the safety net of Social Security.
If you hate your career, by all means, pivot into something you do enjoy (and maybe take a year now to travel while you're young), but I'd encourage you to find a career you do like for at least 10-15 years.
posted by Candleman at 7:10 AM on April 16, 2019 [9 favorites]
You should, quite probably, quit your job, though also quite probably not today. What this money gives you is a lot of freedom and flexibility. It can allow you the room to take a job that pays less, for starters, but that you like more - forgetting the 3-4% rules listed above, let's say you take just 2% of that money every year - that's 20k a year (rough numbers, of course taxes) on top of whatever else you might make. That's a pretty solid baseline for "rent and food" before accounting for the rest of your salary. It's a buffer between jobs. It is a really fantastic safety net. So read a lot of the links above, think about what a single next step might be, and then, maybe in a few weeks or maybe in a few months, with a next step set...go for it! You now have the support you need to not stay in a job you hate.
posted by annabear at 7:47 AM on April 16, 2019 [2 favorites]
posted by annabear at 7:47 AM on April 16, 2019 [2 favorites]
Hi. I was in similar circumstances a few years ago. I suspect I'm older than you, though. If a job is giving you that much stress I say it's costing you. It takes a toll on your mental and physical health. To me, in hindsight, I wish I would've been able to quit the job that eventually caused me to have shingles in my 40s. It was after that when I received an inheritance and decided to work part time and live off that income and dividends and investment income. I try to keep the principle for retirement. I now have time to spend in nature and volunteering with animal rescue. I'd first meet with a couple financial advisors to ask them a series of questions. But don't sign with anyone right away. You may not want to go that route. Investing is always a gamble. Take time to consider what your next steps will be. And for Lord's sake don't tell your friends of your increased wealth. All but my closest friends don't know of mine and people don't ask either. If it comes up I say that I'm fortunate to be able to work part time, which is good because I have chronic illnesses which make full time work difficult (true). You may feel self conscious but it's no one's business and you can think of a polite response should someone be blunt enough to ask. Some people will be envious, you can't escape that. Treat your good friends to meals and day trips or whatever sometimes. Good deeds like that will mean a lot. However, I caution you about loaning money to all but your most trusted few. And even then, it should be a written contract. Good luck and enjoy.
posted by DixieBaby at 8:17 AM on April 16, 2019 [2 favorites]
posted by DixieBaby at 8:17 AM on April 16, 2019 [2 favorites]
One cliched thing wealthy parents say to their financial advisors is: "I want my children to have enough that they can do anything, but not so much that they can do nothing." $1 million in your 20's or 30's is pretty much that amount. It is more than enough cash to quit, and plan for a period of several years of travel, edifying work, or further education. This may lead to other opportunities that you can't forsee now, and changes in your lifestyle you can't plan for.
You're young-ish, made no mention of a child or partner, and are looking to change careers as well. This is a complete no-brainer to do this now. If you wait, your lifestyle costs will creep up, you may meet someone and start a family. It may not take long to get to a point where $1 million doesn't seem like a lot of money.
I say this as a financial planner with a CFP: The financial planning education and planning process are built around a set of concrete goals, and it's hard to plan for a life like yours that might have a lot of flux. I think there are a lot of planners out there you might sit down with and they're going to ask you about when you want to retire and how big a house you want to buy and I don't sense that those questions compute for you right now. So a proper plan won't be valuable to you, but some good advice would be. (Especially around how to invest the windfall, and any retirement savings/company stock from your employer.)
If you quit your job, remember that you still have to get up most days, maybe even every day, and push forward the project of your life. That may involve further education, planning for travel or volunteering, starting a business, something. It's fine to start this period with a bit of a rest, but it's essential to develop a sense of purpose as time goes on.
Even with the cash in the bank, your biggest personal asset is your human capital and the productive time you have in your career. Spending on useful experiences, skills and education has decades to pay off, and almost certainly will as long as you're mindful of the paragraph above.
Finally, do not buy real estate. Small time Property Management is a really frustrating part time job that's hard to take long vacations from, and initially requires painful and expensive lessons in building inspection, negotiation, skilled trades, and project management. It's fine if you are ready to settle down, have some hard skills in that area, and want to do the work, but the notion of "passive income from real estate" is one of the great lies of personal finance.
posted by thenormshow at 8:52 AM on April 16, 2019 [8 favorites]
You're young-ish, made no mention of a child or partner, and are looking to change careers as well. This is a complete no-brainer to do this now. If you wait, your lifestyle costs will creep up, you may meet someone and start a family. It may not take long to get to a point where $1 million doesn't seem like a lot of money.
I say this as a financial planner with a CFP: The financial planning education and planning process are built around a set of concrete goals, and it's hard to plan for a life like yours that might have a lot of flux. I think there are a lot of planners out there you might sit down with and they're going to ask you about when you want to retire and how big a house you want to buy and I don't sense that those questions compute for you right now. So a proper plan won't be valuable to you, but some good advice would be. (Especially around how to invest the windfall, and any retirement savings/company stock from your employer.)
If you quit your job, remember that you still have to get up most days, maybe even every day, and push forward the project of your life. That may involve further education, planning for travel or volunteering, starting a business, something. It's fine to start this period with a bit of a rest, but it's essential to develop a sense of purpose as time goes on.
Even with the cash in the bank, your biggest personal asset is your human capital and the productive time you have in your career. Spending on useful experiences, skills and education has decades to pay off, and almost certainly will as long as you're mindful of the paragraph above.
Finally, do not buy real estate. Small time Property Management is a really frustrating part time job that's hard to take long vacations from, and initially requires painful and expensive lessons in building inspection, negotiation, skilled trades, and project management. It's fine if you are ready to settle down, have some hard skills in that area, and want to do the work, but the notion of "passive income from real estate" is one of the great lies of personal finance.
posted by thenormshow at 8:52 AM on April 16, 2019 [8 favorites]
Just as additional info on the rental property advice: you absolutely cannot count on the monthly rent as “pure profit.” For example, my landlord bought a three unit property three or four years ago and since has had to: buy a washer, dryer, a refrigerator, two dishwashers, two ovens, roof repairs, heater repairs, exterior repainting, work on the sewer line and on the balcony for code issues, completely renovate at least one full bathroom and one full kitchen, pay a gardener, replace all the locks, etc etc. I’m forgetting or not aware of certain things, I’m sure. So I strongly back the advice to see a fee-based financial planner and really do a model of your expenses and potential income for the next 5-10-20 years before committing to a plan of action.
posted by JenMarie at 8:56 AM on April 16, 2019 [1 favorite]
posted by JenMarie at 8:56 AM on April 16, 2019 [1 favorite]
A million dollars is, sadly, not in "quit your job and travel" territory.
Agree. I've been in similar circumstances (death of both parents over eight years, own a few properties with some money to run them) and am 50 with no kids and I put myself on work slowdown. I enjoy work slowdown. I still work but I get to be pickier and choosier about the work that I do. So the important parts for me are
- keeping my hand in the game of working somewhat, this is just important for me mentally, so I do it
- doing GOOD WORKS as often as possible. I really threw myself into community projects, making use of my free time to help people, this is also necessary
- professional people to make sure I am doing this right
- giving to charity, there's a lot of guilt, for me, associated with having money
Right now the money I do earn basically goes towards health insurance and rent in almost equal measure (I live somewhere cheap). If something happens to the market, I would seriously consider going back and getting a regular job. Having to think about things like "the market" angers me but not as much as having a regular job.
But I don't miss having a regular job, or hunting for one. Happy to talk more specifics privately if you want. For now, make sure the money is invested soundly and it's fine to just let it sit for a bit. Pay off your debts if you have them.
I wish I would've been able to quit the job that eventually caused me to have shingles in my 40s.
Amusingly, somewhat, I would up with shingles anyhow. There are no guarantees :D
What you tell people at work: You are going to grad school. It's simple, people won't argue with it, it's more or less true and it will nudge you to actually go to grad school.
posted by jessamyn at 9:01 AM on April 16, 2019 [8 favorites]
Agree. I've been in similar circumstances (death of both parents over eight years, own a few properties with some money to run them) and am 50 with no kids and I put myself on work slowdown. I enjoy work slowdown. I still work but I get to be pickier and choosier about the work that I do. So the important parts for me are
- keeping my hand in the game of working somewhat, this is just important for me mentally, so I do it
- doing GOOD WORKS as often as possible. I really threw myself into community projects, making use of my free time to help people, this is also necessary
- professional people to make sure I am doing this right
- giving to charity, there's a lot of guilt, for me, associated with having money
Right now the money I do earn basically goes towards health insurance and rent in almost equal measure (I live somewhere cheap). If something happens to the market, I would seriously consider going back and getting a regular job. Having to think about things like "the market" angers me but not as much as having a regular job.
But I don't miss having a regular job, or hunting for one. Happy to talk more specifics privately if you want. For now, make sure the money is invested soundly and it's fine to just let it sit for a bit. Pay off your debts if you have them.
I wish I would've been able to quit the job that eventually caused me to have shingles in my 40s.
Amusingly, somewhat, I would up with shingles anyhow. There are no guarantees :D
What you tell people at work: You are going to grad school. It's simple, people won't argue with it, it's more or less true and it will nudge you to actually go to grad school.
posted by jessamyn at 9:01 AM on April 16, 2019 [8 favorites]
Real estate: We recently considered doing the "buy some investment properties, renovate then rent them" thing. Going in to it; I have a lot of experience in renovations, I understand the building codes in my area, I know the folks at the permit office, I have qualified crews I can hire, and I already scoped and interviewed a management company.
And then my attorney ran me through some numerical possible scenarios, and I realized that I was putting myself in a position to not only lose my investment capital, but also real property like my home. And that's without being overly leveraged. Buying and flipping real estate sounds like easy money, but it really really isn't.
Were I you, I would find a financial advisor. Make sure they are a CFP, and abide by the fiduciary rule to work for your benefit and not the benefit of products they sell. Someone who deals with this sort of thing all the time is going to best be able to help you define and reach your goals.
posted by SecretAgentSockpuppet at 9:19 AM on April 16, 2019
And then my attorney ran me through some numerical possible scenarios, and I realized that I was putting myself in a position to not only lose my investment capital, but also real property like my home. And that's without being overly leveraged. Buying and flipping real estate sounds like easy money, but it really really isn't.
Were I you, I would find a financial advisor. Make sure they are a CFP, and abide by the fiduciary rule to work for your benefit and not the benefit of products they sell. Someone who deals with this sort of thing all the time is going to best be able to help you define and reach your goals.
posted by SecretAgentSockpuppet at 9:19 AM on April 16, 2019
It's easier to get a new job when you already have a job. I think if you invested the money, you could work with a financial advisor to determine:
(1) What can I expect, in interest annually, if I leave my principal alone?
(2) What amount of money do I need to live on comfortably?
(3) What salary do I need, combined with the interest on my principal, to be able to live a happier life with a job that I am happy at, which might pay less?
So for example, if you're making $60K a year right now and living comfortably, and you could expect $20K/year in interest on your million dollars invested or banked, you could afford to take a pay cut and get a job that pays you $40K/year and makes you happier.
You quit your job by saying, "I resign, effective [date]." You don't have to explain, but if someone asked, you could tell them you plan to get out of the widget business entirely. You get a new, lower-paying job by putting in your cover letter than you are a career-changer, which is how people who are overqualified get lower-paying jobs than what they had before without anyone raising an eyebrow.
posted by juniperesque at 9:45 AM on April 16, 2019
(1) What can I expect, in interest annually, if I leave my principal alone?
(2) What amount of money do I need to live on comfortably?
(3) What salary do I need, combined with the interest on my principal, to be able to live a happier life with a job that I am happy at, which might pay less?
So for example, if you're making $60K a year right now and living comfortably, and you could expect $20K/year in interest on your million dollars invested or banked, you could afford to take a pay cut and get a job that pays you $40K/year and makes you happier.
You quit your job by saying, "I resign, effective [date]." You don't have to explain, but if someone asked, you could tell them you plan to get out of the widget business entirely. You get a new, lower-paying job by putting in your cover letter than you are a career-changer, which is how people who are overqualified get lower-paying jobs than what they had before without anyone raising an eyebrow.
posted by juniperesque at 9:45 AM on April 16, 2019
Low-paying legal jobs are typically fairly-to-very satisfying compared to higher paying jobs.
OP should be aware that the legal jobs that are only modest-paying but satisfying--as opposing to being brutal mill-work, or heartbreaking underresourced public jobs in communities where people don't give a shit about one another--are quite competitive these days. You really can't expect to walk into one in the present environment, especially if you don't have an established track record of interest in the subject. However, some organizations, even some government agencies, will take on part- or full-time volunteers, and that could be a springboard to paying employment in that area in a few years (assuming OP finds it satisfying and worthwhile).
It sounds absurd to say that $1mil is not a lot of money, but, for a younger person, it's really not the kind that will allow you to dispense with paid employment indefinitely unless you're willing to take a really radical cut in lifestyle.
posted by praemunire at 10:41 AM on April 16, 2019 [2 favorites]
OP should be aware that the legal jobs that are only modest-paying but satisfying--as opposing to being brutal mill-work, or heartbreaking underresourced public jobs in communities where people don't give a shit about one another--are quite competitive these days. You really can't expect to walk into one in the present environment, especially if you don't have an established track record of interest in the subject. However, some organizations, even some government agencies, will take on part- or full-time volunteers, and that could be a springboard to paying employment in that area in a few years (assuming OP finds it satisfying and worthwhile).
It sounds absurd to say that $1mil is not a lot of money, but, for a younger person, it's really not the kind that will allow you to dispense with paid employment indefinitely unless you're willing to take a really radical cut in lifestyle.
posted by praemunire at 10:41 AM on April 16, 2019 [2 favorites]
So for example, if you're making $60K a year right now and living comfortably, and you could expect $20K/year in interest on your million dollars invested or banked, you could afford to take a pay cut and get a job that pays you $40K/year and makes you happier.
See, you actually can't, because of inflation. That $20K (and the $1m) get worth less and less every year if you're using most/all of the returns to support yourself. In the short run, this is not a problem, but it will become increasingly evident, say, a decade out. (This is why professional advice is helpful in a situation like this, when I often think it's not worth the cost.)
posted by praemunire at 10:42 AM on April 16, 2019
See, you actually can't, because of inflation. That $20K (and the $1m) get worth less and less every year if you're using most/all of the returns to support yourself. In the short run, this is not a problem, but it will become increasingly evident, say, a decade out. (This is why professional advice is helpful in a situation like this, when I often think it's not worth the cost.)
posted by praemunire at 10:42 AM on April 16, 2019
Depending on where you are, there may be, e.g., clinics run by the local bar association where you can gain experience and demonstrate commitment without the huge time commitment of a full-blown pro bono project, but you'd need to do it for a sustained period of time.
posted by praemunire at 11:47 AM on April 16, 2019
posted by praemunire at 11:47 AM on April 16, 2019
Consider getting out of the United States altogether. Your money will go a lot further most places.
And you don't have to explain why you're quitting to anyone : you're probably better off keeping the news about the windfall closely guarded under all circumstances.
posted by Sheydem-tants at 12:03 PM on April 16, 2019
And you don't have to explain why you're quitting to anyone : you're probably better off keeping the news about the windfall closely guarded under all circumstances.
posted by Sheydem-tants at 12:03 PM on April 16, 2019
I'm interpreting OP as asking should they quit their currant job (not quit working forever).
Try this: take a week's vacation (or a month-long sabbatical if you can!).
Rent yourself a room someplace nice and calming. Might be in your town, might be near a childhood friend, might be in Cabo.
Have a staycation to think this over. What would be fascinating for you?
You might decide to handle this in the way that most people handle job/career changes: Stay at your job, do the work, and find ways to explore new industry.
Or you might decide to quit, take a few months to travel or do some kind of residency program.
I think the way you go about this process of discovering the rigt way to spend your time will be similar to the process people without the security of money do it - time and exploration.
posted by jander03 at 1:08 PM on April 16, 2019 [1 favorite]
Try this: take a week's vacation (or a month-long sabbatical if you can!).
Rent yourself a room someplace nice and calming. Might be in your town, might be near a childhood friend, might be in Cabo.
Have a staycation to think this over. What would be fascinating for you?
You might decide to handle this in the way that most people handle job/career changes: Stay at your job, do the work, and find ways to explore new industry.
Or you might decide to quit, take a few months to travel or do some kind of residency program.
I think the way you go about this process of discovering the rigt way to spend your time will be similar to the process people without the security of money do it - time and exploration.
posted by jander03 at 1:08 PM on April 16, 2019 [1 favorite]
While considering options, play around with the Vanguard Retirement Calculator and the Bankrate compound interest calculator to visualize the compounding effect of a portion of that windfall--say 3/4 of the total, or $750k--over 15, 20, 25 years. The sooner you fire up the compound interest engine, the sooner you'll have options to start pulling from interest income. The 'Rule of 72' estimates the number of years needed to double your investment--at 5% interest, $750k doubles in just over 14 years. A 7% return will double it in ~10 years.
For example, by stashing that $750k into a target date index fund in your mid-late 20s, you can ride out the ups and downs of the economy while generating potentially 5-7% average annual return. Some years will be up, some will be down. Say you decide to keep $250k liquid for a few years of adventuring and education, then ease your way back into a satisfying career earning $50k/yr. You throw $5k a year into an IRA to top off your investments. If your funds yield just 5%/yr., and you target a soft retirement when you hit 50, your $750k initial investment will grow up to $2.0-$2.5 million, generating ~$4,000 /month (pre-tax) at 50--$4800 if you start drawing at 55, $6000/mo at 65. That's assuming you invested in a fund with very low expense fees (under 0.2%), like a Vanguard fund. This calculator gives you an idea of the huge chunk of change that one donates to fund managers who sell managed funds with high expense ratios.
posted by prinado at 10:26 PM on April 16, 2019 [3 favorites]
For example, by stashing that $750k into a target date index fund in your mid-late 20s, you can ride out the ups and downs of the economy while generating potentially 5-7% average annual return. Some years will be up, some will be down. Say you decide to keep $250k liquid for a few years of adventuring and education, then ease your way back into a satisfying career earning $50k/yr. You throw $5k a year into an IRA to top off your investments. If your funds yield just 5%/yr., and you target a soft retirement when you hit 50, your $750k initial investment will grow up to $2.0-$2.5 million, generating ~$4,000 /month (pre-tax) at 50--$4800 if you start drawing at 55, $6000/mo at 65. That's assuming you invested in a fund with very low expense fees (under 0.2%), like a Vanguard fund. This calculator gives you an idea of the huge chunk of change that one donates to fund managers who sell managed funds with high expense ratios.
posted by prinado at 10:26 PM on April 16, 2019 [3 favorites]
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If you're in the US and don't have a partner with it, health insurance is going to probably be your biggest financial concern. I compared Cobra, ACA/Obamacare, and private and I decided to stick with Cobra as long as possible, but you need to research what's best for you
It will help both your own sense of self and make it easier to describe what you're doing if you come up with a coherent plan for the next year. It doesn't need to be the Correct plan, just an Understandable one. For me my plan is "work towards getting a PhD and working on specific art projects, while contracting 2 days a week". There is a really good chance this plan will change, but it's what I say to other people
If you're like me, a substantial part of your social contact was through work. So, quitting and doing everything solo might make you feel very lonely. That's part of why Im doing contracting, it keeps me interacting with other people and keeps me up to date with my field. Also you may need to put more deliberate effort into seeing your friends after you quit.
Good luck!
posted by JZig at 11:45 PM on April 15, 2019 [4 favorites]