October 14, 2010
Dear Everyone:
The results of the infamous ROM 2 were posted
Wednesday morning.
(ROM=Resource Optimization Management; also called "downsizing" since it
is intended to reduce the size of the workforce.)
The president of the Information Technology Company sent out a
cheery little email late Tuesday announcing the results:
1738 positions filled
370 "colleagues" (approximately 18%) "left
standing"
(“Left standing” is a rather ignominious and
demeaning reference to the children’s game “Musical Chairs”.
Evidently, those “colleagues” were not “nimble” enough to keep
their jobs.)
What does that mean for me?
Last Monday, our soon-to-be-former manager (who was
also our "sponsor" in the ROM) asked me to meet with him in an
unoccupied office. I
thought, "Oh crap! This is
it." (If I was going to be
offered a job, I would have heard from the "job owner".)
Sure enough, he informed me that I was "left
standing", but that I was being offered a "transition job" of six
months. If I accepted, I
would continue working for the Company through next June and would be
eligible for "redeployment" until mid-August.
In the back of my mind, a bell was ringing, but I couldn't quite
hear it.
No one wanted me?
I "nominated" for five jobs, but no one wanted me.
Ouch.
I was stunned, naturally.
After all, I'm such a gem (I’m
certified, for God’s sake!)
A gem who gets 30 days paid vacation every year and will probably
retire in five to six years, but a gem nonetheless.
I went home and tried to think about what I could do.
I had considered all of this before, of course, but there’s no
way to prepare for the emotional impact of total rejection.
Just not “nimble” enough.
Options:
First and foremost--Medical and Dental Insurance:
Covered. I passed
that milestone over ten years ago.
The company will continue to pay the lion's share of the
premiums. I will also have
to pay part of the premiums, but I always have.
It's always been "withheld" from every paycheck.
It's part of the infamous "42%".
This is actually just a general yardstick.
If you want to know how much of your paycheck is "take home",
subtract 42%, or multiply by 0.58.
Next:
The company pension plan. If
you work for the company longer than five years and don't get fired "for
cause", you qualify. There's
a web page that will calculate what you can expect to get in the form of
a pension. (There's also a
phone number that you can call, which I did some weeks ago; they sent me
a printout of my "calculated benefit"):
About $3500 per month (minus about 42%) for the rest of my life.
Subject, of course, to inflation (in which case it could go up)
and to the discretion of the company, which could choose to “freeze” it,
or reduce it at any time.
You can live quite comfortably on $3500 per
month... in certain parts of
rural Georgia.
I read
Gone
with the Wind when I was a teenager.
I enjoyed the book, but it didn't make me want to run off and
live among the cotton plants and peach trees.
I'm not at all certain that I could live "comfortably" in rural
Georgia. It gets hot in the
summer and cold in the winter.
There's a reason
California is so expensive to live in:
Nearly perfect weather.
Still, $3500 per month is nothing to sneeze at.
Or I could "opt" for a "lump sum payment" of a little over
$500,000. That's half a
million dollars. No sneezing
there. (The company is
gambling that the "lump sum payment" will be less--for them--than paying
you until you die. If you
come from a family with a lot of longevity, you might want to go with
the monthly payments. Or
not.)
Other options:
I have two savings accounts at my
credit union.
Thanks in part to the sale of the
townhouse last year, there's
over $20,000 in one of them.
Thanks to our father, who told me when I purchased my first car, "When
you finish making the car payments, keep making the car payments,"
there's even more in the other account.
All told, over $50,000.
Enough to pay the
mortgage,
homeowners, and basic bills for a
year.
(There goes that bell in the back of my mind
again.)
Next: I
have my 401(k) account. For
anyone who has never worked for a large company, this is an employee
savings plan that lets you put money away for retirement.
Typically, the money is used to purchase stock in the company;
and, typically, the company "matches" your contributions to the account.
It's a way for companies to "hide" profits from the
IRS.
When I started working for the Standard xxx Company
of California, 37 years ago, you had to work for the company for five
years before you were allowed to get into the "stock plan".
It was an incentive to keep long-term employees.
So I joined about 32 years ago, plowing 2% of my base pay
(pre-42% withholding) into the plan.
About ten years ago, I increased that to 6%, with 4% going into
other savings options. (We
call that diversification.)
I currently have a bit over $1,316,000 in my account.
Yes, go ahead and count those zeroes again.
That’s over a million dollars.
You can live quite comfortably on a million
dollars. For a while, at
least.
(By the way, the financial company that manages the
401(k) is called Vanguard. I have heard
from a number of people outside the company that it is a very good
financial institution, so I’m OK with staying with them for now.)
I went to the “Retirement Calculator” website and
plugged in some numbers. The
outlook was pretty good.
And I finally listened to that bell that kept
ringing in the back of my mind.
What it was ringing was, “Ka-ching!”
A year’s salary. An
employee “left standing” qualifies for the “Severance Package.”
In my case, that’s 52 week’s worth of pay; in other words, a
year’s salary. Close to
$100,000 (minus “42%”, of course).
Another thing not to sneeze at.
Back when I was looking at “nominating” for
possible jobs, I knew that by doing so, I would be foregoing the
“Severance Package.” At the
time I figured, “OK, I’ll try for one of these jobs, but if not, at
least I’ll get a nice, big pile of money.”
Then I forgot about it.
Until now.
So that’s enough money to live quite comfortably for two years
before I even need to dip into the
Vanguard account. And
now that I’m past the “magic” age of 59½ years, I don’t have to worry
about the IRS yanking 10% off the top.
I still need to have a long sit-down with my tax
accountant about when and how to pull money out of the account, but
there’s time for that.
In the meantime, every morning, when the alarm goes
off, I think it will be nice when I don’t have to do that anymore.
That time looks like it’s just coming a little sooner than I
originally expected.
And last Saturday, I took the first “official” step
towards retirement-hood: I
got a new
Public Library Card.
Love, as always,
Pete
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