Walk away from $1 million a year?

[Anonymous]

Anonymous wrote:I would walk away. Because that would be enough for me, but even if not, aren't you presenting a false choice here: stay in miserable $1 million job or retire now? You have a job that pays you $1 million a year -- someone thinks your skills/knowhow are pretty valuable. Can't you switch to a different job or work part-time or consult? You need not assume zero income if you leave this job.

I think OP's current employer's willingness to keep OP and spouse on their health care forever is a good part of the reason his choices are "this job or retirement." Even if he can get another job (sure he can), where's he going to get that promise?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP here. I should add that all the kids are out of college and married. We have a mortgage of about 2k a month and no other debt.

I mean, I'd probably pay off the house. I know its not necessary but just a mental thing before quitting work. But obviously you can easily do what you are proposing.

I'd work one more year, pay off the house, get everything in order, then walk away.

Another miserable year, another million dollars that's taxed to death and ends up being a lot less. Then you pay off the house and have no mortgage but your overall net worth doesn't change. You just have more of it invested in your house and not generating any income. So your portfolio generates less money but you have no mortgage.

Isn't that six of one, half dozen of the other, except you've lost another year?

You do not understand net worth, my friend.

Sure I do. It's gross assets minus liabilities. If you have, say, $5 million in stocks/bonds and a house worth $1 million but with a $500k mortgage, then your net worth is $5.5 million. If you take $500k from the stocks/bonds and pay off the mortgage you now have $4.5 million in stocks/bonds and $1 million in your house -- $5.5 million again. No difference.

Then you don’t understand math?
The money doesn’t come out of investments if you work another year - that’s what the poster was saying. Work another year and pay the house off.

OP here. Why separate things like that? It's all one big pot. What you're basically saying is work another year and increase your net worth. Ok.

No, it isn't one big pot. Some net worth generates income; some doesn't. A paid off house doesn't. By working another year, you can keep the income-generating portion of your net worth as is, with no large withdrawals, and eliminate a monthly liability form your books.

You don't have to do this, of course - you could retire right now. But, give your lack of financial understanding, perhaps it's better if you work longer and give yourself a bigger cushion.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I would walk away. Because that would be enough for me, but even if not, aren't you presenting a false choice here: stay in miserable $1 million job or retire now? You have a job that pays you $1 million a year -- someone thinks your skills/knowhow are pretty valuable. Can't you switch to a different job or work part-time or consult? You need not assume zero income if you leave this job.

I hear you. But in my case it's not a false choice. I'm a lawyer. I wouldn't do anything else. Neither interested nor qualified.

Ok. I assume you are a partner in biglaw. I'm a lawyer too. There are partners at my firm who became "of counsel" and got away from the majority of the stress and taking on only selected projects that interested them and pro bono. Would that help? I know others that retired and went into legal teaching -- workshops, clinics, sometimes lecture classes too. None of that is appealing?

[Anonymous]

Anonymous wrote:

Anonymous wrote:I would walk away. Because that would be enough for me, but even if not, aren't you presenting a false choice here: stay in miserable $1 million job or retire now? You have a job that pays you $1 million a year -- someone thinks your skills/knowhow are pretty valuable. Can't you switch to a different job or work part-time or consult? You need not assume zero income if you leave this job.

I hear you. But in my case it's not a false choice. I'm a lawyer. I wouldn't do anything else. Neither interested nor qualified.

Could you mentally check out/stop caring? Keep only the clients you want/give the rest away? I bet you swing this for a year before anyone even noticed. Or if you are in-house, basically phone it in for a year?

[Anonymous]

OP again. It sounds like a lot of posters believe there is no such thing as "good debt." I hear that a lot on bogleheads. I'm not sure I agree. With the Trump (ugh) tax stuff there's less of an incentive as before to keep a mortgage, but it still seems to me that, over the long term, you will do better in the market than what you'd save in interest by paying off a mortgage with a low interest rate (in my case, 3.25 percent). I realize that not having a mortgage is a comfort thing for many, though.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP here. I should add that all the kids are out of college and married. We have a mortgage of about 2k a month and no other debt.

I mean, I'd probably pay off the house. I know its not necessary but just a mental thing before quitting work. But obviously you can easily do what you are proposing.

I'd work one more year, pay off the house, get everything in order, then walk away.

Another miserable year, another million dollars that's taxed to death and ends up being a lot less. Then you pay off the house and have no mortgage but your overall net worth doesn't change. You just have more of it invested in your house and not generating any income. So your portfolio generates less money but you have no mortgage.

Isn't that six of one, half dozen of the other, except you've lost another year?

No. Because housing is a mandatory expens, especially in this area, and having your mortgage paid off limits this expense significantly.

[Anonymous]

Anonymous wrote:OP again. It sounds like a lot of posters believe there is no such thing as "good debt." I hear that a lot on bogleheads. I'm not sure I agree. With the Trump (ugh) tax stuff there's less of an incentive as before to keep a mortgage, but it still seems to me that, over the long term, you will do better in the market than what you'd save in interest by paying off a mortgage with a low interest rate (in my case, 3.25 percent). I realize that not having a mortgage is a comfort thing for many, though.

This is a defensible position when you are working. After retirement, it really isn't. You aren't adding to the savings/investment pot, you are only withdrawing. Plus, you have a long horizon in front of you - probably 30+ years. Removing the mortgage eliminates a large recurring obligation, and dramatically improves your likelihood of living the lifestyle you want to in retirement.

[Anonymous]

Depends on how old the kids are. Health insurance can easily be $30k of that $200k.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP here. I should add that all the kids are out of college and married. We have a mortgage of about 2k a month and no other debt.

I mean, I'd probably pay off the house. I know its not necessary but just a mental thing before quitting work. But obviously you can easily do what you are proposing.

I'd work one more year, pay off the house, get everything in order, then walk away.

Another miserable year, another million dollars that's taxed to death and ends up being a lot less. Then you pay off the house and have no mortgage but your overall net worth doesn't change. You just have more of it invested in your house and not generating any income. So your portfolio generates less money but you have no mortgage.

Isn't that six of one, half dozen of the other, except you've lost another year?

You do not understand net worth, my friend.

Sure I do. It's gross assets minus liabilities. If you have, say, $5 million in stocks/bonds and a house worth $1 million but with a $500k mortgage, then your net worth is $5.5 million. If you take $500k from the stocks/bonds and pay off the mortgage you now have $4.5 million in stocks/bonds and $1 million in your house -- $5.5 million again. No difference.

Then you don’t understand math?
The money doesn’t come out of investments if you work another year - that’s what the poster was saying. Work another year and pay the house off.

OP here. Why separate things like that? It's all one big pot. What you're basically saying is work another year and increase your net worth. Ok.

No, it isn't one big pot. Some net worth generates income; some doesn't. A paid off house doesn't. By working another year, you can keep the income-generating portion of your net worth as is, with no large withdrawals, and eliminate a monthly liability form your books.

You don't have to do this, of course - you could retire right now. But, give your lack of financial understanding, perhaps it's better if you work longer and give yourself a bigger cushion.

Respectfully, it's not a lack of financial understanding. I understand that if I worked another year and paid off the mortgage I'd have the same portfolio generating the same $200k a year but wouldn't have a mortgage. You're simply suggesting that you, personally, wouldn't feel comfortable with $200k a year and a $2k a month mortgage. I get completely get where you're coming from.

[Anonymous]

Anonymous wrote:OP again. It sounds like a lot of posters believe there is no such thing as "good debt." I hear that a lot on bogleheads. I'm not sure I agree. With the Trump (ugh) tax stuff there's less of an incentive as before to keep a mortgage, but it still seems to me that, over the long term, you will do better in the market than what you'd save in interest by paying off a mortgage with a low interest rate (in my case, 3.25 percent). I realize that not having a mortgage is a comfort thing for many, though.

You can keep the mortgage, people are suggesting you pay it off because 1) you haven't answered the question about how much you spend, just said you have a $2k/month mortgage and no other debt, and 2) without more information that's all we can advise you on.

If your total annual outlay is less than $200k you can retire today. If you don't know what it is you need to figure that out first. If it's more than $200k then you need to reduce it, and paying off the mortgage is the only clue anyone has to go on for a way to do that because it's the only information you've provided.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I would walk away. Because that would be enough for me, but even if not, aren't you presenting a false choice here: stay in miserable $1 million job or retire now? You have a job that pays you $1 million a year -- someone thinks your skills/knowhow are pretty valuable. Can't you switch to a different job or work part-time or consult? You need not assume zero income if you leave this job.

I think OP's current employer's willingness to keep OP and spouse on their health care forever is a good part of the reason his choices are "this job or retirement." Even if he can get another job (sure he can), where's he going to get that promise?

OP here. Yes, this is a definite factor in my decision.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I would walk away. Because that would be enough for me, but even if not, aren't you presenting a false choice here: stay in miserable $1 million job or retire now? You have a job that pays you $1 million a year -- someone thinks your skills/knowhow are pretty valuable. Can't you switch to a different job or work part-time or consult? You need not assume zero income if you leave this job.

I hear you. But in my case it's not a false choice. I'm a lawyer. I wouldn't do anything else. Neither interested nor qualified.

Ok. I assume you are a partner in biglaw. I'm a lawyer too. There are partners at my firm who became "of counsel" and got away from the majority of the stress and taking on only selected projects that interested them and pro bono. Would that help? I know others that retired and went into legal teaching -- workshops, clinics, sometimes lecture classes too. None of that is appealing?

Yes, biglaw. And, honestly, none of what you're suggesting appeals to me. I appreciate the suggestions though.

[Anonymous]

Anonymous wrote:OP here. I should add that all the kids are out of college and married. We have a mortgage of about 2k a month and no other debt.

"asking for a friend"... "We have a mortgage..."

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I would walk away. Because that would be enough for me, but even if not, aren't you presenting a false choice here: stay in miserable $1 million job or retire now? You have a job that pays you $1 million a year -- someone thinks your skills/knowhow are pretty valuable. Can't you switch to a different job or work part-time or consult? You need not assume zero income if you leave this job.

I hear you. But in my case it's not a false choice. I'm a lawyer. I wouldn't do anything else. Neither interested nor qualified.

Could you mentally check out/stop caring? Keep only the clients you want/give the rest away? I bet you swing this for a year before anyone even noticed. Or if you are in-house, basically phone it in for a year?

Excellent advice. I've already been following it for some time, in fact. But it's very hard to mentally check out when it comes to the law, and it ultimately adds its own kind of stress. It's also not fair to anyone. And there eventually comes a point . . .

[Anonymous]

Anonymous wrote:Depends on how old the kids are. Health insurance can easily be $30k of that $200k.

Kids are married and gone, as I said earlier. Health insurance right now is about $20k, some of which would be tax deductible based on my preliminary calculations.