One of the questions we’ve gotten more consistently over time than any other (other than what we’ll do for health care) is whether we’ll try to negotiate some sweet golden parachute layoff deal for ourselves when we retire early. We’ve thought about it a ton, and have decided that that’s not how we roll. For a bunch of reasons.
But not that there’s anything wrong with wanting the soft landing. Just as we have a long list of reasons why it’s not right for us, there are some completely solid and totally-worth-considering reasons why you might come to a different conclusion. Let’s get into all of it.
Why We Aren’t Going to Try for a Severance Package
We know our work situation is not broadly applicable. We’re fairly unique these days in the sense of having built up super long tenures with (mostly) single companies. We respectively work for a small company and a smallish business unit within a megacorp, and we have long, personal, multi-faceted histories with the people who run the show.
Much of our hand-wringing about when to give notice and what folks will think is based on that last fact, not that we delusionally think we’re some irreplaceable unicorns whom our colleagues will mourn forever. (Ha.) We totally admit that there’s a huge emotional element to how we think about all of this. It’s definitely not 100 percent rational, although I’d argue that no decision-making is ever purely rational, though we might convince ourselves it is, which is itself an emotional decision.
Here are our rational and emotional reasons why we won’t be attempting to get ourselves laid off or negotiate a large severance on our way out the door:
We Don’t Need the Money — Would we like more money on our way out? Obviously. But do we need it? No. If we needed more money to make our early retirement work, we might have a totally different motivation to do this, but fact is that we won’t need to push for much more when it’s time to go. But it’s money the fat cats will just pocket instead! you might say. Not so for our companies. We know how personnel budgeting works, and any money we leave on the table will either go to our replacements or to other new hires. We’re cool with that. We wish more folks who weren’t stoked about their jobs would get out of the way to make more opportunity for those who are eager for it.
We Don’t Want to Claim Unemployment — A big reason to negotiate a separation is to be able to claim unemployment benefits. If you quit voluntarily (or get fired), you aren’t eligible. But we don’t want to be eligible. Both because we don’t need that extra funding, and because we’re likely to get health care subsidies if those subsidies survive, and we have no interest in doubling up on public benefits that could go instead to those who truly need them.
Our Companies Don’t Really Do This — Some companies offer buy-out packages or early retirement options regularly, but this isn’t a thing for either of ours, perhaps owing to their sizes. We know of folks who were told with plenty of advance notice when their last day would be and given the chance to find another job during that time, but only a few rare instances of true severance packages. (Admittedly, there’s probably stuff we don’t know. And this fact alone wouldn’t sway us if we were otherwise dead set on making this happen. Everything is negotiable, after all.)
It Feels Icky Given Our Long Tenures — Here’s the big emotional driver, and I know there are those who will say we are naive for thinking this way (see below). But we care a lot about doing this “the right way.” We want our employers to know that we’re early retiring, not just that we’re leaving. We want them to know we aren’t going to competitors, so aren’t a threat to them, and that we’re grateful for all of it. That feels like a tough needle to thread — demonstrating gratitude while asking for a payout to make us go away.
Our Retirement Plan Is Publicly Available — The last one is a biggie. You’re reading this post, which means that anyone on the internet can see what we’ve been scheming all these years. Soon our first names will be here, we’ll share the blog with more friends, and it’s likely our employers will make their way here (hi!). A big part of negotiating a layoff is using some excuse like family and medical leave or the intention to take a sabbatical or have a baby, and we have no desire to get caught in a lie like that when what we’ve been planning all along is here for anyone to see. (And if you want to get laid off and have been tossing around the idea of starting a blog, this might be a factor worth your consideration.)
We Know Work Is an Economic Arrangement First
To that naivete point, we’re not dumb. Though we consider our managers friends and mentors, we know they don’t pay us just because they like us. (If that job exists, please let me know. I want it.) We contribute (large) economic value, and thus are worthy of (less large) compensation. It’s fundamentally a monetary relationship first, and a personal one only after that. There’ve been some signals in recent years that have reminded us of this fact, so we haven’t lost sight of it. We know the score.
And if we’d only been in our jobs two years, three years, five years maybe, we would certainly see this a bit differently, and would recognize that there’s no shame in pursuing a mutually beneficial end to our work arrangement. (Because there isn’t.) But our desire to do this the right way, on good terms, is powerful motivation to not risk good vibes and good karma over a few bucks. We can always earn more money, after all, but we can’t necessarily repair relationships that we trash on our way out. And we still put people over money.
What We Will Ask For When We Announce Our Plans
Though we won’t be attempting to negotiate severance packages when we make our intentions known, there are several pieces we will absolutely push for. And we have a few pieces of leverage we can use in asking: 1. how long we stick around to make sure our clients have smooth transitions from us to new project leads and our colleagues get the benefit of downloading fully with us, and 2. the fact that we never signed non-compete agreements. All new hires have been signing them for years, but because we started ages ago, they missed the fact that we aren’t bound by the same agreement. I sure bet they’d really like us to sign those things before we go…
This Year’s Full Bonuses — Our bonuses are in large part deferred compensation, and we have every intention of getting the full amounts we believe we’ve earned by continuing to work hard this year. This is more true for Mr. ONL, but I’ll be pushing for my smaller deferred compensation, too.
Future 401(k) Match — Mr. ONL’s match comes at year’s end, and he’ll be entitled to the full match, which he’ll push to receive (and we don’t anticipate any problem there). Mine has murkier rules, and the match for the prior year doesn’t come until summer. But given that I’ll be working this full year, I have every intention of making sure I get the match I’m entitled to, even though I’ll no longer be employed when it’s delivered.
Why You Might Want to Try to Negotiate a Severance Package
Of course, just because we aren’t trying to get ourselves laid off doesn’t mean you shouldn’t try it. Our situation is unique in some ways, especially for Gen X and Millennials, and it might make total sense for you to soften your landing even though we’re not going to try to.
Here are some good reasons you might choose a different approach from ours:
Your Plans Aren’t Public — If you haven’t chronicled your journey and plans for all the world to discover, you may be able to get away with negotiating a layoff.
You May Work Again — If you aren’t leaving your job to retire for good, negotiating a separation gives the opportunity to get in writing that your employer will always serve as a positive reference for you.
Your Tenure Is Shorter, or Your Employer Is Faceless — There might be some aspect of wanting to stick it to the man, and we get that. If your employer is some huge, heartless megacorp, then go ahead and milk it for what you can get.
You Want to Claim Unemployment — If you want to be able to get unemployment benefits, then negotiating a layoff is your best option to be eligible. Quitting like we’ll do makes you ineligible.
Your Company Offers Buy-Outs — Maybe the best reason to take a severance: if someone dangles it in front of your face. If we had that offer available to us, we’d take it in a heartbeat to make way for others who want our jobs more badly than we do.
Health Care Is Super Important to You — Severance packages often include some period of company-paid health insurance. If you or a loved one have a desperate need for continuous health care coverage and you’re otherwise secure enough to retire, you might want the health insurance benefits of negotiating a package.
You Don’t Feel Icky About It — A harder to define reason, but an important one. If you don’t have any ethical or moral qualms about asking for a severance, and you don’t think that doing so will make it hard for you to look yourself in the mirror after you make the ask, then rock on.
The list of reasons you might logically and ethically conclude a negotiated severance is worth pursuing is longer than our list of reasons why we aren’t going to do that. So there’s no wrong answer here. Only, as usual, the answer that feels right for your specific situation.
Sam who writes Financial Samurai wrote an e-book called How to Engineer Your Layoff (<– affiliate link, all proceeds donated to Feeding America) that contains some tips for negotiating a golden parachute on your way out, if that appeals to you. He shared the book with me to review, and the price is pretty steep ($85, $75 with the discount code “saveten”). A good portion of the book talks about some of the basics of financial independence, so it’s not all focused on the layoff process, and may not be new info for folks already acquainted with financial independence principles. There was nothing in it that convinced us to change our approach — but admittedly, we were already pretty sure of how we wanted to navigate our exit. You may consider it worthwhile if you are serious about going the negotiated layoff route — there are a range of tips in it for how to mentally prepare yourself to do it and how to make it happen — but a lot of it is common sense.
Let’s Talk About Your Exit
How do you plan to exit when it’s your time? What factors weigh most heavily in your thinking about it? For those of you who have already quit, how did it go down? What would you do the same or differently, with the benefit of hindsight? Anything you think the rest of us should know? Let’s discuss it all in the comments!
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