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Exit Plans

So now that we are about 18 months away from the end game where we stop working for money, sell everything we own and become traveling hobos, we are starting to look at our exit plan with a lot more seriousness. We are that much closer to determining the exact moment where the equation tells us it’s OK to officially call it quits and escape the cube farm.

But should we quit? 

If we take the MIN-MAX approach, which focuses on minimizing the time worked for the maximum money, straight up quitting doesn’t make the most sense. Quitting simply means we will likely work the longest period of time in order to achieve our target number. Let’s analyze some possible scenarios:

Scenario #1: Just Quitting:

  • Pros
    • We get to have our “Surprise! We are out of here” moment.
    • No negotiation or shadow campaigns necessary. This is actually the easiest in terms of conflict avoidance.
    • Less complicated from a planning perspective.
    • No paperwork for unemployment / severance agreements.
  • Cons
    • Must work the maximum amount of time to start our next chapter.

 

Scenario #2: Getting laid off:

  • Pros:
    • Severance and unemployment feels like free money
    • Less time required to work
  • Cons:
    • No triumphant exit or “moment” when giving your notice
    • Negotiation is often uncomfortable and hard
    • Need the timing to work out
    • Require more complicated planning / decision tree
    • Might require more time before officially triggering the other phase of our plan (e.g. victory lap around the world)
    • Might have restrictions on what we can share on our blog due to disclosure agreements.

We recognize that everything is a trade. High performers usually aren’t granted the option of a voluntary lay off package. This means that it would require a bit of work to make it happen if you are someone who has collected a lot of gold stars throughout your career. The upside could mean getting out of the grind 6 to 9 months earlier though.

How do we arrive at that? Well it’s typical for most big companies to offer 1 to 3 times the years of service in weeks of compensation at the time of termination / layoff. Big companies usually publish what they do from a minimum perspective. It’s always wise to negotiate beyond these minimum thresholds as the worst that can happen is that they say no.

So my company has a minimum of 1 times which means I would likely receive a minimum of 15 weeks severance if I were laid off. I would also get paid for all of the vacation time I have accumulated but have not yet used. This would be paid out in one lump sum which could account for an additional 5 weeks. Then there is unemployment. Depending on  your state this can vary. It usually can cover you for 26 to 30 weeks and the percent of your average income you receive can be anywhere between 30% to 50% of your wages. So let’s figure an additional 10 weeks.

15 + 5 + 10 = 30 weeks which is just over 6 months. If I were to get my severance up to 26 weeks which is the stated maximum in my company’s policy then that would result in 26 + 5 + 10 = 41 weeks or just about 9 months.

So if I can swing it, the perfect time for us to exit would actually be one year from now if we were to be laid off. So what would that involve?

I would have to somehow convince my employer that it makes sense for them to let me go. This seems difficult as I have been collecting gold stars throughout my career and I can’t see that changing over the next year. I have been reading up on lots of strategies however that could work. Let’s take a look at a few:

  1. Get lucky in terms of timing: Big companies go through cycles of hiring frenzies and then retractions. usually during these retractions they look for folks to volunteer to be laid off. The best case scenario for the employees and the company is to decrease the workforce on a voluntary basis to prevent having to do involuntary layoffs. This is obviously the easiest but least reliable of the options.
  2. Family / Health exit: Negotiate your way out. I’ve seen some folks use the family medical leave act as a bargaining chip. If you have a family member you need to care for or a major life event taking place, this would be a valid reason to ask for a way out from the leaders you trust. If you have a solid reputation and you are valued at your company, then you may be able to swing it.
  3. Mid-life crisis exit: If you are losing your shit and need to exit for your own health and well being, this is certainly a valid justification for negotiating your own lay off.

I’m certainly not condoning everyone try and get laid off on purpose. Rather I’m simply thinking outside the box and highlighting the different scenarios that could come in to play as we move closer to our exit and brainstorming what each of those scenarios could look like if they were to be triggered. I think it’s important to know the pros and cons of each as well as understand how they could impact our plan.

Simply by thinking about the different options allows us to be prepared for any opportunities or challenges that may arise.  Locking into a single plan for the next 18 months is too limiting.  Plus it is really low cost in terms of effort to be on the lookout.  We are going to be recalculating our potential date for retirement each month until we pull the trigger anyway; so knowing that our “layoff” target is 6-9 months earlier than our “quit” target is a valuable piece of information.  Most folks I’ve talked to have not done the research on their own company and don’t know the facts.

If you spend a small amount of time you can find these policies / FAQs at the Company you work for. So why not fit them into your plan!

As you’ll see in next week’s article, Knowledge is Power. It’s worth doing the research and arming yourself with as much information as you can.

 

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