Planning a Graceful Exit from Your Job

We have some amazing mentors in the Millionaire Money Mentors forums. Some of them are even accomplished authors!

Over the next few months I’ll be sharing excerpts from some of these authors’ works.

Today we have an excerpt from F.I.R.E. for Dummies — a book that I loved reading and is now my go-to for introducing people to F.I.R.E. 

It’s written by one of the mentors in the forums and makes for a great Christmas present (if you need any ideas).

The section today details a topic that I don’t see a lot of posts on — how and when to resign from your last job and how to plan for it. Let me know what you think of her suggestions in the comments below.

With that said, let’s get to today’s excerpt…

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Planning a Graceful Exit from Your Job 

You’ve come so far and set yourself up for the ultimate peak — the financial freedom to leave your job. You’ve hit your F.I.R.E. number (see Chapter 4) and no longer have to depend on a paycheck or trade your time for money or any of the 50 other things that come with working a day job. This will have you grinning from ear to ear and maybe experiencing a little disbelief that you’ve reached F.I.R.E.! 

Putting together a to-do list prior to leaving your job will help you stay on task as you plan your departure. It’s one of the most fun lists you’ll ever put together and perhaps the last big project before you leave the company. You can do some tasks far in advance, whereas you’ll have to assess others in the months preceding your official retirement date. 

In this chapter, you find out what you need to do as you count down to F.I.R.E., how to write your F.I.R.E. resignation letter, and how to walk away from your job with grace. 

If you love your job, you may not want to leave quite yet. The “retire early” part of F.I.R.E. is not required; just because you can leave doesn’t mean you have to. You’re still in a unique and powerful position. You continue earning money and benefits from your job and know that you are financially able to walk away any time.

Counting Down to Early Retirement 

After you’ve announced that you’ll be retiring early, you’ll get lots of questions, strange looks, and doubtful remarks from coworkers and bosses. Some of the smart ones will invite you for lunch or coffee so they can pick your brain about how you were able to pull this off. I even had someone who was two levels above me ask me to have coffee with him after he had heard about my plans to retire early. I was happy to do it and admittedly a bit flattered. Though I was leaving the corporate hierarchy, decades of conditioning left me with a mindset that those in positions above me were somehow smarter than me. 

But that obviously wasn’t true! I was the one retiring early, and now you’re  setting yourself up to do it, too. In the following sections, I walk you through your F.I.R.E. countdown so that you have an idea of what you should do in the time leading up to your retirement. 

Creating a checklist for an organized departure 

Logistically, a checklist or some type of road map will help you stay organized and get you through this important transition. Most people are tethered to work way more than they think, as I found out when I was decoupling my personal life and my work life. 

You can start this list even before settling on an exact date and giving your official notice. In fact, you will get very busy as your departure approaches, so you may find it more helpful to front-load as many of your tasks as you can, perhaps starting a year or so prior. Examples of things you can do in advance include becoming part of communities or organizations outside of your job or starting to build up the funds you plan to live on after you retire (see Chapter 17). 

Thinking far in advance may be hard at first, but if you maintain a running list, things will start to flow. Thoughts may even pop into your head in the middle of your workday. (Just a quick note: All those daydreams about your life after F.I.R.E. have a way of filling your mind while you’re at work.) 

Segmenting your checklist by date is the most effective way to stay on track. I split mine into three time frames: 

• 1 to 2 years before 
• 6 to 12 months before 
• 3 to 6 months before

Use whatever format you like to maintain your checklist: paper, app, computer, or cloud-based document. I used my notes app on my iPhone because I loved adding things as they popped into my head. In the team meeting, I may have looked like I was texting on my phone, but I was really adding something to my Early Retirement Checklist. 

Your checklist is a living document that you may add to or change as you reach the goals on the list. The following sections are a guide with things you want to be sure to include for different time frames and topics. 

One to two years before retiring early 

This may be the toughest list because you’re quite a bit away from retiring (as I mention earlier in the chapter). How do you even know you’re ready? When you start thinking more about your post-retirement endeavors than your current tasks at work, that’s a good sign that it’s time. Even though you may not have an exact date yet, you may have an idea of the year, and it’s time to get the ball rolling. Make sure to do the following one to two years before retiring early: 

• Strengthen/engage social and professional connections outside of work. 
• Reevaluate projected sources of retirement income and expenses. 
• Identify income sources that you can live on until you reach the no-penalty age for most retirement accounts. 
• Evaluate options for health insurance and healthcare programs. 
• Check ACA Exchange (www.healthcare.gov) pricing and projected income needed to earn subsidy for the state you will reside in after retiring (see Chapter 18). 
• Evaluate/adjust asset allocation/diversification (stocks, bonds, and so on). 
• Evaluate/adjust tax diversification of assets (Roth IRA, traditional IRA, health savings account (HSA), brokerage accounts (see Chapter 15 for details). 
• See if you have pension benefits from current or prior employers (even if they were frozen) and understand rules/options. 
• Make sure you understand how your commission/bonus payout works when you separate from the company. 
• Review and confirm your earnings history (consider doing this annually) at www.ssa.gov; see Chapter 6 for details. 
• Review projected social security benefits and run assumptions of $0 future income at SSA.gov; see Chapter 6 for details.

Six to 12 months before retiring early 

Things are starting to get real as you get within a year of your planned retirement date. You still may not have an exact date or have officially revealed that you are retiring to coworkers or your boss, but there is a lot you can get done in this period. Consider the following tasks 6 to 12 months before retiring early: 

• Start lifting others up on your way out (as I explain later in this chapter). 
• Get copies of awards/recognitions you’ve received while at the company. 
• Reserve paid time off (PTO) for cash payout or make a plan for using the PTO days. 
• Reevaluate options for health insurance and healthcare programs. 
• Make sure any bonuses and incentives are earned, paid out, or fully vested. 
• Make sure you have plenty of available credit and a good mix of card types (low interest, no foreign trans fee, rewards, and so on). 
• Make sure to get as much of the retirement plan employer match as possible before you retire. 
• Front-load 401(k) if retiring earlier in the year. 
• Max out HSA by front-loading (if allowed) to take advantage of payroll deduction (no FICA tax); see Chapter 15 for details. 
• Get online access to retirement, payroll, health and HSA accounts outside the company portal. 
• Make sure you have a copy of the summary plan agreement (the document that explains the rules and provisions of the plan) for retirement accounts for reference. 
• Get a mortgage or refinance while you are still working if you plan on financing a home. 

Three to six months before retiring early

Even several months before retiring, you may not have made it official. That’s probably a wise decision because anything can change. But at this point, you’re so close that you can probably see the light at the end of the tunnel. Stay on track with your plans and do the following three to six months before retiring early: 

• Determine the time of the month you’d like to retire (your health insurance typically goes to the end of the month no matter when your last day is within the month).
• Estimate COBRA payments and understand the rules. 
• Re-shop all recurring expenses that tend to fly under the radar (car insurance, home insurance, cell, internet, tv, utilities, subscription services). 
• Get records of performance evaluations, salary history, company policies, and so on. 
• Make sure you have external access to the payroll program (if allowed). 
• Make sure you have external access to employer-sponsored retirement accounts. 
• Make sure you have external access to employer stock or equity compensation plans. 
• Remove personal items from your work computer or phone. 
• Make sure all personal accounts are tied to your personal e-mail and phone number rather than your work e-mail and phone number. 
• Get personal phone numbers and e-mail addresses from those you want to stay in touch with (do this prior to notification of resignation). 

Custom items for your checklist

There will be a few areas you need to customize for your plans. Think about the special situations or circumstances that will apply to you — for example, your plan for paying off your home or getting approved for a home equity line of credit. These circumstances may not apply to everyone but may be important to you. Make sure to include those items on your checklist as well; just add them with a time frame that makes sense to you. Here are a few examples from my list: 

• Pay cash for a good reliable car that will require little to no maintenance costs (one to two years before). 
• Earn employer matching for qualified charitable donations (three to six months before). 
• Earn wellness bonus to get company HSA contributions (three to six months before). 
• Take two volunteer days benefit offered by company (three to six months before). 
• Check pricing and eligibility for health insurance at the university I was planning to attend (6 to 12 months before).

Picking your departure date strategically

Sometimes you don’t get to choose when to leave a company. For example, I was once notified that my position was being eliminated, and I still remember how I felt at the time. I was in my 20s and my boss and the human resource person invited me into one of the meeting rooms. It shouldn’t have, but this took me by surprise. They explained that the company was downsizing my department and made me sign an agreement in exchange for six weeks’ severance. This felt awful, and I thought that it was somehow a negative reflection on me and my performance. 

I had no control over what was happening to me. They called all the shots, and it was all on their terms: the terms of my separation, the final weeks of pay, and even the dates. Twenty years later, I emerged as what felt like a superwoman after I learned about F.I.R.E.! Now, the game has changed, and I got to separate from my company on my terms. 

Now it’s your turn. You get to choose whatever date you want as your early retirement day, and you are in control. Think of it as your new “birthday.” It’s a great feeling and you’ve earned it. 

As you begin to narrow down your date, being strategic about your choice will serve you well. Here are a few things to consider before you select your date: 

• Company benefits: Be sure you are not giving up valuable benefits such as a pending reimbursement for training or education. 
• Bonus payouts: Set your retirement date after scheduled bonus payouts if you believe you’ve earned a bonus but you won’t receive it if you leave the company before it’s paid out. 
• Company vesting of retirement or other compensation incentives: Consider the timing if you’re close to being vested in your stock options or workplace retirement and you want to get the full company benefit. 
• Health insurance effective dates: Coverage typically remains in effect until the last day of the month regardless of what day of the month you leave. 
• Potential big changes with the company: Whispered rumors of upcoming layoffs could work to your advantage (severance, unemployment eligibility, and so on). 
• Personal plans such as time with family or travel: If you have a big trip planned for the summer, it might work out to retire just before then. 

These considerations can also apply when you are changing jobs.

I ended up choosing December 6, 2019, as my official retirement date, when there were no layoffs in sight. Then boom . . . the COVID pandemic hit only three months later and there were lots of layoffs. The moral of the story is that it’s hard to pick the perfect time because no one can predict the future. Just pick a date based on what you know at the time and stick with it. 

Writing Your F.I.R.E. Resignation Letter

Most resignation letters are short and to the point. They are usually no more than a sentence or two that ends with the employee’s last day of work and that’s about it. Most don’t mention what you’re doing next or why you’re leaving. The assumption is usually that you are going to work somewhere else. 

But your F.I.R.E. letter conveys a grander message and deserves much more. This will represent your written transition point of being free from depending on a paycheck from a job. That’s a big statement right there, and you’ve worked hard for this. 

Saying more than just “I quit”

The time has finally come for you to draft the departing words from your employer, and it should say a lot more than “I quit,” especially because you’re not quitting but leaving on your own terms to do more of what brings you joy. Think of it like graduating from working a regular job to your life after F.I.R.E. Let the gravity of that sit for just a moment. You used clarity, focus, and lots of courage to set your own retirement date rather than following the traditional cadence. A decision that momentous deserves a worthy resignation letter. 

You don’t have to share all of your plans or reasons for leaving, but conveying that the terms of your departure are the culmination of a meaningful, well-thought out plan is powerful. 

You may not have admiration for the job you’re leaving (and it may even be the reason for speeding up your F.I.R.E. date), but remember that you have turned the tables and now hold most of the power. You are the one setting the parameters of this final project at work; have fun with it. 

Figure 16-1 shows the full text of my F.I.R.E. letter from 2019, but here is a portion that summarizes how big of a deal this was to me and shows the deep thought I put into this decision

I know my 40s is a little early to retire and some may even say I’m giving away the Golden Ticket. I’ve certainly spent many months (maybe even years) imagining such a divergence from the norm and ultimately came to this conclusion: I could follow a traditional path or blaze my own; I choose the latter. 

Making your letter frame worthy

The gravity of reaching F.I.R.E. is huge. This is a triumphant moment that deserves to be memorialized and frame worthy. Writing my letter was cathartic, and I had some emotions I hadn’t expected once reality set in that this transition was going to change the trajectory of my life. Ten years prior to retiring early, I never imagined it would be possible. Moving the needle from poverty to reaching F.I.R.E. in my forties — what a feeling! 

My original letter was several pages long, but I wrote it and re-wrote it many times. After several versions, I finally got it down to one page and that was a win! I just became more intentional with my words and was mindful in how much I wanted to share at that point. I knew I would keep the letter for years to come and you will probably want to hold on to yours as well. Here are a few things you may want to include in your letter to make it frame worthy: 

• Mention a few of the things that are important to you as it relates to why you might be leaving. 
• Get across what you really want your employer to know and remember as your parting words. » Name individuals where it matters to you (especially anyone that may have had a positive impact on your time with the employer). 
• Share your mission or big audacious dream that you want to shout to the world. 

Deciding when to give your official notification

After scribing the perfect F.I.R.E. letter, the big question is: When’s the right time to give it to your boss? So far in this chapter, I’ve been talking about the ambiguous future retirement date. There has not been a firm date or official notification in place. In this section, things shift because it’s time to pick a date. 

Some F.I.R.E. people struggle with making their early retirement plans official. I was one of those people. It took nearly two years from the time I started contemplating retiring early to the time I gave my official notification to my employer. 

The timing of your official notification is important, and you don’t want to unintentionally give up valuable benefits, as referenced earlier in this chapter.

You can handle vacation, sick time, and PTO, in a couple of ways: 

• Some people decide they want to get paid out for the time and just leave the company. That is what I did and was paid for about three weeks of PTO after I left the company. 
• Others take that time off in the months or weeks preceding their separation of service, so they are technically still employed during that period (just on vacation). I call that “vacationing out.” 

The federal government is known for its generous benefit of allowing employees to roll vacation and sick time from year to year. I had a friend who accumulated over 100 days of paid time off that she used in the months preceding her last day of official work. She spent that time living it up while still enjoying all the benefits of a full-time employee. I didn’t have such generous PTO, but we all can only work with what we have. 

Consider any lump sum payouts, bonuses, or vesting of equity compensation (like stock options) that may require you to still be employed with the company to collect. 

These provisions can be found in your employer’s documentation and it’s something you definitely want to investigate before handing in that F.I.R.E. letter. There could be thousands of dollars at stake. 

Peek around the corner to see if there are any whispers of possible layoffs or downsizing. If there is, you might be able to negotiate a severance or other favorable terms that will give you a little extra bonus on your way out. Negotiating on your way out may also be an option for you in other circumstances depending on your company and position. It never hurts to verbally broach the topic with your boss before giving your written notice. 

If you are terminated from your job (from a layoff, downsizing, job elimination, and so on), you may also be eligible for state unemployment benefits in addition to any lump sum severance. Massachusetts, for instance, has one of the highest maximum weekly benefits of $1,015/week as of 2022. Some states (like Tennessee) have as little as $275/week. Amounts and rules will vary by state. 

Walking Away Gracefully

There are lots of people who hate their job, their boss, or their employer. It’s often what leads people to seek F.I.R.E. in the first place. Now that you’ve reached F.I.R.E., you may see things through a different lens than you had previously.

Instead of feeling stuck because you need the paycheck, you can walk away when and how you want. You’ve set up a safety net that will allow you to float out of there with dignity and grace. 

Giving ample notice

You can give more than the standard two weeks’ notice if you want to be nice and give your employer a little extra time to find a replacement or make other arrangements. 

The timing of your announcement is up to you. Keep in mind that once you officially submit your F.I.R.E. letter, word will travel fast at work and the wheels will be in motion. Also, once you submit the letter to your employer with your date of separation, they can and will hold you to it. So, there may be no going back . . . this is it! 

I gave my boss a “soft” notice by verbally sharing my plan to retire early about six months before I was intending to leave. I was careful not to give a specific date at that point, but he did ask for at least two weeks’ notice (no problem). This verbal notice wasn’t binding, and I could change my mind at any time before providing a notice in writing. 

I turned in my official letter about two months prior to my chosen separation date. I printed the letter, slid it into a flat yellow envelope, laid it on my boss’s desk, and walked out of his office. I wanted to give him time to read and digest it without me standing there. He came to my desk about 20 minutes later to give me a hug and said congratulations, which was a nice gesture that helped make the next two months easier for both of us. I was happy to do as much as I could to leave things in good shape. (I hope your boss responds with a similar reaction and supports you on the way out. It would actually be in their best interest.) 

Offering a transition plan

After receiving your official notice, your boss may be a little shocked and perhaps even beg you to stay. This could put you in a position of strength to negotiate even a sweeter deal, sort of creating your own separation agreement. 

Even if you don’t want to extend your time with the company, you could offer  to help with a transition plan — particularly if you are in a specialized  leadership role.

You are not obligated to train your replacement or be involved in what happens after you leave. However, many people feel some sense of duty to help their employer, especially if they were treated well. I felt this type of affinity for my boss. Several years prior, he hired my daughter as an intern while she was in college and treated her with kindness and respect. I always remembered that, and I was happy to do as much as I could to help with the transition. 

Your transition plans will look quite different than mine, but here are a few things I included: 

• Introducing and endorsing my replacement to long-time clients 
• Documenting some of my best practices 
• Resolving issues with trouble accounts 

If your experience with your employer was negative or toxic, you may want to skip the whole transition plan, but it’s best not to burn bridges. You may not want to ever work for them again, but how you leave is a reflection of who you are. You want to maintain your grace, even in a not-so-rosy situation. The upside is that your ability to walk away on your own terms has a way of putting you in a pretty good mood. 

Lifting up others on the way out

Even in the worst work environments there are some great people whom you respect and admire. Whether the person is a coworker, your boss, or a random person who always seemed to be working their butt off, you may have a desire to lift them up on your way out. Taking the time to spread a little kindness or sharing your appreciation with those people will keep your good mood going and build goodwill among those you’re leaving behind. 

The security person at the building where I worked was unbelievably perky every morning. I don’t know how she did it, but it made me feel a little better even if I was in a rotten mood. Before leaving, I made a point of telling her I was retiring early and how much I appreciated that she was one of the first smiling faces I saw every morning and that just about everyone else I know felt the same way. 

Within your work group, there could be an opportunity for you to speak up on someone’s behalf because you feel they’re doing a great job but never get the attention they deserve, or you can even recommend the person you think is most worthy of taking over your position (and brag about them a little in the process).

Why would you want to do all this for people you may never see again? The fact that you may never see them again may very well be the point. You have nothing to gain, so what you say and do on your way out will be perceived as truly genuine. Knowing that you’re about to embark on your post F.I.R.E. life, you can either focus on the bad or the good you’re leaving behind. A big part of the good is usually the people. You may as well sprinkle a few good deeds on those people that you’d like to see succeed. 

A few months before I left my company, there was a newly created position in our group that equated to a promotion for someone within my team. Several of my coworkers applied. I probably would have, too, but I obviously had no interest because I was leaving. I thought of one person who definitely didn’t deserve it and  one who absolutely did. So, I advocated for the person I thought was best for the position by doing these things: 

• Writing a letter of support to explain why I recommended her for the position 
• Helping her strategize and prepare for the interview process 
• Making sure she knew why I thought she was the best person for the role, even if she wasn’t the final choice (she did get the job!) 

Sharing your plans publicly

You’ve laid out your exit plan for retiring early by 

• Creating and reviewing your checklist 
• Giving official notice to your boss 
• Sharing your good news with your friends and coworkers 
• Starting your countdown 

For some, that might be it, but for others, there is a public crowd you want to share your good news with. Do you have a blog, podcast, YouTube channel, or social media accounts? Talking about your plans publicly through that type of media means that everyone can see it — your audience, your connections, and even your employer. You will inspire many with your news, and there is nothing like sharing how you are feeling in the moment. You will get lots of questions, and some of them will be about how you did it.

Be mindful of sharing too many specifics (like the name of your employer) before you actually leave your job. 

I was conservative in my approach to sharing publicly before I officially retired. Out of respect for my employer, I decided to hold off with the public announcements. I didn’t blog about it, give interviews, or share it on my social media. It was probably unnecessary for me to do that, but it’s what I felt was right at the time because I wanted to leave in a way that kept things on friendly terms and leave the door open for the possibility that maybe one day they would become a client for my future endeavors. There would also be the remote chance that I would change my mind and decide to go back to work, so I tried to avoid burning bridges. However, behind the scenes, I was capturing the moments by recording short videos on my phone and preparing other ways that I would share after I retired. 

About a week before my official day, I blasted the news all over my social media! I was almost done with the job and so excited to share it with the world. I made my announcement about me, not my employer, and presented it as a celebration. It felt unbelievable! 

Celebrating with a FIREment Party

Just like a birthday party, graduation, baby shower, or bridal shower; reaching financial independence and retiring early is deserving of a celebration. Let’s call it a FIREment party, shall we? This big day started feeling a lot like my new birthday. 

Most good bosses will want to honor and celebrate you just as they would a person retiring at a traditional age. This makes sense if you spent many years with that employer, but it doesn’t need to be the only way you celebrate. 

I love the idea of a FIREment party that is independent of your employer. You  can bring together friends, family, and colleagues from prior employers that represent snapshots in your career. Throughout our jobs and professional careers, you build many relationships; work is a big part of your life. 

I recently had a good friend have a FIREment party, and it was what I wish I had done. Her party was planned by a few of her friends (not her current employer). It was like piecing together a timeline of her life and all the people she’d impacted over the years, including her kids.

I had been with my employer for nearly 21 years, so it meant a lot that my boss insisted on celebrating my early retirement. That many years with one employer is becoming increasingly rare, and it still sounds wild that I stayed there so long. On the other hand, I know it was a big contributor to the financial part of my journey to reaching F.I.R.E. 

My FIREment party took place about two weeks before my last day. I had about 30 people from my company, mostly within my department. They also allowed me to make a list of people to invite. I included my daughter and a couple of other nonwork friends. I admit, it was great to hear the kind words from my coworkers and leaders in our group, especially with my daughter being there. I said a few brief words —mainly to express gratitude. Though things were by no means always perfect at my job, my thoughts were mostly filled with the good times. I gladly accepted the very nice gifts, and, in my mind, it closed the chapter of this part of my life.