Be Strategic About When to Quit
While I was able to reach my financial goal by end of 2017, I actually retired on Jun 29, 2018. The timing of my exit has nothing to do with my finances, it was just strategic. And I will tell you why it is important to time your exit properly.
The company I work for, announces bonus at the end of the year. But the bonus is only paid out in the January paycheck of the next year. And the rule is that I should be working at the time the bonus is paid out. Obviously that meant that I cannot just quit on December 31, 2017. I did not want to lose out on the bonus which is substantial at 20% of my annual pay. After having worked for the full year of 2017, why would I not take my bonus? So the thought was that I would work for another month, take the salary + bonus and quit on January 31, 2018.
But wait, there is more (these companies have a nice system to retain you don’t they?). I receive stocks on 25th of last month of each quarter. So a bunch of stocks vest on March 25, June 25 etc. The stock value like the bonus is quite substantial. So I was wondering if I should work another 2 months until March 25 to receive the stocks. Then I had the brilliant idea to take sabbatical. You see, one of the many perks at work include a 3 month sabbatical assuming the manager approves it. The wonderful thing about sabbatical is that I won’t receive any pay but everything else remains the same. My stocks continue to vest, company issued medical insurance is still valid etc. I decided to take sabbatical from February 5 to May 6, 2018 (the maximum allowed duration of 3 months).
The best part about sabbatical is that I will also get to experience how life will be without any work and pay. So I will get to try out dipping into my retirement fund for living expenses and also get a feel for how it would be without any work and sitting at home all day. I intentionally did not plan any vacation or fun activities. I wanted to do exactly what I would do if I was retired. Now comes the best part. The plan was to announce that I will be quitting work right after I come back from sabbatical on May 7. Since my company has a policy where I need to give 30 days advance notice, my last working day would have to be June 7. Now, remember what I said about my stock vesting schedule? Yeah that thing again. If I can just wait another 18 days and quit on June 25, I would get my stocks too. You see where this is going right? Greed has no end.
One more reason I could not quit on June 7 was that I wanted to transfer the employer offered medical insurance to my name. And that process needs to start at least 45 days before my last day at work. So in the best case scenario, I could quit on June 22. So what is 3 more days between friends (or colleagues) if I can add a bit more to my retirement kitty. I wanted to keep a buffer of 1 more week and decided to make June 29, 2018 to be my last working day. And it was!
- Jan 1 - Feb 4: Work, pick up the paycheck and bonus
- Feb 5 - May 6: Sabbatical, no pay but stocks vest on Mar 25
- May 7 - Jun 29: Work, port medical insurance and phone number, announce resignation
- Jun 30 on wards: Retired!
In the end, I swelled up my retirement fund with one year end bonus, two stock vesting (March 25 and June 25) and three months of salary (January, May and June). It worked out to be a non-trivial percent of my total corpus. All that for working just 3 months more than my intended retirement day. And so the timing of exit is important too!