Ok... Some life changing choices here... "401k", moving, jobs... etc etc etc.

[MeAndMillie2]

So, there is a little excitement within me mixed with a lot of nervousness.... To ask one simple question, I feel like I have to give a little background history.

I am 37 year old single female and I have worked seven years for a city in Texas that offers TMRS (actually a 401a) as their retirement program. It is a mandatory 7% contribution... not negotiable... can not take a loan against/from it and zero hardship allowances (including financial or medical), basically the only way to stop contribution is to stop employment. Ever since I started with the city I viewed it as a temporary for me. Then I started looking at the numbers and listening to fellow co-workers and decided to work towards vesting at the 10 year mark to receive the city matching funds of 2:1.

I found something out early this year that changed my direction. Sure, I vest at 10 years, but under TMRS rules, I have to either be at retirement age or hit the 20 year mark of employment under a TMRS entity to receive the matching funds once I vest at 10 years (even if I roll it over). So, if I left at the 10 year and 1 month mark... Well, I have only five years to withdraw my funds, unless I work for another TMRS participating organization, so I would not reach either benchmark. One thing I have discovered working for this city is that I desperately want the private sector again.... DESPERATELY!!!

So, with that said.... Over the past couple of months I have decided to move back "home". My mother (mid 60s) is getting to the point that she is needing some help (heart issues) yet still extremely independent. We (my sisters too) have been trying to talk her into moving in any direction to be closer to family after my father died. Well, she is extremely happy there. There is little around that. Pencil to paper, it would also cost her way too much to move (selling business if she can, home, the move itself) not to mention the impact on her "quality of life" would be hugely negative.

With my realization of TMRS (I really do not want to put in 20 years)... I am the most relocatable of the family.

I have to time this move since the cost of living in my city is high and breaking any lease (I do not own) would be costly. So, I have to plan this move for the middle of January. Well, the holiday season is not the best time to look for a job. I will making this move "jobless" although my current employer will keep me under contract (with transportation and hotel expenses) for 24 hours a week until my position has been filled or I quit. Not completely penniless... But I have to split up my time between two cities. I do have to admit, while I do not like the mentality of the municipal mindset... Awesome people!

That does not scare me... I am comfortable with the above choices. With all due respect, job? Not a worry. I hate to feel too confident... However, in time, I know I will not worry.

Now for the reason to this post....

Now, I am about to say the worst thing that this board wants to hear, probably. TMRS? I have about 40K in there now. I do have some debt (college and living). I have sought out some "hardship" allowances and always hit the mandatory contribution roadblock.

I have thought about withdrawing it all in one lump sum to pay off the last of my college loans, at least. I know I will be unemployed in the new location for a couple of months, at least. I do not know how long my "24 hour/week" arrangement will last with my current employer. Like many in the times we are in I have seen my salary stay the same (thankfully not decrease or furloughs) for four years, yet I have seen my cost of living increase by 15-20% year by year (rental increase yearly is 10% of that due to the market demand). I do have some revolving debt now...

That 40K in my TMRS is my biggest reservation... Trying to figure out my options. I have never worked for an organization that had mandatory contributions... A withdraw appears to be taxed twice and penalized. And quite frankly... I want my money!

I apologize for all of that above... I just need to figure this out.

[Redraidernurse]

I live in Texas and have the same retirement plan you have, with the 7% mandatory contribution. One thing you left out is this also comes with a 7% annual interest credit that is compounding interest (That rate can only be changed by the Texas Legislature). It just doesn't get better than that. The ups and downs of the market don't affect the account. I think you would be a mad woman to take the money out even if you won't receive the employer match. You can find some way to earn money after moving even if it means taking a lower paying job or doing odd jobs until you find a better one. Dipping into retirement savings is not the answer.

[MeAndMillie2]

I live in Texas and have the same retirement plan you have, with the 7% mandatory contribution. One thing you left out is this also comes with a 7% annual interest credit that is compounding interest (That rate can only be changed by the Texas Legislature). It just doesn't get better than that. The ups and downs of the market don't affect the account. I think you would be a mad woman to take the money out even if you won't receive the employer match. You can find some way to earn money after moving even if it means taking a lower paying job or doing odd jobs until you find a better one. Dipping into retirement savings is not the answer.

You are totally correct about the compounding interest. Although, mine is 5% and has been consistently 5% on the previous year balance since I have been here. To be honest, I have not taken that into consideration whatsoever. I never even really thought about it as an option and I should - allowing my money to stay within TMRS for the permitted 5 years. The city I am moving to also has TMRS for its employees (and would be considered as a last chance effort for me when it comes to job hunting). They vest and match at 5 years and I can retain my account as service credit hours towards the 20 year mark (If I work for the city, for example, within 5 years).

Ok, here is the thing.... And maybe a whole other issue that probably deserves a topic of its own... I really do not think about "retirement" and have very little interest in investing for 30 years from now. I am a single (ok, divorced woman) that actually enjoys and embraces being single yet old enough to know if I marry again he better have his own. I have never wanted children of my own nor do I have any children of my own. So therefore, I do not have dependents as my beneficiaries. I am rather “fatalist” in nature seeing people like my father live for retirement and age 62, but pass away from cancer at 59, although, my mother is financially taken care of for life ( she took a more traditional route in life and had very little in SS). Before the recession hit and I saw my cost of living get skewed a little, I had paid off the last of my college loans (returned to get my masters and that is what I am paying on now), lived CC free (1 CC and car loan) and I have been able to travel and enjoy life with a good balance. I have never wanted anything more than a comfortable middle class life. Granted the last few years have been a little different. I am one of those who actually enjoy working. I have built a life (although rather selfish some can say) that is not exhausting. Some say I have a rather hedonist (live for today) quality about me.

Good or bad? Who can really say.

Like I said it is a whole other topic, but retirement is not really on my agenda and young enough to know I can put 20 years in somewhere. There is a debate for both sides of that equation.

[Joan.of.the.Arch]

Could I ask you to put your one simple question into one simple sentence? I'm not sure I see the question.

[MeAndMillie2]

Could I ask you to put your one simple question into one simple sentence? I'm not sure I see the question.

It's the part right below "now for the reason in this post" in bold about the withdrawal of the $40k in my TMRS retirement fund.

[Joan.of.the.Arch]

Okay....Now, I am about to say the worst thing that this board wants to hear, probably. TMRS? I have about 40K in there now. I do have some debt (college and living). I have sought out some "hardship" allowances and always hit the mandatory contribution roadblock.

So you want to know if you should use your retirement account to pay off your college loan and/or other debt?

Probably not. Even if you think you have no old-age future, statistics suggest you do have such a future. Continue to save for it.

Perhaps before moving to be closer to your mother who is still healthy enough to run a business you should save up several month's expenses to back you up, and it should include enough to continue making your college loan payments and other debt payments.

[Wink]

One thing in your scenario that really scares me for you is leaving your job without having another one lined up. I work as a career counselor, and I work with people everyday who are super qualified, both with education (Master's degrees) lots of work experience, really the complete package who have been layed off, or downsized, or like you, relocated and after 2 years of looking for work are still unemployed. It is an extremely tough job market right now and there are sometimes hundreds of people (well qualified people)applying for the same job.

Do you have a plan to support yourself for a possible extended (very long) period of unemployment?

[MeAndMillie2]

For both JOAN and WINK....

Yeah, trust me, I would not be leaving this job without a little something. In the post, it may have gone unnoticed with how verbose I am (and for that I do apologize), I talked about my current employer keeping me on under contractual terms. I told my employer about my Jan. 15, 2012 deadline with my apartment at the end of August, when I made this decision. They did offer me an 8% increase to stay, I declined. What we ended up negotiating was that I will travel back to the Dallas area (travel expenses paid) to be in the office 24 hours a week (Fri. Sat & Sunday and that will allow me the weekdays to look for a job) and they will take my current salary (without the offered increase), break it down into an hourly rate and that will be my contractual hourly salary. I will work additional hours by remote, as needed. With that contract I will be dropping my TMRS obligation and unfortunately, my insurance (but with the option to buy in).

I will be terminating my official employment on 1/13/2012 and will begin working under contract. This will last how long? I do not know. I do know that they move as slow as molasses! In over a month, they still have not looked at possibilities for my position. If the normal M.O. is in place... well, they post (once I am officially off the employment roster), dig through tons of resumes, then interviews to find the candidates, if none in first pool they will post again, then a full committee interview, background check (which includes drug test, credit, FBI clearance and 8 hour psych eval with tests and shrink) and then make the final offer... Sometimes a 2 month long process, at the minimum (my position was vacant for 5 months, and then I interviewed and was offered the job a month later). They ask that I am available for training and questions for an “undetermined amount of time.” If they decide to terminate early and before I am employed… well, I am screwd! Due to their generosity, I guarantee my weekends (if I find a job that will require my Fridays) and evenings by remote.

I have also managed my paid time off over the past year to have 4+ weeks built up.

I am making a HUGE decision… But luckily, I am not irresponsible. I may have an irrational sense of security since I have never been unemployed since I was 16. That will be a wake up call for me, honestly.

I will say this, my family (mother) is extremely important to me. Her physicians have been talking about doing a bypass on her and I could not imagine her being alone (she has already had hospitalized emergencies like angina attacks and stints). Her quality of life is so valuable to me that I am willing to make the sacrifice for it.