Personal Finance

I'm 52 with a few million in the bank and a juicy government pension - should I just finally quit my job?

John Seetoo

Published: November 23, 2024 7:13 am

One of the perks of working in the Foreign Service division of the US State Department is the ability to fully immerse oneself in another nation and its culture while still enjoying the protections of the US and its international clout. In addition to the generous pensions and embassy privileges that accompany overseas postings, Foreign Service officials enjoy high-level networking opportunities among both private sector and governmental sector decision-makers in other nations. However, opportunities must be selected and acted upon or their windows soon evaporate.

Should I Stay or Should I Go?

A Foreign Service officer recently posted on Reddit that he was considering quitting his job, now that he has logged enough seniority at age 52 to warrant an $85,000 per year pension for life. He and his 38-year-old wife, who also is in the Foreign Service, have two children, aged 8 and 5. They also have roughly $2.4 million in investments, as well as paid off home in Florida.

Currently stationed in Europe, he is considering quitting and relocating the family to Vietnam or Thailand, where he previously had served for 12 years, to do something else.  His department is happy with his work, even though he claims the job requires minimal effort and has become boring. A large part of his wealth accumulation has been due to zero housing and medical expenses, as they are all taken care of by the State Dept., so he would have to assume those costs were he to quit.  A quick snapshot of his family asset holdings are as follows:

Current expenses are $8,000, but he admittedly does not make a budget. Housing and medical expenses are free while employed by the US Government; current family medical insurance could be retained for $400 per month if he were to quit. 

What Harm Could It Do?

From an objective perspective, there are a number of downsides to leaving at this stage of his career, at least not until after measures have been taken to address the following points:

• His 401-K needs to continue to grow, and he still cannot withdraw any of those funds for over a decade without triggering early penalty fees and commensurate taxes.
• No details are disclosed on the dividend stock account, but as many dividend stocks have limited upside growth, diversification into some growth-oriented assets may be worth considering to outpace inflation.
• The cryptocurrency account does not disclose details, but given the volatility and sporadic liquidity with some tokens, this asset requires close monitoring.
• The 529 account amount is inadequate for two children with over ten years left before spending eligibility as matriculated students, so it needs to see additional contributions and growth.

Before Taking The Plunge

While Vietnam and Thailand have substantially lower cost of living expenses for US dollar holders, the poster’s affinity for those nations’ food and culture implies that “doing something else” already has some specific options in mind. If he decides to take the plunge, some other preparations should be taken before an announcement and official resignation is tendered.

• While still in Europe, he should ingratiate himself with European politicians and private sector decision makers who deal with matters or business in Vietnam and Thailand, and   add them to his network. The expansion of BRICS and non-US dollar commerce is an important factor to include for the near and distant future. 
• As he would ostensibly be working as a US expat private citizen, he should speak with a tax professional with regard to the Foreign Earned Income Exclusion form he should file to avoid double taxation.
• If he has not already done so, he should lease the Florida home on an annual or 2-year basis for passive rental income while his family remains abroad.
• If he plans to rent a home for his family, he should definitely secure a place to live in advance before moving the entire family. The prospective new home should have all of the features that the family deems to be important, re. location, security, ease of proximity to food, transportation, et. al. 
• As both Vietnam and Thailand are members of ASEAN, foreign currency fluctuations, geopolitical threats from pirates in the South China Sea, and maritime conflicts with Chinese naval forces need to be monitored if any of his work involves import/export trade.

This article is intended for speculative informational value only. Professional tax and financial advice should be sought for more in-depth and customized advice.