My only recommendation is if you're going to head off for 2 calendar years and you have no other income for those years, then move your 401k money over to a Roth to the tune of around 40K per year (you may have to move some of it to a regular IRA first). You will have to pay about 4.5K of taxes per 40K. However, if you were to pull it out when you retire this would probably be anywhere from 6-10K in taxes (relative to current dollars) later on.

Then, again if you could pull off an FEIE.....hmm, not sure that would or wouldn't work. Have to think about that. And people think there is no reason to have a dedicated ex pat forum....

quote:

(you may have to move some of it to a regular IRA first).

Effective 2008 you can roll directly from a 401k to a Roth. As of now you have to go to a rollover IRA first.

It's a great idea to do your conversion while you're gone and it should definitely save you a bundle in taxes over the long haul.

Just make sure you have the money put aside to pay for the taxes out of pocket, don't have them withheld from the converted money.

Also, if you decide *not* to convert you should still roll your 401k to an IRA when you leave the company.

Hmmmm, good point on the roll-over ideas... I'll have to talk to my planner about that (right about the time I tell her that I'm doing this in the first place).

Vagabondette, I appreciate the idea of trying to do some freelancing and having some residual income, but it might be hard for my field of expertise. I'm a General Manager of a banking division; it's a new industry & company for me. I've only been here 6 months; all of my previous management experience has been in consumer products. The more I think about it, I guess I'll just have to do what I just did 6 months ago, and convince an employer to hire me based on a solid resume!

One thing though, from those who've done it: how do perspective employers react to taking a year/years off mid-career? I know every situation is different, but I'm wondering if some have faced a stigma? I would think that it would be benefical (broadened perspective, maybe even learn a new language, true "real-world" experience in the growing globalization of the business world), but I could also see how some employers would think you're a "bad hire" due to having a wanderlust mindset...

Again, not that any of these concerns are gonna change my mind! It's amazing; I'm not planning to leave until the Spring of 2009 (RalphTheWonderLlama, where you planning to go?), but just getting it in my head that I'm really going to DO this has been exhilarating!

The most common response I've gotten is "wow, I wish I could do that."

I think many companies see it as an advantage. So many companies have international sides that having someone on staff who is culturally aware can be a big benefit. Just make sure you come up with a reason that is well-rehearsed so when people ask you why you aren't stumbling. Focus it on the educational side of travel rather than the satisfying your wanderlust side and it'll sound better.

quote:

Originally posted by Skyediver:
One thing though, from those who've done it: how do perspective employers react to taking a year/years off mid-career? I know every situation is different, but I'm wondering if some have faced a stigma?

I think the biggest element will be how you present this year off to your next potential employer. I wouldn't put any emphasis on your "urge to travel." Instead, I'd make certain to place it within the context of a set of pre-planned life goals. "I told myself that I'd do such and such before age 40. I did it, I learned something, I think it has given me a new perspective and a new set of skills to bring to my personal/professional life, it's done, I'm back, and now I have new goals to achieve here at <insert employer here>."

Of course, if you're business minded, then you're just as likely to find business opportunities while on the road, setting up your own source of employment. Hell, you may never come back. So I wouldn't start planning post trip job interview strategies just yet.

I'm 39 and I leave in just oer two weeks to go RTW for several years.
I do not have a six figure salary or anything similiar)-in fact, I run a soup kitchen/homeless shelter.
I do have some investments/IRA etc from a previous life career...
I think you are in a great situation to go on your trip. I think the previous posters have pretty much covered the financial angle and how to approach your employer.
My advice in more in area of the way you approach the trip yourself and your sanity. I talked about going rtw/dreamed of it for quite awhile-but it never came in fruition, because I was fearful about what my future would be when when I returned. So, when I told people about my plans to rtw years ago, I really listened to the negative reactions and didn't hear the positive ones. The fear kind of overtook the possibility of adventure and the joy of travelling.
This time, I had done my homework for my trip, I felt confident and sure that I was going, and then I presented it to everyone. No one has questioned it, it's just a fact for them I'm going.
I think you will get a whole new skill set on your trip, and change and grow in ways you've never imagined.
I notice you looked at Scribetrotters website(above) and IT IS GREAT! She is amazing. There are alot of great sites/blogs on bootsnall,too, that have helped me tremendously.
Mine is geared to women also, but take a look if you want. It is
http://blogs.bootsnall.com/gigirtw
And good luck!Gigirtw

I started my trip at 42 and it has been 16 months. I plan to go at least another 20 months. I say jump now and you can figure out your parachute later. All I know is I can still keep up with 20 year olds and do whatever activities I want to do as well as keep a busy schedule. If I waited another 20 years until retirement, I doubt (but I do hope!) that I could do whatever I want to do activity-wise. I lost my wife to cancer when she was just 40. Let me tell you, don't ever think you have time later to do anything or you may have big regrets. Do it when you want it and when you can do it and don't sit around waiting for retirement or something else in the future that will require a lot of luck to ecer see. Jump now!!!
Rick (writing from Cairo Airport on my way to Madagascar - hahaha!!!)

If you think 38 is old, I am 63 and on my fourth trip around the world next stop Argentina I have finished USA Australia Bali Malaysia Thailand Laos Turkey Morocco Ireland and France so far this year

It is grand enjoy and be flexible

Just to add further support, after our 2 years RTW my husband and I both re-entered our careers easily. Much more easily than we imagined, really. We'd been 'in-touch' while traveling but settled in a different city and strangely enough, no one asked that much about our time off except to say 'Wow, that is awesome.'
If you find yourself missing work (which can happen, it sounds like you have a good job which probably plays a big roll in your life) call up your former co-wokers from a beach in Thailand. You will a) feel better immediately and b) might end up with some contract work to keep up with things and have a little extra income.
You are in a great situation, have fun!

In terms of saving/rentry - are you likely to return to the same town as you are now? It would make sense to invest in property before you left ie. would you make money on the rent to cover the mortgage and would the property appreciate in the time you were away? Just a thought. If you think its going to take 6 months to re-enter the workforce then put some savings aside to cover your expenses in that period and leave them at home!
I can't comment specifically on the US scene - taking time off to have a life is much more common in Europe, Australia, NZ than in North America. One of the thing I read is that its hard for you to get health insurance if you aren't working - have you a solution for that? I assume you will sell the car when you go- would it be better to sell it now - buy a cheap one for cash and then sell that when you leave - owing money on a car doesn't make much financial sense.

I took a year off and went to Africa when I was 27. Although I wasn't as far along in my career as you are, I had over 5 years with the same company and was not just out of college. I was a little concerned about getting back into the job market, but it worked out great. I had kept in touch with former co-workers and was offered a job at my old company when I got back. I wanted to try somewhere new though, so I didn't take it.

I found my new job (which I really like) a few weeks into my job search. When the VP here looked at my resume (I work in HR), he said something along the lines of: "A year in Africa. Good -- If you could handle that, you should be able to handle our employees."

Taking time off might be viewed as a negative at some workplaces, but I also think there are plenty that will value your experiences and you probably wouldn't want to work for one of the ones that didn't.

As for travelers that I met (and hung out with) on the road, they ranged from 18 to mid-60s. Age doesn't really matter very much when you are traveling.

We're both 48 and we just got back from our RTW. Stepped right back into a job. Think of it this way--if you go for a job interview and you tell the boss about your RTW, and he or she looks at you like you stepped off another planet then run like hell, b/c you don't want to work for someone like that anyway.

I turned 38 last week......we are leaving in ten months. And we're taking eight kids with us.

Ditto to all above. I am 35 and say go. You mentioned the opportunity cost of leaving. I would advise that yes there is opportunity cost but it is worth. You have to acknowledge the beneft is worth the cost.

Damn! I guess I've been denying I'm middle-aged for so long I've missed the window of opportunity. 38 middle aged?? Geeesh. At 61 I'm considering how to travel, and RTW long term is just one option. I think it would be very hard to leave my job (with which I'm quite happy) and return to the field due to agism, but I think I can take multiple "short" trips: maybe 3 months one year, a couple month long trips another, etc.

You do tend to get bogged down in life--I don't want to miss the grandkids growing up, I have a dog, several horses (with whom I actually travel), etc, so I'd recommend anyone who is relatively unencumbered go while they can.

Anyway, reading everone's experiences is inspiring. gracias