Could you accept an Employer Buyout?

You only need to read the newspaper, check the Internet headlines or turn on the TV to hear even more about what you already know – more and more companies are sinking into the red, and therefore being forced to lay off their employees. With unemployment the highest it's been in almost fifteen years, the prospect of the loss of employment, for many, is a real one. And, though not quite as ominous, but still a very serious issue in its own right, is the specter of employer buyouts. Have you stopped to consider that notion? What would you do if you were offered a buyout package from your employer?

Given the current global economic situation, the answer to this question may not be an easy one; and certainly much more difficult than, say, ten years ago. Before this crisis unfolded, if you were unhappy at your job and your boss offered a nice severance package, it's quite conceivable that you would have considered it positively for more than a moment or two. And, you certainly wouldn't have been alone. But today, however, may be a different story altogether. There are a number of variables to consider in today's equation that were of no major concern prior to this time of upheaval. Indeed, it would probably take a lot of soul-searching before you'd even seriously think about such an offer right now.

What are those considerations? Well, age is one important factor. If you're not yet close to retirement age (and, of course, to retirement benefits), you might seriously consider a buyout if offered to you. But, if you do decide to stay, what guarantee will you have that your job is secure for the long term? On the other hand, what if you are nearing the age for retirement? Can you afford to retire earlier than expected given today's economic environment? Do you have enough savings to see you through the next few years? Remember, you have to take into account that retiring early can result in a substantial loss in pension pay. Additionally, what about health insurance? Will it be forfeited by agreeing to a buyout? Will the severance pay be enough to keep you afloat until you find other employment?

Here's another scenario that may be worth thinking about: if your company is merging with another, are you assured that you'll still have a position? The real question that you must ask yourself in this situation is, "How indispensable am I?" Warning: some of us may be rather unsettled at the truthful answer.

Many years ago, the U.S. Department of Education offered buyout packages to teachers that were near retirement or making a top-level salary. The ability to hire additional teachers could only be accomplished if older teachers retired or accepted such a buyout. However, to retire early obviously meant that a teacher's pension would be decreased significantly. While many teachers accepted the package, others just couldn't afford to do so.

Under law, if you do receive a buyout offer, you'll have 45 days to either accept or decline it. You must weigh the pros and cons carefully, discuss it thoroughly with your family, and determine if you have the funds available to enable carry you over until you find another suitable job. With the current economic climate, your choices could be somewhat limited.

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