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May 17, 2021, 9:13 p.m. EDT

I was offered a buyout at work. Should I take it?

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Kerry Hannon

To paraphrase The Clash: Should you stay, or should you go?

Knocked by revenue losses and dealing with new business models triggered by the coronavirus pandemic, plenty of companies are exploring ways to shore up their bottom line and get lean.

A voluntary buyout offered to employees is one way is to cut payroll and benefit compensation.

This is a tried-and-true move, and there’s nothing nefarious about it beyond the fact that it’s often older workers who are targeted.

In the last year, for example, workers at Delta /zigman2/quotes/200327741/composite DAL +1.80% , Gannett , Southwest Airlines /zigman2/quotes/201071949/composite LUV +2.01% and UPS /zigman2/quotes/201245396/composite UPS +2.81% were offered buyouts. In March, Medium, the digital publishing platform, offered voluntary buyouts to all editorial staff.

A buyout certainly trumps a layoff, in my opinion. You can leave with your head held high. After all it was y our choice to accept it. And you can brag that the offer was too good to leave on the table.

But can you afford it? Does it make sense for your unique situation?

If your job outlook is decent, taking a buyout can be a sweet cash-infusion and a boost for your future financial security.

The decision is both financial and emotional. In most cases, it’s worth strongly considering. If you’ve been offered one, it’s likely that you have already been deemed expendable. Sorry about that. And there’s no guarantee that you won’t get axed in a layoff down the road where there is no enticing buyout offer on the table. Severance pay is usually one week, or two weeks’ pay for every year you’ve been on the payroll with no wiggle room for negotiation.

Age matters

Whether the timing is right for you will often depend on your age. Your life situation at 50 and at 60 could be miles apart in terms of your desire or need to continue to earn income and even how you want to spend your money.

It’s perfectly reasonable that if you’re nearing 65, when Medicare kicks in, and full Social Security benefit eligibility starts at 66 or 67, you might see the writing on the wall and take the offer without too much angst.

Moreover, if you’ve got ample savings, a well-funded 401(k) or IRA accounts, and no hefty debts hanging overhead or major expense soon, you’re probably in the right place to accept it and not look back.

Timing matters

The state of the job market and economy when you get your buyout offer is a huge factor. The number-crunching is critical if your outlook for a job is dicey, for example, or if you’re accepting the voluntary buyout as a true path to retirement. Here’s some advice f or older workers looking for a job this year.

Financial checklist for a buyout decision

Understand the deal being offered. These packages are typically complex. The sum offered is generally based on the number of years you’ve worked for the company and your salary like a standard severance offer, but frequently more generous. It could include extended health insurance coverage, accrued vacation pay and bonuses, life insurance, career assistance with finding another job from an outplacement firm, or assistance with financial planning.

$ 45.77
+0.81 +1.80%
Volume: 9.86M
June 21, 2021 4:00p
P/E Ratio
Dividend Yield
Market Cap
$28.76 billion
Rev. per Employee
$ 56.30
+1.11 +2.01%
Volume: 5.47M
June 21, 2021 4:00p
P/E Ratio
Dividend Yield
Market Cap
$32.64 billion
Rev. per Employee
$ 203.32
+5.55 +2.81%
Volume: 3.64M
June 21, 2021 4:04p
P/E Ratio
Dividend Yield
Market Cap
$172.17 billion
Rev. per Employee
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