Just received my early retirement offer packet

[jclarksnakes]

All of us here on this forum have opinions (bird in the hand better than two in the bush, megacorp sucks get out quick, have to work right up to that exact number, etc.). In the end the most important opinion is your own. The one opinion that is almost as important as your own is your husbands. Together the two of you need to discuss this and then YOU decide. I tend to think that where you will be 10 years from now will be less dependent upon this decision and more influenced by something else. A big swing in the stock market could mean lots more dollars up or down than your decsion on this. As someone on the forum mentioned recently we seem to worry about one thing or the other to the point of overanalyzing it and then something else actually jumps up and bites us in the butt. Don't worry, be happy.

[brett]

At the end of the day I suspect that you will go with your gut instinct.

Good luck. I was one of the fortunate ones who got a golden handshake AND was well prepared financially for it.

[mystang52]

I'd like to give you some possible reassurance, even though I don't know your exact $$$$ numbers. To wit, if you took the package and were let go before August 2013, I bet you could still hit your desired May 2015 target date. I realize one year's additional salary is not a small thing, but in the big picture I suspect that the severance package and any other job you might get (plus, perhaps, a small amount of belt-tightening) would still let you reach that May 2015 target.

[MasterBlaster]

I have a somewhat different take on your situation.

Since a package gets you 9 months and a layoff gets you 4 months, what they are really offering you is an extra 5 months pay.

Since it will take them some time after the packages are accepted or rejected to come up with the layoff list you may be able to work another one or perhaps many months more.

It also just may happen that if they lay you off anyway, you (perhaps) could get the package in spite of what they said earlier.

So based on all that, I would stay working and take my chances. If you can work another 5 months (or more) beyond when package people go out the door, then you are ahead. When you do your analysis don't just look at the dollars from the package.

Keep in mind also, that every month on the job is one more month that you don't have to spend down your nestegg to support yourself. Every month on the job also allows the nestegg to snowball somewhat more as well as whatever you add to it. Those factors are not insignificant.

[meekie]

I'm in a similar position job wise (16 yrs at company, no degree, making way more than I should) and I would take the package for sure.

Even if I can't replace my salary, I could do *something* for some extra money while I let my investments grow. But I'm also at the point that I would rather work part time for 3 years, than full time for one year. You might not feel the same way.

[2B]

Quote:

Originally Posted by Lisa99 And yes 2B, DH hasn't spent a penny of the household budget since we've talked. He's still spending, but it's fully within his budget which I'm fine with.

The secret to making everything work is for you both to agree and then live by your agreement. Being sloppy can be covered up when paychecks are still coming in but few retirement budgets can be ignored without issues coming up later. It's no different for toys from Amazon or the latest Coach handbag. Hopefully, you're both on the same page.

Now about you not being eligible.....

If the numbers work, it's really nice getting money for nothing. I enjoyed getting a big severence check for six months of pay and it didn't have all the pesky deductions taken out. I don't know if there is a downside to applying and not getting it. If not, you could go early if they let you. Once you're retired, DH can buy all the toys he wants but can't retire until you both reach THE NUMBER you both decide is needed.

[Livefree]

Quote:

Originally Posted by Lisa99 Talk about a surge of adrenaline when that email hit the inbox. I wasn't sure whether I would qualify. I needed 65 'service credits' combined between age and years of service. I have 64 years, 11 months and 27 days (yes they broke it down that granular). Anything over 15 days is rounded to the next month, so I have exactly 65 years of credits. The money side of it is the equivalent of nine month's pay (about $100k for my situation) but added to my pension rather than in cash. The health insurance part of the offer isn't a factor since I'm on DH's insurance. If I don't take it and get laid off in the restructuring I get 4 months of pay. Normally the offer wouldn't be good enough for me to consider, however, they've added a weird twist. At manager discretion, the retirement date can be deferred for one year, so retirement date could be August 31, 2013 instead of August 31, 2012. That one extra year of working would make all the difference in the world in my decision. Lots to think about and a conversation to be had with my manager which is ok because she is a great lady and I trust her implicitly.

I believe we work for the same company, as it's all anyone is talking about today. Unfortunately, I only have 62 credits (57 with 5 Years) so I don't qualify. If I did, one thing I don't like, is it's a lump sum payment, so I would forgo 401k contributions going forward, and if I can hang on it's that much more I can invest.

[MichaelB]

So, if the severance is added to the pension, that makes it pre-tax, correct? Equivalent to about 1 year of additional take home? By not taking the offer, you would need to work through 06/13 to break even, or perhaps a bit longer?

After a major downsizing it usually takes that long just go get things back in working order. Unless there is a big miscalculation (unlikely), workloads rise and jobs get more stressful but are safe for a year or so. Then management assesses if the expected results are being achieved and adjustments are made. At this point management is predisposed to a portray a positive view because they want to look smart and proactive.

Not accepting but being downsized before 6/13 seems the risk, but other large companies experience does not point to this being very big. It does exist, though. The other risk is getting the nudge to sign up and leave immediately, but against that there is nothing to be done.

Companies that downsize don't do so once. It becomes habit forming, like drugs. If this "works", there could be another, which could be very timely for someone looking to retire in the '15 timeframe. Pure speculation.

[Lisa99]

Quote:

Originally Posted by MichaelB So, if the severance is added to the pension, that makes it pre-tax, correct? Equivalent to about 1 year of additional take home? Companies that downsize don't so so once. It becomes habit forming, like drugs. If this "works", there could be another, which could be very timely for someone looking to retire in the '15 timeframe. Pure speculation.

I do think it is pre-tax since its being added to the pension. And you're spot on with the action being habit forming. There have been multiple early retirement offers in the last 5 years. So if I stay for now there is a better then 50% chance that there will be another one before I retire.

[rodi]

I agree with Michael B that downsizing becomes habit forming. My megacorp has discovered it's "core competency" - which is laying off people. And we were just told yesterday that more are in the works.

It's so bad I check the intra-net posted severance policy daily... any changes mean it's happening that week. And changes in the severance are *never* to the benefit of the employee being shown the door.

9 months pay vs 4... I'd be inclined to take it. But I tend towards paranoia and cynicism about what would happen if I didn't.

Severance package offers shrink over time, then disappear.

[brett]

The Megacorp that I worked for has been downsizing for about 20 years, through 2 mergers. And they are in the midst of another large one.

I would take the 9 months and hope for the best. Like others have said, understand what you situation is NET of taxes. That could impact your decision. But, only you can decide.

[Ken11]

Quote:

Originally Posted by donheff I'm guessing that the manager will have to justify retention to a higher authority so no guarantee can be made (other than "I will make the recommendation"). But, like Chris2008 says, what guarantee is there if you don't sign up?

THis is exactly what happened at my megacorp when I took such a deal two years ago.

The work extensions were intended to be few and far between- driven by a dire need that would otherwise go uncovered.
It was definately at mangements discretion.
No budget relief was available to the responsible management if they kept the person on..
All this required second level review.

If you have no inside relationship then ( netting out the package) why work two+ years at less than half salary?
It would be better to take the deal and find another source of income- even if its much lower than prior.

You may also be surprised to learn that some states grant unemployment to folks that volunteer IF its part of a corporate restructuring/downsizing.

[Nords]

Quote:

Originally Posted by Lisa99 I'm really wanting to be able to say yes to this, but if I were to be let go earlier than August 2013, it would gut our chance to retire in May 2015, which we've recently revised from Sept 2016. The decision will probably come down to risk tolerance. Is it better to take the package and risk getting let go before Aug 2013 or is it better to coast in a job that I like with a manager that I like for the next three years straight into a controlled, planned retirement (assuming I don't get let go in the restructuring!)

Quote:

Originally Posted by Lisa99 Thanks everyone for your replies. My manager is not eligible for the package and my risk of being let go is small. The program that I work in is one of the priority areas that will get additional funding as the restructuring occurs. We've added almost 50% headcount to the group in the last six months. I manage one of the teams that is growing and in fact I have two open reqs right now that I've been given the go ahead to hire for. So if I take the package and am let go before 2013, I have to find another high paying job to be able to make our 2015 date. I don't have a college degree and on paper I shouldn't be making north of $100k, but I've been with the same company for 15 years and have gotten where I am through hard work and having managers that didn't care about the lack of a degree. However, in today's market I don't know if I could even get an interview for the jobs I'm qualified for without having the 'required education'.

If it's your choice, I'd take the bird in the hand package now and hold my breath about the Aug 2013.

You may not land your equivalent high-paying job, but you'll have no trouble taking a year or two off to find a part-time job that you enjoy. You might even surprise yourself with an offer that's almost as good.

Taking the retirement package offer sounds much better than playing Layoff Roulette with an automatic weapon and a full clip...

[obgyn65]

I would take the offer also.

[Midpack]

Quote:

Originally Posted by MichaelB Companies that downsize don't do so once. It becomes habit forming, like drugs. If this "works", there could be another, which could be very timely for someone looking to retire in the '15 timeframe. Pure speculation. Quote: Originally Posted by rodi I agree with Michael B that downsizing becomes habit forming. My megacorp has discovered it's "core competency" - which is laying off people. And we were just told yesterday that more are in the works. Severance package offers shrink over time, then disappear.

+2. My past experience has been the same, downsizing never happened just once anywhere I've been associated with.

And severance or other benefits typically declined with each "wave" too.

But you're more likely to know what's ahead at your employer.

Just another data point, tough call - best of luck, seriously.

When you make the decision(s), just don't look back, it's pointless...

[MBAustin]

Quote:

Originally Posted by Midpack Just another data point, tough call - best of luck, seriously. When you make the decision(s), just don't look back, it's pointless...

+1

Over the years, I have found it most healthy to focus on making a GOOD decision and not stressing over making the PERFECT decision (because there is almost always imperfect information available to you at the point of making the decision). Once said decision is made - go forth and prosper.

[Lisa99]

Continued great thoughts.

I've completed my analysis so here's how the numbers break down:

Baseline data: in my current job (assuming no layoff), I will earn $400k by our planned retirement date of May 31, 2015.

1. If I don't take the package and get laid off I leave $50k on the table.

2. If I take the package I get $100k (put into my pension tax free) and have to assume that my last day of work will be Aug 31, 2012. I will also have to find another full time job to be able to retire as planned in May 2015.

3. If I take the package, I have to replace $300k in income in the next three years, so my new job's salary would have to be $100k/year minimum.

4. I am a global Communications manager. The communications field does not pay well, so the odds of replacing my current job with a $100k+ salary is small.

5. I can exceed the $100k/year but I have to go back into sales (sales is where all of my contacts are). But I will go back to traveling and working 80-100 hours per week, which I will not do unless I have to.

Based on the analysis I've done so far, which essentially boils down to taking $100k now or earning $400k in the next three years (I put the odds of keeping my current job at 50%), I'm likely going to turn down the package.

If I turn it down and get laid off, oh well. I will suck it up, go back into sales and appreciate my retirement in three years even more.

If I turn it down and don't get laid off, I cruise into retirement via a job that I like that I can do in my sleep.

I've taken many risks in my career, and I'm comfortable with the risk of my being laid off and losing the $50k. Whichever way it goes, I'll know that I've thought it through and done what I felt was right for me. And my husband has said he is good with whatever my decision is.

[Texas Proud]

Congrats on making your decision...

Hope it all works out...

[MichaelB]

Lisa, your reasoning is sound. It looks like the least risk path to your retirement goal and should get you there. Congrats on being well prepared so you can pursue the most favorable option. Hopefully you get it.

[brett]

One thing to remember with downsizing, and with new management is that the focus is not simply on eliminating positions but also on the total cost of each position/employee to the employer.

The focus may also be on replacing older, higher paid workers with younger, less expensive staff as a means of bring in 'new blood' and lowering payroll costs. Older workers are typically more expensive from both a salary and a benefits perspective...especially for employers that self pay benefits even though these are administered by third party benefits organizations.

You can be sure that salary levels and benefit costs-health/dental/vacation, etc. will be reviewed and acted upon at some point during the re-structuring process.