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Take the Package or Risk it...
Old 06-05-2012, 05:09 PM   #1
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Take the Package or Risk it...

I just received a early retirement package that allows 12 months pay (into pension) plus 2 years medical coverage (paying active employee monthly costs).

Although I feel secure in my position, I have seen over the last 10 years non-sensical layoffs. Once the early retirement offers are allocated, layoffs will proceed until the target numbers are reached.

I like my work, but after 2+ decades at the same company, I want a change (in company and industry). I can manage costs for two years before impacting my "true" retirement nest egg.

At 54, should I take the package? Or should I risk it with layoffs pending? The medical coverage is attractive since I cover my family benefits.
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Old 06-05-2012, 06:08 PM   #2
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Sounds like a good opportunity to me. Are you close to retirement yet or will it pose a significant risk for you? How easy will it be to change jobs? If you do get a new job with medical benefits is the package's medical benefit worth anything? Are you considering a year or two off before starting work again? Is the pension on a steep ramp up if you put in a few more years with the current company?
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Old 06-05-2012, 06:29 PM   #3
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Oh sure, it's a great opportunity. But the question(s) you should ask yourself is(are)...

Given my chosen lifestyle, Can I afford to retire now with my present savings and the ER offer ?

By retiring now what would you give up ? would I regret not working longer to sustain a better lifestyle ?

Is there some leeway in your plan in case of unforeseen circumstances ?

also ask yourself - What could go wrong with my plan ?
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Old 06-05-2012, 06:39 PM   #4
Confused about dryer sheets
 
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I would like to work for 8-10 more years. I plan to take two months off to visit family and friends in areas that I might consider for re-location. I am not quite sure how easy it would be to change jobs. While I think I have strong skills, I haven't been actively searching for a job due to the economy and raising a family (and the fact my company seemed relatively stable). My children have grown, and I am ready to move on. I wish I had more time for research -- but I need to make a decision quickly.

My pension plan was "frozen" years ago (when the company moved to 401K)....so the main impact would be the contributions I make to my 401K.
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Old 06-05-2012, 06:45 PM   #5
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Quote:
Originally Posted by Sadie2012 View Post
My pension plan was "frozen" years ago (when the company moved to 401K)....so the main impact would be the contributions I make to my 401K.
Tha main impact is also 8-10 extra years of expenses supporting yourself, Lost growth in the nestegg over that timespan, and possibly very expensive medical insurance payments when the company payments stop before medicare kicks in at 65.

Those three items are worth considering.
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Old 06-05-2012, 09:40 PM   #6
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I guess it partly depends on how likely you think it is you might be laid off and presumably then get no package if you turn it down. If you plan to leave anyway then the package is good. If what you really want is the job (or at least not to leave until you get another one) then you have to decide if you want to gamble that you won't be laid off. Tough decision.
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Old 06-07-2012, 09:04 AM   #7
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Sadie2012... Yup in a simliar situation, but I'm almost 52. I'm also trying to weigh in the benefit of being able to have "control" of the "frozen" amount of pension (by moving to a self directed IRA), and make a better return over the next 10 years as well, but this is a definitely a tough situation.
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Old 06-07-2012, 09:23 AM   #8
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My general stance is to take the package. A couple of reasons--

1. If they are downsizing, your job probably isn't secure anyway.

2. Generally, packages get worse as things get worse at a business. The people who leave early tend to do better than the people there at the bitter end.

3. The opportunity to get 12 months of pay and also get paid at a new job at the same time allows a nice potential boost to your net worth.


Obviously, the downside is the potential chance that you won't be able to find a comparable job. Only you can weigh that risk.


Quote:
Originally Posted by Sadie2012 View Post
I just received a early retirement package that allows 12 months pay (into pension) plus 2 years medical coverage (paying active employee monthly costs).

Although I feel secure in my position, I have seen over the last 10 years non-sensical layoffs. Once the early retirement offers are allocated, layoffs will proceed until the target numbers are reached.

I like my work, but after 2+ decades at the same company, I want a change (in company and industry). I can manage costs for two years before impacting my "true" retirement nest egg.

At 54, should I take the package? Or should I risk it with layoffs pending? The medical coverage is attractive since I cover my family benefits.
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Old 06-07-2012, 09:30 AM   #9
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Based on my observations of former colleagues who were let go (with no package as my megacorp never offered them, just pitifully meager severance), the key to "experienced" folks finding a new position is networking in a very deliberate, planned, and intentional (full-time job) way. A modern-looking resume is also important (you don't need to pay a resume service but get advice from your networking contacts).

I realize you don't have long to decide but if you could reach out to some former colleagues or other contacts for an honest appraisal of your potential in the job market that might also be helpful.

Best wishes for your decision-making - and once you make it, don't second guess yourself. Keep us posted and good luck!
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Old 06-07-2012, 10:28 AM   #10
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If I were in this position, it would come down to my chances of finding a new job. All I could do is go on a quick job recon - call a headhunter, call friends, look at online listings, etc.

If I decided that a new job looked very likely, I'd jump. If the new job search looked like it could take more than a year, I'd stay and keep getting paid while doing some background searching.
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Old 06-07-2012, 10:49 AM   #11
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If you are confident that you could find other employment, I would take it.

A friend of mine changed employers in his mid/late 50s and was totally reinvigorated in his work, so much so that while he is FI and could retire at any time, he is still working because he enjoys his job and the people that he works with so much.
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