Just after releasing better than expected third quarter earnings, General Motors announced that it was offering buyouts to approximately 18,000 salary workers in North America. Currently, General Motors has approximately 50,000 North America salary workers, which means that approximately 36 percent of GM’s North American salary workers are eligible for the buyout. In order to be eligible, you must have at least 12 years at General Motors. General Motors is offering the buyout which basically gives workers six months’ pay in order to cut costs and to be proactive, as sales in the world’s two largest car markets and GM’s largest markets, China and the United States, are slowing down. Eligible employees will have until November 19 to decide if they wish to accept the buyout. Depending upon how many workers accept the buyout, General Motors has indicated that after the November 19 deadline, it is possible that they would have forced layoffs. Obviously, General Motors is offering buyouts because they feel it’s in the best interest of the company. However, the question is if you’re offered the buyout, what should you do? After all, General Motors is doing what is best for General Motors; you should also do what’s best for you.
In deciding if the buyout works for you or not, the key is to look at your own individual situation. What is good for your next door neighbor or your brother-in-law may not be good for you. Therefore, the key is to look at your goals and objectives and use them as a guide. Here are a few things you should consider in helping you make your decision.
The first item is where do you stand with your pension benefits? Many people who are offered the buyout will find that they have not worked at General Motors long enough to receive their maximum pension benefit. In fact, many people will find that if they work for a few more months their pension benefit would increase substantially. Therefore, the effect on your pension should be a major consideration in deciding on the buyout offer.
The buyout can have an impact on other benefits that you may receive from the company such as healthcare. In addition, your social security benefits can be impacted if you take the buyout. Therefore, it is important that you analyze how other benefits that you may be entitled to would be affected before you decide on the buyout.
Many people who are contemplating accepting the buyout are going to retire. The question those people need to ask themselves is if they have the resources to be retired for the rest of their life. It is important that if you are thinking of accepting a buyout and you are going to retire, that you have the financial resources to provide yourself with a rising income throughout your life. If you won’t have the resources, and you still want to accept the buyout offer, you have to consider obtaining new employment. Even though jobs are plentiful these days, we all know that for older people it’s not as easy to find new employment, particularly at the salary you may desire. Therefore, if you are thinking of accepting the buyout and you are going to need employment before you accept the offer, you should explore what the realistic possibility of obtaining a new job is, and what that compensation would be. Keep in mind, if you don’t have the wherewithal to retire, accepting the buyout may not be such a good idea.
The key to making the right decision is to focus on your own individual situation and not let emotion enter into the equation. Unfortunately, General Motors did not give its employees sufficient time to make their decision; however, it is what it is. Therefore, my advice is to start the process as soon as possible and don’t be afraid to sit down with someone professionally if you need to. However, as always when you deal with someone professionally, it is important that you don’t deal with a salesperson; rather, you deal with someone whose sole goal is to do what makes sense for you.
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