Offered a Job Buyout? When You Should Take the Money and Run

According to the latest jobs report, the unemployment rate is now at 13.3%, a strong indication that the economy is struggling to stay afloat. While there is a glimmer of hope for the jobs market as states begin to open up, employment rates are likely to suffer for the unforeseeable future. The challenging part of the employment picture is not knowing how the COVID-19 health crisis will play out. With no script to follow, economists are left without a guide to know when the economy will get back on its feet.

As a result of all of this uncertainty, many businesses are offering some of their employees a variety of attractive buyout packages. No organization wants to have to let go of their employees. Offering a select group of workers a buyout package in an effort to cut payroll costs is becoming an increasingly popular option for business leaders. What happens if you are offered one of these packages? Here are a few things to consider before making a decision.

What Companies Are Offering Buyouts?

It is not difficult to figure out what industries are leading the list in offering buyouts to their workers. All of the world's major airlines have already announced plans to encourage senior employees to accept these packages in an effort to combat the massive losses the industry is experiencing as air travel came to a halt. Similarly, aircraft manufacturer Boeing also announced that over 5,000 employees have already accepted buyout offers. Other industries that are offering packages include the healthcare sector, technology, and the financial industry.

Is There a Target on Your Back?

One thing to weigh when making this big decision is whether or not you believe that there is a target on your back. If your organization has already identified you as a prime candidate for a buyout, there is a good chance that you are on a short list of people who will eventually be let go if economic conditions do not improve. In the majority of cases, this initial offer will be the most attractive package available to you. Hanging on for a few more months may result in less money in the long run.

Consider the Health Insurance Options

There is never a good time to be without health insurance. However, the ongoing global pandemic has made it even more imperative that you ensure that you have the proper insurance coverage. Many buyout offers will provide health insurance coverage for a designated amount of time. If your offer does not include this provision, you need to carefully price out the costs of purchasing your own policy. This element of the offer may be a dealbreaker for many families, especially if you have multiple dependents to support.

What Are Your Current Prospects?

Before you sign off on a buyout offer, you need to consider what your current job prospects will be when you enter the pool of people looking for work. If your skills are specific to a certain industry that is struggling, you will not likely see better prospects. For example, if you are a pilot, there is not likely to be any other airlines that are in a better position to hire. However, if you are a mechanic let go from an airline, you may be able to transfer these skills to an industry that is not experiencing as much turmoil. Be sure to do your research about possible job prospects before jumping ship.

What is Your Current Life Situation?

Do not sign on the dotted line until you have thoroughly analyzed what kind of impact accepting this buyout will have on your current situation. If you are nearing retirement, it might be easier to make it work than if you have children getting ready to head off to college. Understanding the long-term implications of the buyout is key when deciding whether to take the money or to stay put.

Clearly, there are no easy answers when navigating this unique financial crisis. With no roadmap to guide the way, you have to look at your own personal situation before deciding if a buyout is the right choice for you. If your financial situation is particularly complicated, a trained financial advisor may be able to provide you with valuable advice in navigating this decision path.

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